The stock market remained volatile after the latest inflation report came out, as buyers did their best to hold indexes in the black at midday Wednesday.
The Nasdaq composite led with a 0.8% gain. The index cleared its Feb. 2 peak earlier in the session and is trying to hold above that significant chart level.
Other indexes reflected uncertain trading following the consumer price index report. The S&P 500 added 0.3% after paring earlier gains. The Dow Jones Industrial Average rose 0.2%. The Russell 2000 climbed 0.5%.
Stock Market Volume Rises
Volume rose on the Nasdaq and NYSE compared with the same time on Tuesday. Breadth was positive even while indexes took uncertain steps. Advancers led decliners by 9-to-7 on the Nasdaq and by 3-to-2 on the NYSE. Weak breadth has clouded the stock market’s outlook this year.
The Innovator IBD 50 ETF (FFTY) narrowed its gain to 0.4%.
The fitness beverage company’s first-quarter sales and earnings were above analysts’ estimates. North America sales more than doubled, which lifted total Q1 sales 95% above the year-ago period, to $260 million.
But Axon Enterprise (AXON) cost the IBD 50 some points as the stun-gun maker sold off in heavy trading. Axon slid 17% despite beating sales and profit estimates late Tuesday. It also raised its outlook.
Inflation Data Shows Cooling Prices
Inflation continued to ease in April. The consumer price index climbed 0.4% from the previous month and 4.9% on an annual basis. That’s basically what economists had expected. In March, the CPI rose 0.1% month to month and 5% at an annual rate.
Core prices, which exclude food and energy, rose 0.4% from March and 5.5% on a 12-month basis. That was nearly identical to March readings and also in line with forecasts.
Alexandra Wilson-Elizondo, a portfolio manager at Goldman Sachs Asset Management, said the CPI will be interpreted as “not hot enough to force the Fed’s hand in June” and gives the Fed an excuse to keep rates unchanged.
But this single data point won’t determine the Fed’s decision at its next policy meeting, she added. That’s because multiple economic data points remain between now and then. “The details of the print suggest that we are still a meaningful distance from the Fed’s 2% target, giving little reason for the Fed to cut (rates) this year.”
David Russell, vice president of Market Intelligence at TradeStation, noted the latest CPI was the first to drop under 5% and he sees a chance of a rate cut.
“It’s a nice psychological number and less than expected by economists,” he said. “It was also the first time inflation dropped under the current Fed rate, which makes the idea of a cut much more realistic this year.”
The 10-year Treasury yield fell 6 basis points to 3.46%. That kept the benchmark yield in a two-month range between 3.25% and 3.64%.
Odds the Federal Reserve will keep interest rates unchanged at its June meeting rose to 87% from nearly 79% on Tuesday, according to CME FedWatch.
Stock Market Movers: Airbnb, EV Makers
Airbnb (ABNB) reported solid first-quarter earnings after the close of Tuesday’s stock market as it continued to benefit from a travel rebound. But Airbnb slid 11% after a disappointing forecast for the second quarter.
In a busy day for EV stocks, Li Auto (LI) reported strong first-quarter earnings and offered upbeat guidance Wednesday. The China-based startup also posted a strong sales streak. The stock jumped nearly 13% to the highest level since September.
Rivian Automotive (RIVN) reduced its stock gain to 4% at midday. The maker of electric pickup trucks reported a smaller-than-expected loss for the first quarter late Tuesday and maintained its production guidance.
Industry leader Tesla (TSLA) trimmed gains and was nearly flat.
Philadelphia-based Livent (LTHM) and Argentina’s Allkem announced a merger of equals, creating a $10.6-billion lithium powerhouse. Livent rose nearly 6% at midday, boosting other lithium stocks. Albemarle (ALB) rose 1.3%, Sigma Lithium (SGML) added 2.9% and SQM (SQM) was up 0.9%.
Icahn Posts Loss, Wendy’s Rallies
Icahn Enterprises (IEP) plummeted 19% in heavy trading. The flagship company of billionaire investor Carl Icahn posted a larger-than-expected loss for Q1, according to FactSet. Revenue fell 7% but beat views.
The firm also disclosed that federal prosecutors have launched an inquiry into the company. The probe followed a report from short seller Hindenburg Research that levied criticisms against Icahn Enterprises.
In the restaurant industry, the stock market cheered results from Wendy’s (WEN). The fast-food chain topped Q1 sales and profit expectations, as comparable sales jumped 7.2% in the U.S. and 13.9% internationally. The stock rose above the 23.88 buy point of a cup base but eased below it.
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