S&P 500 Under Pressure Post U.S. Inflation Data
NAGA | Jul 13, 2022 10:39AM ET
The S&P 500 declined on Monday and Tuesday despite last week’s bullish price movement. Last week, the market contemplated whether the instrument would be able to maintain its bullish trend, and so far, we have had no major indication that it could.
Looking at today’s futures market, we can see that the index is only slightly higher (0.19%) and has not moved toward yesterday’s price high. Traders are waiting for the stock market to open to gauge investors’ reaction to the latest CPI report.
The CPI monthly figure was predicted to land at 1.1%, slightly higher than the previous month. However, it came out at 1.3%. This will trigger a more hawkish stance from the Fed.
Another element influencing the decline is the bond market which has begun to spike. This points towards a “risk off” market sentiment. Yesterday's auctions for the placement of short-term securities saw the 3–month treasury bills placed at a rate of 2.110%, which exceeds the previous figure of 1.850%. The United States 3-Year option was placed at a rate of 3.093%, which is also higher than expected. Bonds appear to look more appealing as the stock market struggles to gain momentum.
Among the stocks seeing the highest growth so far is Twitter (NYSE:TWTR) - which has increased by 4.23% after a substantial decline, Cboe Global Markets (NYSE:CBOE) - which increased by 2.26%, and Martin Marietta Materials (NYSE:MLM) - which increased by 2.0%. With such low gains in the stock market, we can see why the bonds look a lot more enticing.
The main driver of the US stock market will be the latest inflation figures, as well as the earnings from Morgan Stanley (NYSE:MS) (NYSE:MS) and JP Morgan (NYSE:JPM) due to be released tomorrow after market close.
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