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U.S. Stocks Climb After Inflation Data

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03/13/2018 | 04:30pm CEST
By David Hodari and Allison Prang 
   -- U.S. inflation data in focus 
 
   -- Dow, S&P 500, Nasdaq climb 
 
   -- Trading calm in Europe, Asia-Pacific 

U.S. stocks rose Tuesday as investors responded positively to the latest inflation data that showed consumer prices rose modestly in February.

The Dow Jones Industrial Average rose 91 points, or 0.4%, to 25269. The S&P 500 climbed 0.2% and the Nasdaq added less than 0.1%.

The consumer-price index, which measures what Americans pay for everything from shampoo to hotel stays, rose 0.2% in February after climbing a seasonally adjusted 0.5% in January, the Labor Department said. Economists surveyed by The Wall Street Journal expected a 0.2% increase.

Erik Davidson, chief investment officer for Wells Fargo Private Bank, said the market doesn't have "to fear an extremely aggressive Fed." He expects the Federal Reserve to stay on track for three interest-rate increases this year.

"Because of this inflation data this morning...the Fed is not necessarily going to need to act more quickly," he said.

Also Tuesday morning, President Donald Trump said he would nominate CIA director Mike Pompeo as secretary of state to replace Rex Tillerson. The inflation data was still the bigger news Tuesday, observers said, as Wall Street has learned to deal with turnover in the administration.

"This is now what is expected to be normal," said Matt Miskin, market strategist at John Hancock Investments.

A lack of inflationary jitters during 2017 allowed U.S. stock indexes to leap to multiple records early in 2018, while investors kept long-term bond yields subdued.

Since the start of February, however, rising inflation in both the U.S. and Europe has prompted investors to second-guess central-bank guidance, fueling speculation about tighter monetary policy.

The inflation data was released against a fraught trading backdrop, with the Trump administration's announcement of tariffs on steel and aluminum imports having provoked rebukes from China and the European Union in recent days. How those trading partners now respond may have broader implications for global economic growth, analysts say.

"Trade and GDP growth are intimately linked. You've seen a big pickup in trade in the past six months, but now, that growth rate is slowing," said Edmund Shing, global head of equity derivative strategy at BNP Paribas. "The chances of a global recession in the next year or two are already rising and if you add to that a slowdown in the rate of trade -- not just a slowdown in trade growth -- it could have repercussions for global economies."

The yield on U.S. 10-year Treasurys edged down to 2.863%, according to Tradeweb, from 2.870% on Monday.

In corporate news, shares of chip maker Qualcomm fell 3.9% after President Trump on Monday blocked Broadcom's $117 billion hostile takeover bid on national security grounds.

Elsewhere, the Stoxx Europe 600 slipped 0.4%, after Asia-Pacific indexes shrugged off early pressure.

In Asia, Japanese stocks closed up 0.7%, erasing earlier losses. The Shanghai Composite fell 0.5% on news that China plans to merge its banking and insurance regulators.

Kenan Machado contributed to this article.

Write to David Hodari at David.Hodari@dowjones.com and Allison Prang at allison.prang@wsj.com

Stocks mentioned in the article
ChangeLast1st jan.
CHINA-SHANGHAI COMP 2.50% 2797.48 End-of-day quote.-15.59%
DJ INDUSTRIAL 0.32% 26743.5 Delayed Quote.8.19%
NASDAQ 100 -0.50% 7531.0719 Delayed Quote.17.74%
NASDAQ COMP. -0.51% 7986.9551 Delayed Quote.16.29%
S&P 500 -0.04% 2929.48 Real-time Quote.9.57%
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