Wall Street appeared to enjoy some positive vibes early Wednesday after Tuesday’s late sell-off. Though tariff and geopolitical worries played a role in the plunge, the main factor might have been simple fatigue after a seven-day rally in the Nasdaq. Today’s theme seems to be whether the market can recover.
Fresh data hit early Wednesday as the producer price index rose 0.2% in February, in line with Wall Street analysts’ expectations and not a number likely to raise any fears about inflation. Retail sales fell 0.1% in February, but were weighed down by a weak automobile market. With auto sales stripped out, retail sales rose 0.2%, still below expectations.
While the market isn’t likely to spend much time focused on these numbers, the takeaway might be some inflation relief. The PPI and retail sales numbers certainly don’t seem to indicate any kind of overheating in the economy, and bond prices rose a bit on the data.
Stocks bounced in pre-market trading, and the so-called FAANG stocks (Facebook, Apple, Amazon, Netflix, and Google) came back a little in pre-market trading after Tuesday’s weakness. The real focus today is on whether stocks can make up what they lost yesterday. Keep in mind, too, that quadruple witching (expiration of stock index futures, stock index options, stock options and single stock futures) is coming up Friday. There aren’t a lot of numbers to watch on the data side of the equation, but because it’s quadruple witching we may see some back and forth trade. A lot of people might want to close their positions before the end of the day tomorrow.
The market remains on edge about tariffs, inflation, and geopolitics as Wednesday gets underway. Overseas, Asian stocks took it on the chin as worries swirled about possible U.S. tariffs and the replacement of former U.S. Secretary of State Rex Tillerson, news media reported. The White House might be looking at imposing up to $60 billion in tariffs on Chinese goods, according to Reuters.
The Asian slump came despite better than expected data from China, where industrial output jumped more than 7% in the first two months of the year. Oil climbed slightly after that news hit.
Arguably, most of this year’s sell-offs have centered around chances of a possible fourth rate hike in 2018. That didn’t seem to really be the concern as U.S. stocks slumped on Tuesday, however. Actually, a couple of items seemed to work against rate fears. The February consumer price index (CPI) was pretty mellow, coming in as expected at 0.2% and not raising many eyebrows. Also, 10-year yields pulled back during the day, falling to around 2.85% by the close to near the middle of their recent range as inflation fears eased a bit.
Tech took a blow Tuesday, in part from news that the Trump administration had blocked Broadcom Ltd (NASDAQ: