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Early gains on Wall Street fizzled out with the S&P 500 and Nasdaq Composite trading in negative territory on Tuesday as tech and energy sectors came under pressure.
Stocks earlier shook off President Donald Trump’s decision to replace Secretary of State Rex Tillerson, choosing Central Intelligence Agency Director Mike Pompeo to take over the role.
Stocks rallied earlier after closely watched consumer-inflation data was in line with expectations, helping to placate worries rising prices would hasten interest-rate hikes by the Federal Reserve.
What are the main benchmarks doing?
The S&P 500 index SPX, -0.08% was down 0.4% at 2,773. Losses in the energy, technology and financials sectors outweighed gains in the rest of the market.
The Dow Jones Industrial Average DJIA, +0.08% which earlier was up as much as 181 points, fell 101 poitns, or 0.4%, to 25,077. General Electric, American Express and Microsoft Corp were leading the losses.
The Nasdaq Composite Index COMP, -0.39% retreated from an intraday record high set earlier, to trade 64 points, or 0.8%, lower at 7,524. If the index closes lower, it will break a seven-day winning streak.
What is driving markets?
The consumer-price index rose a mild 0.2% in February after a worrisome 0.5% increase in the first month of the year. The cost of housing rose and the price of clothes and auto insurance posted surprisingly large gains for the second month in a row.
Economists surveyed by MarketWatch had forecast a 0.2% advance.
The year-over-year rate for CPI edged up to 2.2% from 2.1% in January.
A stronger-than-expected inflation number was feared as a potential catalyst to nudge the central bank closer to four hikes instead of the three that the Federal Reserve is expected to carry out, something that could weigh on stocks. The Fed is expected to increase interest rates in March, but the jury out on how aggressively it will act beyond that.
Analysts said Trump’s decision to oust Tillerson had little lasting effect, coming amid a number of personnel moves by the administration.
What are strategists saying?
“Investors got used to the game of musical chairs in the White House and realize that it’s not a true economic risk,” said Karyn Cavanaugh, senior market strategist at Voya Financial, referring to the Tillerson exit.
“CPI really was on the money, showing inflation is not too hot and not too cold. Combined with the fact that there is still slack in the labor market we don’t worry too much about inflation,” Cavanaugh said.
Which stocks are active?
DSW Inc. DSW, +8.57% shares rallied 11% after the footwear retailer posted quarterly results.
Stitch Fix Inc. SFIX, -2.07% shares fell 1.6% after the online clothing retailer beat Wall Street’s forecasts for sales, but missed on revenue. In addition, nearly 38 million new shares of the company became eligible for trading after Monday’s close.
Micron Technology Inc. MU, +3.44% is up 1.6% after Mizuho raised its price target to $66, the third firm to raise its target this week.
Shares of retailers were sharply higher as they attend Bank of America Merrill Lynch Consumer & Retail Technology Conference.
What are other markets doing?
The yield on the 10-year U.S. Treasury TMUBMUSD10Y, -0.47% retreated to 2.845% from 2.867% before the report.