Tech Stocks Rise After Inflation Data, S&P 500 Holds Steady Awaiting Biden's Debt Ceiling Crisis Remarks

The U.S. stock market is again experiencing a cautious session Wednesday, as investors await more clarity from President Joe Biden on the debt ceiling crisis. Biden is expected to deliver remarks on the debt ceiling at 1:30 p.m. ET. 

The U.S. inflation rate for April was 4.9% year on year versus the 5% expected, supporting pre-market gains in stocks until profit-taking behavior resumed later.

Cues From Wednesday's Trading:

Blue-chip stocks in the Dow Jones Industrial Average fell 0.5%, underperforming all other averages. The S&P was unchanged for the day, after climbing as much as 0.8% at open, while the Nasdaq 100 index rose 0.7% and then held gains. Small caps in the Russell 2000 gained 0.3%. 

U.S. Indices’ Performance Wednesday

Index	Performance (+/-)	Value
Nasdaq 100	+0.7%	13,295.12
S&P 500 Index	+0.01%	4,121.16
Dow Industrials	-0.51%	33,401.17

Analyst Color:

The National Federation of Independent Business' small business optimism index released on Thursday showed confidence dipping to a 10-year low in April. Carson Group's Ryan Detrick sees a silver lining in the cloud.

"The last time the NFIB Small Business Optimism Index was this low was in January 2013," the analyst said.

"That was right at the tail end of the fiscal cliff drama and it also wasn’t the worst time to be bullish [on] stocks," he said, adding that the S&P 500 gained 30% that year.

Commonwealth Financial Network CIO Brad McMillan is hopeful about the near term. "While we do have headwinds, the current economic slowdown and adjustment in interest rates could put the economy and markets in a better place. Over time, we may see economic resilience as those improvements continue," he said.

Wednesday's Trading In Major US Equity ETFs: In midday trading on Wednesday, the SPDR S&P 500 ETF Trust SPY was flat at $411.03, the SPDR Dow Jones Industrial Average ETF DIA fell 0.5% to $334.05 and the Invesco QQQ Trust QQQ rose 0.68% to $323.70, according to Benzinga Pro data.

The Technology Select Sector SPDR Fund XLK and the Real Estate Select Sector SPDR Fund XLRE, were the best performing sectors for the day, up 1% and 0.7%, respectively. 

The Energy Select Sector SPDR Fund XLK was the underperformer, declining 1.3%, followed by the Financial Select Sector SPDR Fund XLF down 0.9%. 

Latest Economic Data:

The Mortgage Bankers Association reported a 6.3% rise in mortgage application in the week ended May 5, up from a negative 1.2% in the previous week. 

The Bureau Of Labor Statistics released its consumer price inflation report for April, with headline CPI coming in at 4.9% annually and core CPI dropping from 5.6% to 5.5%. Both indices advanced at a 0.4% monthly pace, as expected. 

The Energy Information Administration reported an increase in U.S. crude oil inventories by 2.951 million barrels in the week ending May 5, 2023, compared to market estimates of a 917,000-barrel decline. 

The Treasury auctioned 10-year notes at 1 p.m. EDT.

See Also: Best Futures Brokers

Stocks In Focus:

Datadog, Inc. DDOG rose 7.2% on headlines about the company's integration with OpenAI. 

Airbnb, Inc. ABNB plunged close to 9.7% following analysts cutting price targets on earnings results. 

Catalent, Inc. CTLT dropped nearly 5%, hitting lows from March 16,2023, after analysts cutting company's price target. 

• Upstart Holdings, Inc. UPST soared nearly 33% following the release of positive-than-expected quarterly results.
• American Express, Inc.  AXP fell 2.4%, being the worst performer among Dow Jones' components. 
• Rivian Automotive, Inc. RIVN rose over 4% on better-than-expected first-quarter earnings.
• Those reporting after the close include Beyond Meat, Inc. BYND, Nutanix, Inc. NTX, Robinhood Markets, Inc. HOOD and Walt Disney Company DIS.

Commodities, Bonds, Other Global Equity Markets:

Crude oil fell 1.2%, with a barrel of WTI-grade crude dropping to $72.57. The United States Oil Fund ETF USO was 0.9% lower to $64.26 per share.  

Treasury yields fell, with the 10-year yield dropping 7 basis points to 3.45% and the two-year yield down 9 basis points to 3.94%. The iShares 20+ Year Treasury Bond ETF TLT was 0.8% higher for the day. 

The dollar slightly weakened, with the U.S. dollar index, which is tracked by the Invesco DB USD Index Bullish Fund ETF UUP, down 0.1%. The EUR/USD pair, which is tracked by the Invesco CurrecyShares Euro Currency Trust FXE, ticked 0.1% higher to 1.0970.    

European equity indices closed in the red, with the Frech Cac 40 leading losses, down 0.8%. The iShares MSCI Eurozone ETF EZU was 1.3% lower. . 

Gold rose 0.3% to $2,029/oz. The SPDR Gold Trust GLD rose 0.3% $188.49. Silver fell 0.6% to $25.42, with the iShares Silver Trust SLV falling 0.5% to $23.37 per share. Bitcoin BTC/USD rose 2% to $27,883. 

Staff writer Piero Cingari updated this report midday Wednesday. 

Read Next: How To Trade US CPI: The Top 5 Mega-Cap Gainers And Losers Following Last 3 Inflation Reports

Photo via Shutterstock.