In the latest trading session, US equity indexes exhibited a mixed performance, with notable gains seen in the S&P 500 and the Nasdaq Composite as consumer price inflation data for February presented a more favorable outlook than anticipated. The Nasdaq Composite experienced an impressive increase of 1.4%, reaching 17,688.2, while the S&P 500 rose by 0.7% to settle at 5,612.1 during the midday session on Wednesday.
Conversely, the Dow Jones Industrial Average faced a slight decline of 0.1%, now at 41,378.4. This daily trading rhythm was reflected across various sectors, primarily driven by technology, communication services, and consumer discretionary industries, which gained traction following the release of cooler-than-expected inflation statistics.
Among the seven Magnificent-7 stocks, six demonstrated strong performance, with Tesla and Nvidia taking the lead as top gainers in the mega-cap category. On the flip side, consumer staples and healthcare sectors experienced substantial downturns, indicating a prevailing risk-on sentiment within the market. As per the Bureau of Labor Statistics, the consumer price index indicated a deceleration in growth, slowing to 0.2% in February, down from 0.5% in January.
Analysts who contributed to a survey conducted by Bloomberg had anticipated a slightly higher uptick of 0.3%. Annually, inflation eased to 2.8%, a decrease from the previous month's 3% and slightly better than Wall Street’s expectation of 2.9%. Core inflation, which omits the more volatile food and energy components, also took a downward turn, falling to 0.2% from January's 0.4%, thus trailing below the 0.3% consensus estimate.
On a year-over-year basis, core inflation registered at 3.1%, which was less than the anticipated 3.2% forecasted by market analysts. On the bonds side, the majority of US Treasury yields rose throughout the day, with the 10-year Treasury yield increasing by 1.9 basis points to reach 4.31%, while the two-year yield climbed 3.3 basis points to 3.97%.
In contrast, the CBOE's volatility index, known as the VIX or the fear gauge, experienced a decline of 4.3%, settling at 25.84, continuing its pullback from levels not seen in approximately seven months. Additionally, West Texas Intermediate crude oil futures witnessed a notable surge, jumping 1.7% to $67.41 per barrel, further illustrating the dynamic movement within the markets. The interplay between these various economic indicators and their impacts on trading strategies highlights the complex landscape of current financial markets, shaped by investor sentiment and economic forecasts..