By Shashwat Chauhan and Shristi Achar A
(Reuters) – U.S. stocks fell on Tuesday, reversing early gains amid a broad sell-off, as investors grew nervous ahead of a key inflation data later in the week that could affect earnings. Federal Reserve’s expansionary monetary policy stance this year.
In focus is the March reading of the U.S. consumer price index (CPI), due on Wednesday, which is expected to show headline inflation rising to 3.4% year-on-year, from 3.2 % of February.
The core figure, which excludes volatile components such as food and energy, is expected to fall to 3.7% year-on-year, from 3.8% in February.
“Given the strength of the economic data, it is becoming increasingly easy to defend the idea that we may be closer to an overheating economy than the next recession,” said Dave Grecsek, managing director of investment strategy and research at Aspiriant .
“Three rate cuts this year seem a bit challenging at the moment.”
Amid signs of a robust U.S. economy, investors have scaled back expectations for how much the central bank will cut interest rates this year. Current bets on easing of around 60 basis points are the lowest since October, compared to around 150 bps expected in early 2024, according to LSEG data.
According to the CME’s FedWatch Tool, traders see a nearly 57% chance of a cut of at least 25 bps in June, down from 64% last week.
Mega-cap growth stocks, including Nvidia (NASDAQ:), Meta Platforms (NASDAQ:) and Microsoft (NASDAQ:), fell between 0.2% and 2.9%, weighing on the indexes.
Financial stocks also contributed to the losses, with the index down 0.8% and leading the sector declines.
Adding to market jitters, the commander of Iran’s Revolutionary Guard Navy said that Israel’s presence in the United Arab Emirates is seen as a threat by Tehran and that it could close the Strait of Hormuz if deemed necessary.
Minutes from the Fed’s March meeting – in which it stuck to guidance of three rate cuts this year – will be released later in the week and could be key in assessing the central bank’s stance on easing monetary policy.
At 12:02 p.m. ET, it was down 146.83 points, or 0.38%, at 38,745.97, was down 16.43 points, or 0.32%, at 5,185.96, and was down 28.44 points, or 0.17%, to 16,225.52.
Cryptocurrency and blockchain stocks fell, tracking lower bitcoin prices. Stock operator Coinbase (NASDAQ:) Global and software company MicroStrategy fell 4.5% and 7.5%, respectively.
Modern (NASDAQ:) bucked the overall trend, rising 6.9% after the personalized cancer vaccine developed by the vaccine maker along with Merck showed a positive response in an early-stage study.
Advancing issues outpaced declining ones by a ratio of 1.09 to 1 on the NYSE and 1.16 to 1 on the Nasdaq.
The S&P index recorded 12 new 52-week highs and one new low, while the Nasdaq recorded 46 new highs and 53 new lows.