Before the Bell: It has been a newsworthy week so far on the economic front, and the reports will keep rolling in. Specifically, this afternoon will bring the Federal Reserve's Beige Book, a survey of business conditions across the country that the central bank will use to help it formulate monetary policy at its next FOMC meeting, which is on tap for late this month. Ahead of all that, and following yesterday's mostly positive session, the stock market seems poised to open to the upside this morning, with renewed strength in the NASDAQ.
In other upcoming news, we will be getting data on retail sales, weekly jobless claims, industrial production, and factory usage ahead of the stock market's opening tomorrow. Then, on Friday, the government is scheduled to report on March housing starts and building permits. This all comes after yesterday's somewhat disappointing release of inflation data for last month. In that report, the Labor Department noted that the Consumer Price Index had increased by 0.6%. After excluding the food and energy components, the core rate rose by 0.3%.
Those increases were each more than forecast, suggesting some nascent inflation concerns. However, when yields on the 10-year Treasury eased back on the day, pricing worries seemed to moderate and the stock market largely pushed higher. The main area of strength was the NASDAQ, where some technology heavyweights, such as electric car maker Tesla (TSLA) surged in price. All told, the NASDAQ, trading higher throughout the day, climbed by 146 points, while the Dow Jones Industrial Average fell 68 points. IBM (IBM) led the way lower on the day.
Also hurting the Dow on this bifurcated trading day was a pullback in shares of pharmaceuticals behemoth Johnson & Johnson (JNJ). That issue fell after the United States recommended pausing that company's one shot COVID-19 vaccine after six women had incurred blood clots after getting vaccinated. However, those clots were among seven million Americans getting the shot. JNJ shares fell $2 on the news.
Helping the market was the fact that investors bet that the increase in inflation during March would not be enough to move the needle on Federal Reserve monetary policy.
Looking ahead, the next few sessions will see the start of first-quarter earnings season, with the big banks leading the parade. Those issuances will be followed by tech heavyweights next week. Expectations, meantime, are quite high for earnings, and with the stock market trading at elevated levels and dividend yields quite low, there would seem to be little margin for error on the profit front. – Harvey S. Katz, CFA