U.S. Stocks Showing A Lack Of Direction Ahead Of Inflation Data

(RTTNews) - Stocks have shown a lack of direction over the course of the trading day on Tuesday, with the major averages bouncing back and forth across the unchanged line after ending the previous session moderately higher.

Currently, the major averages are narrowly mixed. While the Dow is up 37.62 points or 0.1 percent at 45,552.57, the Nasdaq is down 33.42 points or 0.2 percent at 21,765.28 and the S&P 500 is down 5.55 points or 0.1 percent at 6,489.60.

The choppy trading on Wall Street comes as traders seem reluctant to make more significant moves ahead of the release of closely watched inflation data in the coming days.

The Labor Department is scheduled to release reports on producer price inflation and consumer price inflation on Wednesday and Thursday, respectively.

While last Friday's weaker-than-expected jobs data increased confidence the Fed will cut interest rates at its meeting next week, the inflation data could influence how aggressively the central bank lowers rates.

Economists currently expect the annual rate of producer price growth in August to come in unchanged from July at 3.3 percent.

The annual rate of growth by consumer prices is expected to accelerate to 2.9 percent in August from 2.7 percent in July, while the annual rate of growth by core consumer prices, which exclude food and energy prices, is expected to hold at 3.1 percent.

Ahead of the data, CME Group's FedWatch Tool is currently indicating a 92.0 percent chance the Fed will lower rates by a quarter point and a slim 8.0 percent chance of a half-point rate cut.

On the U.S. economic front, the Labor Department released data showing non-farm employment for the twelve months through March 2025 was downwardly revised by 911,000 jobs.

"The jobs picture keeps deteriorating and while that should make it easier for the Fed to cut rates this fall, it could also throw some cold water on the recent rally," said Chris Zaccarelli, Chief Investment Officer for Northlight Asset Management.

"Worse still, if the CPI shows a worsening trend of higher inflation on Thursday then the market will begin worrying about stagflation," he added. "The bull market has been extremely resilient this year, but we could be approaching an inflection point where it is tested again."

Sector News

Most of the major sectors are showing only modest moves on the day, contributing to the lackluster performance by the broader markets.

Housing Stocks have shown a substantial move to the downside, however, dragging the Philadelphia Housing Sector Index down by 3.0 percent. The index ended the previous session at its best closing level in nine months.

On the other hand, energy stocks are turning in a strong performance amid a sharp increase by the price of crude oil, with the NYSE Arca Oil Index jumping by 1.9 percent and the Philadelphia Oil Service Index climbing by 1.2 percent.

Notable strength is also visible among banking stocks, as reflected by the 1.2 percent gain being posted by the KBW Bank Index.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Tuesday. Japan's Nikkei 225 Index fell by 0.4 percent, while Hong Kong's Hang Seng Index jumped by 1.2 percent.

The major European markets are also mixed on the day. While the German DAX Index is down by 0.4 percent, the U.K.'s FTSE 100 Index and the French CAC 40 Index are both up by 0.2 percent.

In the bond market, treasuries are giving back ground after trending higher over the past several sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 4.2 basis points at 4.088 percent.