[BRIEFING.COM] The equity market is modestly lower this afternoon following a failed attempt to move higher at the start of today's session. The S&P 500 ticked above 2800 not long after the opening bell, adding as much as 0.7%, but started trending lower soon thereafter. The benchmark index is currently down 0.2%, hovering a step above its session low.
Meanwhile, the Dow Jones Industrial Average is up 0.1%, and the tech-heavy Nasdaq Composite is underperforming with a loss of 0.4%. Influential Nasdaq-listed names like Amazon (AMZN 1588.89, -10.40), Alphabet (GOOGL 1147.70, -18.22), and Microsoft (MSFT 95.12, -1.66) show losses between 0.7% and 1.7%, while chipmakers are also weak, evidenced by the 0.7% decline in the PHLX Semiconductor Index. Qualcomm (QCOM 60.11, -2.69) is especially weak, losing 4.3%, after President Trump blocked Broadcom's (AVGO 264.86, +2.06) acquisition effort.
Unsurprisingly, the top-weighted technology sector (-0.4%) is trading at the bottom of today's sector standings. The second-most influential sector, financials (-0.3%), also shows relative weakness amid a slight flattening of the yield curve; the 2yr-10yr spread has dropped two basis points to 59 basis points. Treasuries are in demand amid the modest decline in U.S. equities, pushing the yield on the 10-yr note lower by two basis points to 2.85%.
A handful of sectors are trading in the green though, including industrials (+0.2%), materials (+0.2%), health care (+0.5%), telecom services (+0.4%), and real estate (+0.1%). The industrial sector is attempting to bounce back from a 1.2% decline on Monday, but General Electric (GE 14.49, -0.60) didn't get the memo; the industrial giant has dropped 4.0% today after JPMorgan downgraded its target price to $11 per share from $14.
Investors breathed a sigh of relief following this morning's release of the Consumer Price Index for February, which came in as expected. The CPI increased 0.2% last month, in line with the Briefing.com consensus, after rising 0.5% in January. Meanwhile, the core CPI, which excludes food and energy, also met expectations with a 0.2% increase, down from 0.3% in January. With those monthly changes, total CPI was up 2.2% year over year, up from 2.1% for the 12 months ending January, and core CPI was up 1.8%, which was unchanged from the 12 months ending January.
The key takeaway for market participants is that the consumer inflation trend is not accelerating in a worrisome fashion; therefore, they are feeling less worried about the prospect of the Federal Reserve raising the fed funds rate more than three times this year. According to the CME FedWatch Tool, the chances for a fourth rate hike in 2018 are currently sitting at 29.4%, down from 35.1% on Monday. The chances for a hike at next week's meeting remain high--currently at 86.0%.
In Washington, President Trump announced this morning that Mike Pompeo, Director of the Central Intelligence Agency, will replace Rex Tillerson as Secretary of State. The president also said that longtime CNBC personality Larry Kudlow has "a very good chance" to replace Gary Cohn as Director of the National Economic Council.