Overnight – Profit taking in MAG7 reverses early gains on inflation data
Stocks fell overnight, giving back early gains on cooler than expected inflation data, as profit taking continued in the Mega-cap “Magnificent 7” stocks
US producer prices rose at a slower-than-anticipated rate in December, with the producer prices index increasing by 0.2% on a month-on-month basis in December, according to data released earlier Tuesday. Economists had anticipated the reading would match November’s pace of 0.4%.
Compared to a year earlier, the PPI ticked up by 3.3%, accelerating from 3.0% in the prior month but cooler than estimates of 3.5%.
“While this morning’s report does little to arrest the likelihood – and need – for a policy pivot near term, it does seemingly afford the Committee more flexibility for policy as the data continue to evolve in the new year and under a new regime in Washington,” Stifel said in a Tuesday report.
The cooler inflation data helped pause the climb in Treasury yields, thought the 10-year Treasury yield moved off session lows to test the highs of the day as investors looked ahead to CPI report.
This data comes ahead of Wednesday’s consumer price index, and will offer more cues on interest rates after strong payrolls data from last week cemented bets on a slower pace of Fed rate cuts this year.
The earnings season is also set to begin in earnest on Wednesday, with prints due from several major Wall Street banks- including JPMorgan Chase (NYSE:JPM), Wells Fargo (NYSE:WFC), Goldman Sachs (NYSE:GS) and Citigroup (NYSE:C)
The ASX should fare better than its US counterparts with the MAG7 being most of the losses in the US. We don’t expect the market to move much until the Trump inauguration next Monday.
The only potential catalyst is if tonight’s US CPI data is higher than its 0.3% MoM and 2.9% YoY expectations.
Stock specific
- Funds managed by Macquarie Asset Management will invest $US900 million to help Applied Digital complete the construction of an artificial intelligence data centre in North Dakota.
- Telstra will spend $700 million rolling out artificial intelligence across its entire business.