DJIA: 34,220.36, down 87.72
S&P 500: 4,397.45, down 15.08
Nasdaq: 13,371.57, down 40.39

Stocks erase gains; Treasury yields decline

U.S. stocks turned lower on Tuesday as investors exhibited caution before the unofficial start to earnings season. JPMorgan Chase & Co fell 1.1% ahead of its first quarter profit tally tomorrow morning. The Dow lost 87 points, erasing a more than 300 point intraday gain, while the S&P 500 and Nasdaq Composite each slipped 0.3% as growth-oriented shares continued to underperform.

Meanwhile, Treasuries stabilized following an in-line inflation reading. The Consumer Price Index (CPI) rose 1.2% in March, matching estimates for its largest monthly gain since 2005. Gasoline costs fueled half of the March increase, while food prices were also a notable contributor. The year-over-year pace accelerated to 8.5% from the prior 7.9% clip, marking the highest annual reading since December 1981. The year-over-year figure is widely anticipated to represent a peak, as it accounted for the surge in food and energy costs following Russia’s invasion of Ukraine. The yield on the benchmark 10-year note shed six basis points (0.06%) to 2.72%, falling for the first time in eight days. The two-year note yield slid 13 basis points (0.13%) to 2.37%, its biggest one-day pull back since late February. In other data, a gauge of small business optimism deteriorated more than projected in March as survey respondents cited inflation as their biggest headwind.

Seven of 11 S&P 500 sectors finished in negative territory with Financials leading laggards. Energy outperformed as oil prices reclaimed $100/barrel. West Texas Intermediate crude jumped 6.6% to $100.55/barrel as China eases COVID-19 restrictions in Shanghai. In earnings, CarMax Inc. slumped 9.5% after missing profit estimates, pressured by rising used car prices.

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