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Stock Market News for Apr 12, 2023

Wall Street closed on a mixed note on Tuesday, dragged down by tech stocks. Trading reflected caution as investors eagerly await the inflation numbers due later this week. One of the three major indexes ended in the green, one ended in the red, and one remained virtually flat.

How Did the Benchmarks Perform?

The Dow Jones Industrial Average (DJI) rose 0.3% or 98.27 points to close at 33,684.79. Eighteen components of the 30-stock index ended in positive territory, while 12 ended in negative.

The S&P 500 remained virtually flat to close at 4,108.94. Nine of the 11 broad sectors of the benchmark index ended in positive territory. The Energy Select Sector SPDR (XLE), the Financials Select Sector SPDR (XLF) and the Materials Select Sector SPDR (XLB) gained 1%, 0.9% and 0.8%, respectively, while the Technology Select Sector SPDR (XLK) lost 0.9%.

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The tech-heavy Nasdaq lost 52.48 points, or 0.4%, to finish at 12,031.88

The fear-gauge CBOE Volatility Index (VIX) was up 0.7% to 19.10. A total of 9.8 billion shares were traded on Tuesday, lower than the last 20-session average of 12 billion. Advancers outnumbered decliners on the NYSE by a 3.04-to-1 ratio. On Nasdaq, a 1.49-to-1 ratio favored advancing issues.

Investors Eagerly Await CPI and PPI Numbers

In recent sessions, the focus has shifted to the upcoming headline consumer price index and producer price index numbers slated for release on Wednesday and Thursday, respectively, as these are considered the benchmark inflation indicators for the market. Investors are especially keeping a keen watch on the CPI report for any evidence that the long, slow inflation cooldown continues. If inflation is seen to be directionally tending toward the Fed's target rate of 2%, market participants are banking on a likelihood of another 25 bps interest rate hike in May.

Also, the very fact that these inflation numbers will be one of the last sets of data to be informed at the May 3 Fed meeting adds weight to their importance. As the central bank evaluates its battle against inflation and decides on the appropriate pace of rate hikes, investors are already apprehensive that it might turn hawkish.

This, in turn, further stoked recession fears and growth and tech stocks suffered. Investor mood is currently grim about whether the Fed will be able to attain a soft landing of the economy.

Investors Look at Earnings Season for Direction

Investors are also keeping an eye on the first-quarter 2023 earnings season commencing this week, with major banks like JPMorgan Chase & Co. JPM and Citigroup Inc. C reporting on Friday. How the financial bigwigs are interpreting the goings on in trade is going to be a major signal for market participants for their investment decisions. Currently, it is expected that stocks on the S&P 500 will report a loss year over year, in a reversal from the 1.4% annual growth seen at the beginning of the quarter.

Tech Stocks Continue to Struggle on Recession Fear

The tech-heavy Nasdaq closed a second straight losing session because of a tech rout. With a recession or an almost inevitable economic slowdown on the horizon, investors are unsure whether the central bank will be able to attain a soft landing. In such a scenario, high-value growth stocks like tech stocks suffer. The trend continued on Tuesday.

Consequently, shares of Microsoft Corporation MSFT and Amazon.com, Inc. AMZN lost 2.3% and 2.2%, respectively. Both carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Energy Sector Drives Market

Oil prices settled higher on Tuesday, after falling in the previous session, on the hope that the Fed might ease up on its policy tightening. Brent crude settled up $1.43, or 1.7%, at $85.61/barrel, while WTI crude rose $1.79, or 2.2%%, to $81.53/barrel. Based on the same, energy stocks became the biggest gainers of the day.

No economic data was released on Tuesday.

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