Shares of smaller companies and those in cyclical industries like materials and energy that are less sensitive to interest rates rose in a quiet session Tuesday ahead of the release of the latest U.S. inflation data.
The S&P 500 was nearly unchanged, shedding 0.17 point to close at 4108.94. Meanwhile, the Russell 2000 index climbed 14.15 points, 0.8%, to 1786.59, the second consecutive session that shares of smaller companies outperformed those of larger firms.
Top gainers included flooring firm
which rose $5.40, or 5.7%, to $100.12, and appliance maker
up $4.94, or 3.8%, to $134.02. Fertilizer producers
and Mosaic each added more than 4.4%.
The Dow Jones Industrial Average climbed 98.27 points, or 0.3%, to end at 33684.79. The Nasdaq Composite fell 52.48 points, 0.43%, to 12031.88.
U.S. government debt prices declined, nudging yields higher. The yield on 10-year Treasury notes rose to 3.433%, from 3.414% Monday. Gold prices, up 10% this year, remained above $2,000 a troy ounce and Bitcoin rose above $30,000 for the first time since June, extending a rally that began when banking turmoil led investors to expect the Fed would soon cut interest rates.
Traders and money managers are focused on interest rates ahead of the Fed’s meeting that will conclude May 3. After last week’s strong labor-market data, traders are increasingly wagering that the central bank is likely to raise rates by a further quarter of a percentage point, according to CME Group.
“We’re in a nothing market until either the fed blinks or the market blinks,” said Matthew Tuttle, chief executive of Tuttle Capital Management.
Investors remain focused on interest rates.
Photo:
Peter Morgan/Associated Press
Consumer-price data due Wednesday will help investors assess the Fed’s progress in taming inflation.
Lars Skovgaard Andersen, investment strategist at Danske Bank, said recent economic data had fueled hopes that the Fed might control inflation without causing a recession. Still, he said that many large investors hadn’t participated in the recent rally and that weaker companies would begin to be exposed by higher rates.
Live Q&A
Bull v. Bear: Cathie Wood’s ARK Innovation Fund
On Thursday, April 13, at 11 a.m. ET, Matthew Tuttle, the CEO behind the ETF shorting Cathie Wood, and Art Laffer, president of Laffer Associates and advisor to ARK Investment Management LLC, join the Journal’s Gunjan Banerji to discuss the bull and bear cases for the ARK Innovation Fund.
Investor attention could turn back toward banking upheaval later this week when JPMorgan Chase, Wells Fargo and Citigroup kick off earnings season. Hani Redha, a portfolio manager at PineBridge Investments, said money managers will focus on what lenders say about credit conditions and deposits in the wake of outflows from some regional banks.
Financial stocks rose as they continue to rebound from the selloff last month, when two major U.S. lenders failed and Switzerland engineered a deal for
to take over struggling rival Credit Suisse.
Mr. Tuttle said he isn’t buying a banking recovery. Instead, he said he is shorting regional bank stocks as well as placing wagers that will pay off if shares of commercial real-estate firms decline. He is also buying shares of precious-metals miners on down days, reasoning that they should benefit from high gold and silver prices as well as consolidation in the sector.
Shares of Colorado-based gold miner Newmont lost $1.17, or 2.3%, to end at $49.92 after the company raised its takeover bid for Australia’s Newcrest Mining for $19.5 billion. Newcrest said it would open its books so that
could put forth a firmer offer.
led the S&P 500, rising $6.35, or 9.6%, to $72.21 after the used-auto retailer reported fourth-quarter profit roughly twice what analysts expected. CarMax nonetheless warned that the company has been plagued by affordability issues, higher interest rates, tightening lending standards and low consumer confidence. CarMax’s lending business is bracing for more defaults.
“Our newer originations are purchasing at a higher average selling price, therefore, there’s a higher payment,” said
Jon Daniels,
senior vice president of CarMax Auto Finance. “People haven’t worked through having a higher auto payment than they might normally be used to.”
Economists are eyeing secondhand auto prices closely to gauge inflation. Goldman Sachs Group analysts said they expect Wednesday’s consumer price data will show that used-car prices climbed 0.5% in March, keeping pressure on U.S. consumers.
was the stock index’s biggest loser, falling $4.90, or 3.1%, to $155.25 after the biotech company told analysts and investors at its “Vaccines Day” presentation that its first influenza vaccine candidate didn’t meet the criterial for early success in a Phase 3 trial.
In international markets, the Stoxx Europe 600 added 0.6%, led by shares of basic-resource and auto stocks. Japan’s Nikkei 225 rose 1.1%. Hong Kong’s Hang Seng climbed 0.8%.
Write to Ryan Dezember at ryan.dezember@wsj.com and Joe Wallace at joe.wallace@wsj.com
Corrections & Amplifications
The yield on 10-year Treasury notes rose early Tuesday to 3.419%, from 3.414% Monday. An earlier version of this article incorrectly said the yield declined. (Corrected on April 11)
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