MW UPDATE: Dow edges slightly higher in afternoon trade, with Powell speech awaited
By William WattsJoy Wiltermuth
U.S. stocks were largely unchanged Wednesday afternoon, a day after the Dow Jones Industrial Average and the S&P 500 snapped six-day winning streaks.
A report on U.S. inflation showed investors have little to worry about, for now, and gave a brief boost to stocks in early trade. The day's schedule brings a speech by Federal Reserve Chairman Jerome Powell on the state of the labor market.
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Stocks saw little movement Tuesday, with the Dow and S&P 500 posting small losses to snap a six-day winning streak for both indexes, while the Nasdaq Composite eked out a small gain to capture another record close. The small-cap Russell 2000 outpaced its larger-cap siblings with a 0.4% gain to also post another record finish.
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Investors remain focused on prospects for another large round of government spending, as well as a slowing pace of new COVID-19 infections, along with the ongoing vaccine rollout. At the same time, market watchers are parsing consumer price inflation data for January published Wednesday morning.
The U.S. consumer price index rose 0.3% in January as expected, after climbing 0.4% a month earlier, but excluding volatile food and energy prices the core CPI was unchanged versus an expected increase of 0.1%. CPI inflation was up 1.4% in the past 12 months.
While the headline economic indicators aren't showing evidence of inflation yet, commodities prices are, noted Andrew Smith, chief investment strategist at Dallas-based Delos Capital Advisors. Raw materials like oil , lumber $(WOOD)$, and corn have all shot higher over the past few months, and may start to pinch Americans' pocketbooks soon, he said.
Even so, Smith told MarketWatch, "We think we've hit a good new stride in the market." While valuations are high in all corners of the market, "We're finally seeing earnings growth," he said.
In a separate report, the Census Bureau said wholesale inventories gained 0.3% in December.
"Equity markets can be undermined by a swift rise in yields, especially if this isdriven by expectations of persistently higher inflation," Mark Haefele, chief investment officer at UBS Global Wealth Management, wrote in a Wednesday client note. "This year, however, we believe the rise in yields is being led by improving growth, which is also positive for corporate profits."
Investors were expected to pay little attention to the second impeachment trial of Donald Trump, with arguments getting under way in the Senate on Wednesday afternoon. The Senate voted Tuesday that the trial could proceed after a round of arguments over the constitutionality of trying a former president.
The trial isn't expected to affect financial markets since it isn't seen as interfering with a push toward another round of coronavirus aid spending. President Joe Biden is targeting an $1.9 trillion package and Congressional Democrats have taken steps that would allow them to push through a spending plan without Republican support in the evenly divided Senate via a process known as budget reconciliation. The size of the plan is expected to shrink somewhat, however, due to resistance from some Democrats.
Powell is slated to deliver remarks to the Economic Club of New York at 2 p.m. Eastern, and federal budget figures for January are set for release at 2 p.m.
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-William Watts; 415-439-6400; AskNewswires@dowjones.com
$(END)$ Dow Jones Newswires
February 10, 2021 13:40 ET (18:40 GMT)
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