US stocks turn lower ahead of CPI inflation data

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• Tue, April 9, 2024 at 12:20 PM MST

  A closer look at inflation’s path lower

  A rapid decline in core goods prices, which exclude food and energy, helped bring inflation significantly closer to the Fed’s 2% target.

  But after January’s Consumer Price Index (CPI) report, investors and economists alike were reminded that the rest of inflation’s decline might not come as smoothly.

  As seen in the first chart below, core goods increases have been slowing for the past year, driving inflation lower. Services, however, has had far stickier inflation.

  Our second chart drives into what’s keeping core services inflation higher. In January, shelter’s price decline slowed. Meanwhile auto insurance, part of the transportation bucket, has also seen a slight uptick over the past few months. Largely, economists don’t see the issues in services abating swiftly.

  “While we believe core goods prices have some additional room to fall over the next few months as earlier benefits of supply chain normalization feed through to prices, services prices will need to cool more markedly to keep overall inflation on its downward path,” Wells Fargo senior economist Sarah House wrote in a note to clients on April 3.

  On Wednesday, the Consumer Price Index report is expected to show core prices rose 3.7% year over year, a slowdown from the 3.8% increase seen in February. Monthly core price increases are expected to clock in at 0.3%, slower than the 0.4% increases seen in January and February.

• Tue, April 9, 2024 at 11:30 AM MST

  Reports of rising housing supply ‘overblown,’ Capital Economics says

  Housing inventory is up this year, igniting hopes that a years-long supply crunch in the market may be easing. But Capital Economics cautions that investors shouldn’t read too much into increase.

  “We think that reports of a wave of new resale supply coming onto the market are overblown,” Thomas Ryan, property economist at Capital Economics, wrote in a note to clients Tuesday morning. “While the number of homes being listed for sale has increased compared to last year, it is still low by historical standards, as mortgage rate ‘lock-in’ continues to curb the number of homes put up for sale.”

  There are two reasons behind his thinking: Comparing this year’s inventory levels to last year’s is misleading, and most of the attention is focused on the wrong measure of supply, Ryan explains.

  Inventory of new homes was historically low last year, suggesting that any uptick this year will appear sizeable in percentage terms, Ryan noted. The number of new listings of homes for sale is still about 20% lower than any point between 2017 to 2021.

  Meanwhile, active listings— which represent “the stock of homes on the market” — haven’t gained enough steam to indicate a better balance of supply and demand. While the metric has gradually risen since hitting a bottom in 2021, Ryan estimates that the market is still about 400,000 homes off what can be characterized as a “normal” level of supply on the market.

  All this means that with many homeowners locked into mortgage rates below 5%, new resale home supply will be limited this year —again. That should send prices up: Capital Economics is maintaining its forecast that home prices will rise by “an above-consensus 5% this year.”

• Tue, April 9, 2024 at 10:52 AM MST

  Boeing shares fall after whistleblower complaint

  Boeing (BA) shares fell as much as 2.5% on Tuesday following a report from The New York Times that the Federal Aviation Administration is investigating safety claims made by a Boeing whistleblower.

  According to the Times, Boeing engineer Sam Salehpou raised concerns over faulty production features of the 787 Dreamliner aircraft. Salehpou had worked at the company for over a decade.

  “These claims about the structural integrity of the 787 are inaccurate and do not represent the comprehensive work Boeing has done to ensure the quality and long-term safety of the aircraft,” the company said in a statement.

  The probe comes after an engine cover fell off of a Southwest jet during takeoff on Sunday — the latest in a string of high-profile incidents for Boeing.

  Earlier this year a door panel blew off of a new Alaska Airlines Boeing 737 Max 9.

• Tue, April 9, 2024 at 10:45 AM MST

  A trend to watch this earnings season

  Bullish investors are looking for a “catch-up” scenario in markets where the earnings for the other 490 companies in the S&P 500 start to rebound later in the year.

  While that trend won’t be the clear driver of earnings growth this quarter, Deutsche Bank chief equity strategist believes there will be signs of a rotation under the surface in earnings growth, backing the recent market narrative that a growing US economy will be a tailwind for stocks outside the tech sector.

  “With a cyclical uptake, with the pickup in CEO confidence that we’ve seen and talked about, you should start to see much better earnings,” Chadha told Yahoo Finance. “You should start to see much better and more confident guidance.”

  To be clear, Chadha still sees “good earnings” for megacap growth and tech moving forward. But he believes the companies’ guidance released this quarter will show some signs of a cooldown from the astronomical earnings growth seen by some large companies in 2023.

  If this is met by upbeat guidance from the other areas of the market, it would “continue to encourage” the rotation seen in markets over the past month with sectors like Energy (XLE), Materials (XLB), and Industrials (XLI) outpacing gains in Technology (XLK) and Communications Services (XLC).

  Charles Schwab global chief investment strategist Jeffrey Kleintop told Yahoo Finance Live that if first quarter earnings calls indicate a rotation may be underway, that’d be a welcome sign for the health of the stock market rally.

  He added that the recent pickup in manufacturing activity, which grew at its fastest pace in the US since 2022, shows analyst expectation for an earnings pickup in economic-sensitive sectors is more than “hope.”

  “It’s a second wind for the stock market,” Kleintop said.

• Tue, April 9, 2024 at 10:00 AM MST

  Nvidia, Moderna, Alphabet: Stocks trending in afternoon trading

  Here are the stocks trending on Yahoo Finance in afternoon trading on Tuesday:

  Nvidia (NVDA): Shares of the chip giant fell nearly 3% after competitor Intel (INTC) revealed a new version of its artificial intelligence chip at its Vision event on Tuesday. According to the company, the new Gaudi 3 chip can train specific large language models 50% quicker than Nvidia’s prior generation H100 processor. Intel shares climbed about 1%.

  Moderna (MRNA): Shares of the pharmaceutical giant jumped to a three-month high, up as much as 10%, after the company revealed positive responses in its early-stage cancer vaccine trial. The vaccine, developed with Merck, was used in patients with a type of head and neck cancer.

  Alphabet (GOOG, GOOGL): Alphabet shares jumped more than 1% to trade near 52-week highs on Tuesday. The moves come after the tech company announced a new video-creation app, Google Vids, which utilizes artificial-intelligence to streamline content development.

• Tue, April 9, 2024 at 9:15 AM MST

  Commodities check: Gold, oil prices surge

  Commodities prices are surging as gold (GC=F) hits another record high while the debate intensifies about whether or not oil prices will reach $100 a barrel.

  The price of gold has risen over the past eight trading sessions, despite recently revised expectations that there may be less interest rate cuts than initially anticipated this year.

  In a note published on Monday, Bank of America said the price of gold could rally to $3,000 per ounce by 2025. Prices are currently trading above $2,380 an ounce.

  Meanwhile, energy prices remain a key risk to inflation after serving as the largest contributor to headline CPI numbers over the past several months.

  WTI crude oil (CL=F) is currently trading around $86 a barrel while Brent crude prices (BZ=F) have climbed above $90 a barrel.

  “Brent has rallied to $91/bbl because the market is now pricing in a firmer demand outlook and some geopolitical downside risks to oil supply, which together have boosted…