Markets

Midday Update: Wall Street's Overreaction to CPI Creates Buying Opportunities For Bottom Fishers

Wall Street brushed off a better-than-expected gain in consumer prices and soft retail sales to trade higher for a fourth consecutive day with financial and technology stocks taking the lead.

The strongest gain in the nominal CPI in five months triggered panic selling in stock futures before investors scrambled to cover shorts after a second look indicated year-over-year inflation is below the Fed's 2.0% target rate.

Retail sales also contributed to the overreaction across Wall Street when January sales fell 0.3%, missing estimates for a 0.3% gain. Excluding the auto sector, sales were unchanged and were down 0.2% excluding sales of autos and gasoline, both of which were significantly below expectations.

Stock futures were higher despite the risk the CPI could lay the groundwork for the Fed to tighten faster and more aggressively this year. The print unleashed a torrent of selling in both equities and Treasury securities, driving Dow futures more than 300 points below the prior day's close and the yield on the 10-year Treasury note to 2.88%. Bargain-hunters swooped in to buy the dip despite the continued rise in the 10-year yield (last at 2.90%) driving the Dow to the flat line and S&P 500 and Nasdaq into positive turf.

European markets tracked their U.S. counterparts higher as a brief pull-back in the euro and British pound following the U.S. inflation data helped offset early losses. European bourses were given an extra hand by better-than-expected industrial production data.

Crude oil was up $0.19 to $59.38 per barrel. Natural gas was unchanged at $2.59 per 1 million BTU. Gold was up $20.50 to $1,350.80 an ounce, while silver was up $0.21 to $16.73 an ounce. Copper was up $0.06 to $3.22 per pound.

Among energy ETFs, the United States Oil Fund was up 0.59% to $11.94 with the United States Natural Gas Fund was down 0.59% to $21.87. Amongst precious-metal funds, the Market Vectors Gold Miners ETF was up 3.33% to 22.72 while SPDR Gold Shares were up 1.43% to $127.88. The iShares Silver Trust was up 1.30% to $15.82.

Here's where the markets stand at mid-day:

US MARKETS

NYSE Composite Index was up 49.43 points (+0.39%) to 12,623.80

Dow Jones Industrial Index was up 33.06 points (+0.13%) to 24,673.51

S&P 500 was up 11.11 points (+0.40%) to 2,673.78

Nasdaq Composite Index was up 68.72 points (+0.98%) to 7,082.80

GLOBAL SENTIMENT

FTSE 100 was up 45.96 points (+0.64%) to 7,213.97

DAX was up 142.66 points (+1.17%) to 12,339.16

CAC 40 was up 56.02 points (+1.10%) to 5,165.26

Nikkei 225 was down 90.51 points (-0.43%) to 21,154.17

Hang Seng Index was up 676.07 points (+2.27%) to 30,515.60

Shanghai China Composite Index was up 14.52 points (+0.46%) to 3,199.48

NYSE SECTOR INDICES

NYSE Energy Sector Index was down 2.24 points (-0.02%) to 10,726.66

NYSE Financial Sector Index was up 43.25 points (+0.53%) to 8,191.38

NYSE Healthcare Sector Index was up 46.32 points (+0.33%) to 14,229.88

UPSIDE MOVERS

(+) FOSL (+60.95%) Reports better-than-expected Q4 results

(+) CMG (+36.23%) Names Taco Bell CEO to lead company

(+) LAYN (+19.10%) To be acquired by Granite Construction ( GVA )

DOWNSIDE MOVERS

(-) TTPH (-59.48%) Phase 3 trial of eravacycline for urinary tract infection fails to meet endpoints

(-) GLMD (-53.17%) ARRIVE study did not meet primary endpoint

(-) AVGR (-40.07%) Priced series B preferred stock for $18 million in gross proceeds

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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