Wall Street rebounds on softer inflation data, eyes on earnings

By Stephen Culp

NEW YORK (Reuters) -U.S. stocks rebounded from a steep sell-off on Thursday as fresh economic data rekindled hopes that inflation remains in a cooling trend.

Interest rate-sensitive megacaps boosted the tech-heavy Nasdaq sharply higher, while the and the Dow were modestly lower.

The Producer Prices index (PPI) came in cooler than expected, supporting the narrative that price growth is still cooling.

On Wednesday, hotter-than-expected CPI data sent stocks sharply lower and benchmark Treasury yields to their highest level since November. The report doused hopes that the central bank could implement as many as three rate cuts before year-end, possibly starting as soon as its June policy meeting.

“There’ been a lot of trepidation in the market, even heading into the CPI reading yesterday,” Joseph Sroka, chief investment officer at NovaPoint in Atlanta. “There was probably an equal amount of trepidation coming into today for the PPI report, which was obviously more in line with expectations.”

While the PPI data was more encouraging, the data did indicate that inflation’s journey down toward the central bank’s annual 2% target might be too meandering for the Fed.

John Williams, President of the Federal Reserve Bank of New York, said “there’s no clear need to adjust monetary policy in the very near term.”

Richmond Fed President Thomas Barkin cited the latest inflation data, saying the central bank is not yet confident pricing pressures will continue to ease.

“Investors are starting to absorb the possibility that maybe inflation’s could linger just a little bit longer and the Fed’s going to continue to remain patient, which is their big word right now,” Sroka added.

Investors now switch their focus to first-quarter earnings season, with results from three major U.S. banks – JPMorgan Chase & Co (NYSE:), Citigroup Inc (NYSE:), and Wells Fargo & Co – due Friday morning.

At 2:07PM ET, the rose 93.66 points, or 0.24%, to 38,555.17, the S&P 500 gained 42.94 points, or 0.83%, to 5,203.58 and the added 237.51 points, or 1.47%, to 16,407.87.

Of the 11 major sectors in the S&P 500, tech was out front, while energy shares were the laggards.

The FANG+ index of megacap momentum stocks was a clear outperformer, gaining 2.3%.

CarMax (NYSE:) slid 11.5% after the pre-owned vehicles retailer missed analysts’ estimates for fourth-quarter results and said it might not meet its long-term vehicle sales target.

Globe Life (NYSE:) tumbled 43.4% after Fuzzy Panda Research disclosed a short position in the company, alleging multiple instances of insurance fraud.

Rent the Runway skyrocketed by 129.9% after the apparel rental company said it was betting on artificial intelligence to power its current year growth.

Biotech firm Alpine Immune Sciences (NASDAQ:) is to be acquired by Vertex Pharmaceuticals (NASDAQ:) for about $4.9 billion in cash, both companies said. Alpine surged 36.8%.

Advancing issues outnumbered declining ones on the NYSE by a 1.20-to-1 ratio; on Nasdaq, a 1.35-to-1 ratio favored advancers.

The S&P 500 posted 7 new 52-week highs and 6 new lows; the Nasdaq Composite recorded 41 new highs and 103 new lows.

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