Markets had a quiet Tuesday as investors braced for key inflation reports coming out later today and Thursday.
Investors’ hesitation was reflected in the low volume Tuesday. The SPDR S&P 500 ETF Trust (SPY), which tracks the S&P, traded 44 million shares, below its 30-day average of 76.1 million. Major stock indexes mostly fell, but only fractionally. The S&P 500 dipped 0.46%, the Dow Jones Industrial Average was mostly flat and the Nasdaq Composite lost 0.6%.
For regional banks that experienced a week of volatile price swings, however, it was a welcome respite. The SPDR S&P Regional Banking ETF lost 0.4%, but PacWest, the besieged Los Angeles-based lender, managed to eke out a 2.35% gain.
Most of the big swings happened in extended trading as a slew of companies reported earnings after the bell. Airbnb slid 11.2% and Twilio sank 14.7% after both companies issued weaker-than-expected forecast for the second quarter. One bright spot: Electric vehicle maker Rivian popped 6.4% after the company’s net loss narrowed more than analysts anticipated.
Investors are hoping April’s CPI reading will show dipping prices. But there are signs inflation won’t cool as quickly as many wish. Economists think April’s headline CPI number will remain unchanged from March’s. April’s jobs report showed the labor market’s still going strong, which might contribute to price pressures. Indeed, New York Fed President John Williams said he doesn’t expect inflation to drop to 2% until the next two years. It could be a rocky road ahead, both for the economy and markets.
