U.S. stocks wavered Tuesday, with the Tech sector taking a nosedive as key inflation data and the start of earnings season loomed on the week’s calendar.
The S&P 500 (^GSPC) was flat, reversing its gains from earlier in the trading session. The Dow Jones Industrial Average (^DJI) gained about 0.29%, while the technology-heavy Nasdaq Composite (^IXIC) dipped by 0.43%.
Government bond yields were higher. The yield on the 10-year note edged up by 3.428%, while rate-sensitive two-year note yields rose to 4.033% Tuesday.
Wall Street kicked off the week on a modestly upbeat note ahead of inflation data out on Wednesday and bank earnings on deck for Friday. The S&P 500 recovered from early losses to finish the session higher, up 0.1%.
Inflation data will dominate the headlines this week, with bank earnings also in sight. Economists surveyed by Bloomberg expect March’s consumer price index to climb 0.3% from February’s figure, lowering the year-over-year inflation rate to 5.2%.
“This is the week that could tell us that the US consumer is no longer showing resilience and in fact is rather weak; core inflation is making things more expensive, retail sales might show the consumer is tapped out, and the banks might paint a picture that American savings accounts are down and credit card debt is skyrocketing,” OANDA analyst Edward Moya said in a note.
This comes after the Labor Department reported that nonfarm payrolls rose by 236,000 in March, slightly below consensus estimates for 240,000. That’s down from February’s revised 326,000, the slowest since December 2020. The unemployment rate fell to 3.5%, while the labor force participation rate climbed to a post-COVID era high of 62.6%.
With another strong jobs report in hand, investors are responding by changing their probability of another rate hike from the Fed at their next meeting. Markets are now pricing in a 68% probability that the Federal Reserve will raise interest rates by another 0.25% in May, according to data from the CME Group.
Separately, the minutes from the Fed’s late-March meeting will be released on Wednesday, giving more insight into the central bank’s policy moves.
This week’s main central bank policy decision will come from the Bank of Canada on Wednesday. Policymakers announced a pause in rate hikes at their meeting in January, and investors are anticipating that rates will remain unchanged.
Elsewhere, global policymakers gathered in Washington for the IMF and World Bank spring meetings. The International Monetary Fund warned Tuesday of slowing global growth amid banking sector vulnerability. The IMF projects the global economy will expand at 2.8% this year, slightly lower than its January estimate of 2.9%.
Also on Wall Street’s plate this week will be earnings from the bank heavyweights, including Wells Fargo (WFC), JPMorgan (JPM), BlackRock (BLK), and Citi (C) on tap Friday. Banks have had a weak start to the year amid the sector’s turmoil, with the KBW Banks Index (^BKX) down 20% this year.
With the first-quarter season underway, tech stocks have made a sudden turnaround from an ugly 2022. Some analysts continue to see the upside ahead for the sector.
“We continue to believe that Tech will be trading better this year than it did last, but at the same time, think that recent Tech run is getting stretched, in absolute terms,” Mislav Matejka, head of global and European equity strategy at JPMorgan, wrote in a note to clients. “It is looking overbought, close to all-time highs, with RSIs [relative strength index] that are nearing elevated territory.” And the question remains if tech will keep driving the market higher.
On the economic front, optimism among small business owners fell below a 49-year average in March as inflation, tighter credit conditions and difficulty finding workers weighed on outlook.
Meanwhile, Yahoo Finance’s Jennifer Schonberger spoke exclusively to New York Fed President John Williams on Tuesday. Williams said the Federal Reverse has its work cut out for them as they try to bring down inflation to the Fed’s goal of 2% amid strong labor market.
Here are the trending tickers on Yahoo Finance:
HEXO Corp. (HEXO): Shares plunged 25% after Tilray Brands announced it would acquire the cannabis company as the industry continues to consolidate.
CarMax, Inc. (KMX): The stock surged over 10% after the company posted an earnings beat on Tuesday. But higher rates could make a bumpy ride as affordability challenges hit fourth-quarter sales, CarMax said.
Snowflake Inc. (SNOW): The stock is selling off on Tuesday after the software services provider disclosed with the Securities and Exchange Commission (SEC) on Monday that executives and board members had donated and sold its shares.
WW International, Inc. (WW): Shares of the WeightWatchers parent rallied 60% after the company closed its deal with a telehealth provider, which will help expand their footprint in the growing market for new obesity drugs.
Coinbase Global, Inc. (COIN): Shares climbed more than 5% after Bitcoin USD (BTC-USD) blew past $30,000 for the first time this year. Bitcoin has risen 7.51% in the last seven days, according to CoinMarketCap data.
Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv
Click here for the latest stock market news and in-depth analysis, including events that move stocks
Read the latest financial and business news from Yahoo Finance