FX.co ★ Quiet Economic Day May Lead To Choppy Trading On Wall Street

The major American stock indices look set to make a steady start on Wednesday, as the market's direction remains uncertain following significant gains seen in the previous session. The absence of significant American economic data points may cause some investors to wait on the sidelines, anticipating the release of several key reports in the forthcoming days.

A report from the Labor Department, due to be released on Thursday, will detail producer price inflation statistics for February. Insights into the potential shifts in interest rate perspectives could be gleaned from these figures. Forecasted figures suggest an increase of 0.3 percent, sustaining the same growth rate witnessed in January. Meanwhile, the year-on-year growth rate in producer prices is expected to reach 1.1 percent, up from 0.9 percent.

Thursday will also see the release of reports on weekly jobless claims and retail sales data. It is anticipated that February retail sales will see a rebound after exhibiting a downturn in January.

On Friday, market activity may be influenced by reports indicating import and export prices, industrial production, and consumer sentiment. The preliminary University of Michigan report on March consumer sentiment is likely to draw significant attention, given it will provide an indicator of inflation expectations.

Following the downward trend witnessed on Friday and Monday, the market observed a robust uptrend on Tuesday. The leading indices varied somewhat throughout the day but eventually closed on a high note.

The Nasdaq registered notable gains on the day, surging by 246.36 points or 1.5 percent to reach 16,265.63. Concurrently, the S&P 500 experienced a jump of 57.33 points or 1.1 percent, resulting in a new record closing high of 5,175.27. The narrower Dow Jones also experienced growth, increasing 235.83 points or 0.6 percent to conclude at 39,005.49.

The Wall Street success partially derives from positive responses towards the highly awaited consumer price inflation report for February, released by the Labor Department. The report suggested that the consumer price index increased by 0.4 percent in February, following a 0.3 percent rise in January, a figure that confirmed economist predictions.

Excluding food and energy prices, core consumer prices rose by 0.4 percent in February, mirroring the January growth. This surge exceeded economist forecasts, which had projected a 0.3 percent increase.

According to the report, the annual consumer price growth rate inched up to 3.2 percent in February from 3.1 percent in January, while the expectation was that the year-over-year growth figure would remain stagnant.

However, the core consumer price annual growth rate manifested a slowdown, declining to 3.8 percent in February from 3.9 percent in January. Economists had predicted this growth rate would slow down to 3.7 percent.

Even though the core price growth rate decelerated slightly slower than expected, there is still an overarching sense of optimism about the Federal Reserve possibly lowering interest rates in June.

Software stocks demonstrated substantial growth resulting in a 2.6 percent surge in the Dow Jones U.S. Software Index. Oracle led the sector with an 11.8 percent jump following its better-than-expected third quarter earnings announcement and strong cloud revenue growth. Meanwhile, semiconductor stocks also drove the Philadelphia Semiconductor Index up by 2.1 percent.

Retail stocks also observed considerable gains, with the Dow Jones U.S. Retail Index posting a 1.5 percent upliftment. However, gold stocks plummeted in parallel with the drop in the precious metal's prices, which pulled down the NYSE Arca Gold Bugs Index by 2.0 percent.

Regarding commodities and currency markets, crude oil futures rose to $78.90 a barrel following a drop to $77.56 a barrel on Tuesday. Gold traded at $2,169.60 per ounce, a marginal increase compared to the previous session's close of $2,166.10.

On the currency front, the U.S. dollar is trading at 147.97 yen compared to the 147.68 yen it traded at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.0936 compared to the previous figure of $1.0927.On Wednesday, Asian stocks closed with little movement, triggered by the fading hope of an early rate cut by the U.S. Federal Reserve and with investors keeping an eye on the commencement of Japan's spring wage negotiations for signs of possible policy changes.

The dollar held steady and gold saw marginal growth in Asian trading, while the news of an unexpected drop in U.S. crude inventories helped oil prices rebound.

In mainland China, the Shanghai Composite Index fell 0.4% to 3,043.83, largely due to property developers like Country Garden's slip after it failed to meet a coupon payment. Over in Hong Kong, the Hang Seng Index closed fairly flat at 17,082.11, with shares in Country Garden Holdings dropping 4.9%.

Japanese markets also closed slightly lower. A surge in wages announced by the country's largest employers strengthened the yen, fuelling speculation that the Bank of Japan might terminate its negative interest rate policy in the upcoming meeting. Following these wage increases, BoJ Governor Kazuo Ueda acknowledged the importance of wage outcomes, along with other data and information, in making policy decisions. The Nikkei 225 Index and Topix Index both decreased 0.3% to 38,695.97 and 2,648.51, respectively.

South Korean stocks had modest growth after the unemployment rate dropped to 2.6% in February from 3% in January. The Kospi gained 0.4% to 2,693.57, setting a 23-month record.

Australian stocks ended higher due to gains made by the banking and real estate sectors, counterbalancing losses in the mining sector. Both the S&P ASX 200 Index and the All Ordinaries Index gained 0.2%, closing at 7,729.40 and 7,989.50, respectively.

On the same day, European stocks remained underwhelming as investors examined mixed earning results and looked forward to the release of more U.S. data for clues on the Federal Reserve's rate-cutting plans. German wholesale prices continued to fall in February, and the U.K. economy experienced a modest growth of 0.2% in January after facing a technical recession in the latter half of last year.

Indicative of mixed markets, the French CAC 40 Index increased by 0.5%, while the U.K.'s FTSE 100 Index and the German DAX Index saw marginal decreases.

In the energy sector, the Energy Information Administration is expected to report a 1.3 million barrels increase in oil inventories for the week ending March 8th.The Treasury Department plans to share the outcomes of its recent auction of thirty-year bonds, valued at $22 billion, at 1 pm ET.

In the stock market focus, Petco Health and Wellness (WOOF), a pet supplies retailer, has witnessed a significant surge in its pre-market trading shares following its better-than-expected revenue report for the fiscal fourth quarter.

Cruise line operators Carnival (CCL) and Royal Caribbean (RCL) are also experiencing upward movements in their stock value after Goldman Sachs started covering both companies' stocks with Buy ratings.

In contrast, Tesla's (TSLA) shares may take a downward turn, following Wells Fargo's decision to lower its rating of the electric vehicle manufacturer's stock from Equal Weight to Underweight.