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Wall Street ends near flat ahead of inflation data

Published May 08, 2023 05:29AM ET Updated May 08, 2023 06:36PM ET
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© Reuters. FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., May 4, 2023. REUTERS/Brendan McDermid
 
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By Shreyashi Sanyal, Shristi Achar A and Carolina Mandl

(Reuters) - U.S. stocks paused on Monday after a strong rally in the prior session as investors shift focus to a key inflation reading later this week.

For most of the day, stocks struggled for direction amid disappointing earnings from Tyson Foods (NYSE:TSN) and Catalent (NYSE:CTLT) and a short-lived rebound in regional banks.

Shares of Catalent Inc tumbled as the contract drug manufacturer saw lower revenue and core profit in 2023, while Tyson Foods tanked on a surprise second-quarter loss and a cut in its annual revenue forecast.

A rebound in shares of regional lenders ran out of steam by midday, with the KBW Regional Banking index falling after posting its best single-day performance in seven weeks on Friday.

According to preliminary data, the S&P 500 gained 1.85 points, or 0.04%, to end at 4,137.90 points, while the Nasdaq Composite gained 19.31 points, or 0.16%, to 12,254.72. The Dow Jones Industrial Average fell 53.96 points, or 0.16%, to 33,620.42.

The struggle for a clearer direction comes after a rally on Friday, when U.S. jobs data pointed to a resilient labor market.

"Whenever you have a big up day, people need more good news to keep the market up every day in a row," said portfolio manager Moez Kassam of Anson Funds.

The spotlight this week will be on the Labor Department's inflation reading on Wednesday, which is expected to show the consumer price index (CPI) likely climbed 0.4% in April after gaining 0.1% in March. Producer prices, weekly jobless claims and consumer sentiment data are all lined up for the week.

The data this week should help investors gauge whether the Federal Reserve's aggressive tightening cycle - including its most recent 25 basis point hike last week - is helping tamp down inflation as well as whether fears of stagflation are founded.

"The bigger picture is inflation will remain higher for longer and that we are heading into a recession," Michael James, managing director of equity trading at Wedbush Securities.

"Whether that's hard or soft remains to be seen, but until there's something to disprove that bigger picture thesis, the overall market is going to remain somewhat range bound."

A rally in regional banks' shares proved short-lived, with PacWest Bancorp paring gains after a surge of as much as about 30% earlier in the session after the lender sharply cut its quarterly dividend to boost capital.

Shares of regional banks tumbled for much of last week on worries tied to the collapse of First Republic Bank (OTC:FRCB).

"We've had some stabilization in the stocks of middle market banks today because people are realizing prices were moving counter to where the fundamentals actually were," said Carol Schleif, chief investment officer for BMO Family Office.

Warren Buffett's Berkshire Hathaway (NYSE:BRKa) Inc's Class B shares rose after posting a $35.5 billion first-quarter profit, boosted by gains from stocks such as Apple (NASDAQ:AAPL).

Shares of Zscaler (NASDAQ:ZS) Inc rose after the cloud security company raised its annual forecast.

Wall Street ends near flat ahead of inflation data
 

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Comments (10)
Prashant Kumar
Prashant Kumar May 09, 2023 1:52AM ET
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inflation definitely high. more rate hike definitely there and it's going to be more challenge for regional banks
Dave Jones
Dave Jones May 08, 2023 11:17PM ET
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brandon likes chocolate sauce on his ice cream and in his diapers...
First Last
First Last May 08, 2023 11:17PM ET
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Old people use diapers?  Let's make fun of old people!
First Last
First Last May 08, 2023 11:17PM ET
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Trump is old, too.
Vivian John
Vivian John May 08, 2023 4:34PM ET
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I love my new home in the us
Tom Michaels
Tom Michaels May 08, 2023 3:58PM ET
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Total sham, let's pick another one. Lies and deception overfloweth.
First Last
First Last May 08, 2023 3:58PM ET
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This article isn't about Trump
Dave Jones
Dave Jones May 08, 2023 3:58PM ET
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Good to know he lives rent free in your head. Just like you undoubtedly live rent free in Mommies basement.
First Last
First Last May 08, 2023 3:58PM ET
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Dave Jones   Trump wants to be in the limelight.  That's why he gold-plated his residence, has been rejected by his home-town's moe classy elites, can't shut his pie hole even if it gets him in legal trouble, is gonna run for potus a 3rd time (and lose the 2nd time), etc.
Steven ML
Steven ML May 08, 2023 3:28PM ET
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Market struggling for direction? They ran out of BS stories for another rally
Jouni Trading
Jouni May 08, 2023 3:26PM ET
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Big money doing their best to maintain the illusion of welfare in the market as long as possible. House of cards a bit shaky shaky...
First Last
First Last May 08, 2023 3:26PM ET
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What exactly is "big money" doing to maintain illusion?
Vijay Srivastava
Vijay Srivastava May 08, 2023 10:59AM ET
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They seem to be artificially maintaing the level, but may tumble soon.
Antonio Velardo
Antonio Velardo May 08, 2023 10:57AM ET
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Now is down
amit suri
amit suri May 08, 2023 10:14AM ET
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it's about to crash by another 3 to 6 percent in a very brief note GANN STUDIES
Prashant Kumar
Prashant Kumar May 08, 2023 9:33AM ET
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180 regional bank facing financial crises. $32 billion very less to help them. crises not resolve
 
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