US stocks turn-around in fickle post CPI data market place

  • Stocks turn around in fickle market space.
  • Benchmark 200-hr SMA's under pressure. 

There has been a complete turnaround in the markets as the NY session keeps going after investor's appetites flipped. The S&P is now back to levels preceding the CPI data and is through the 200-hr SMA at 2669.86. The DJIA is also making advances above its own hourly SMA at 24670.70 at the time of writing, although struggling to find traction above there. 

The main equity benchmarks opened firmly lower on the back of higher-than-expected consumer inflation. The DJIA is shaking off the losses that followed the CPI beat with shares in Boeing Co. and Goldman Sachs led gains in the turnaround, contributing more than 40 points to the price-weighted blue-chip average. (A $1 move in the Dow's 30 components equates to a 6.83-point swing in the benchmark). 

CPI data highlights:

US data response

The majority of the components to the CPI measure all rose, with the cost of rent, clothes, gasoline, health care and auto insurance up that contributed to the 0.5% jump in the consumer-price index in January.  However, the core inflation reading, less volatile food and energy prices, rose by 0.3%.

What are driving prices?

The concerns here are that the Fed will need to tighten at a faster pace to battle the perceived negative impacts of rising inflation and that is not going to be welcomed by stocks that have been relying on uber low borrowing costs, although could be positive to the financial stocks in the near term offering loans. (The 10-year yields,  2.31% touched a four-year high at around 2.8985% with a range of between 2.8059 - 2.8985%).

DJIA levels

The 10 DMA, 24727.21 is offering resistance on the correction Daily RSI is turning more positive and is well out of oversold territory here. On a break of the low at 24297, 23114 is a key target to the downside as the monthly low with 24929 as the upside target as the recent double top on the daily sticks.

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