Stock Market Update

[BRIEFING.COM] Today's trade has a negative skew after the latest inflation reading didn't go the market's way. That is to say that the core-Consumer Price Index was up 3.3% year-over-year in January, versus 3.2% in December.

Inflation moved in the wrong direction as it relates to Fed policy and the market has recalibrated rate cut expectations as a result. The fed funds futures market has pushed back the likelihood of another rate cut to the September FOMC meeting from the July FOMC meeting, according to the CME FedWatch Tool.

Treasury yields moved sharply higher in response to the 8:30 ET release, which put added pressure on stocks. The 10-yr note yield, which is most sensitive to changes in inflation, moved from 4.53% ahead the 8:30 ET release to 4.64%. The 2-yr yield moved from 4.29% to 4.36%.

The Nasdaq Composite moved above its prior close despite an otherwise downbeat tape due to gains in the mega caps. Apple (AAPL 235.55, +2.93, +1.3%), which traded down as much as 0.8%, is influential in that respect. 

Discretionary-related stocks are seeing increased selling pressure today in the wake of the CPI data, which stirred concerns about consumers decreasing discretionary spending after inflation moved up.

Homebuilders and retailers are especially weak, dotting the bottom of the standings in the discretionary sector (-0.1%). The SPDR S&P Homebuilder ETF (XHB) trades 2.1% lower and the SPDR S&P Retailer ETF (XRT) trades 0.8% lower.

Lennar (LEN 121.44, -3.47, -2.8%), PulteGroup (PHM 105.47, -1.86, -1.7%), Best Buy (BBY 86.52, -1.49, -1.7%), and Home Depot (HD 408.03, -8.33, -2.0%) are standouts from the spaces.

Reviewing today's economic data:

• Weekly MBA Mortgage Applications Index 2.3%; Prior 2.2%
• January CPI 0.5% (Briefing.com consensus 0.3%); Prior 0.4%
• January Core CPI 0.4% (Briefing.com consensus 0.3%); Prior 0.2%