Wall St steady as gains in growth stocks counter rate jitters

By Johann M Cherian

 and Sruthi Shankar

Feb 14 (Reuters) – Wall Street’s main indexes edged higher on Tuesday, as gains in growth stocks such as Tesla and Nvidia outweighed worries that the Federal Reserve will likely stay on its rate-hike path this year after data pointed to still-elevated inflation.

The tech-heavy Nasdaq (.IXIC) recovered after a weak open, boosted by 4% gains in Tesla Inc (TSLA.O) and Nvidia Corp (NVDA.O). Ten of the 11 major S&P sectors rose, with consumer discretionary (.SPLRCD) and technology (.SPLRCT) leading the gains.

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Stock index futures fell after data showed U.S. consumer prices accelerated in January as Americans continued to be burdened by higher costs for rental housing, suggesting that the Fed was far from pausing its interest rate increase campaign.

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“I don’t think (this report) moves the needle for the Fed, and I suspect they’re taking a hard look at the data. Does it mean we are headed for at least two more rate hikes? Absolutely,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

“My guess is the year-over-year decline in topline and core (CPI) suggests another 25 basis point hike in March and another one in May.”

Markets have had an upbeat start to the year, driven by a renewed interest in growth stocks that were battered in 2022 as the Fed raised rates aggressively to bring steep prices under control.

The rally, however, stalled last week on signs of a tight labor market and hawkish commentary from Fed policymakers.

Money market traders have priced in at least two more 25 basis point rate hikes this year and see interest rates peaking at 5.2% by July.

The yield on the U.S. 10-year Treasury notes steadied near six-week highs after dipping earlier.

At 10:11 a.m. ET, the Dow Jones Industrial Average (.DJI) was up 81.07 points, or 0.24%, at 34,327.00, the S&P 500 (.SPX) was up 21.36 points, or 0.52%, at 4,158.65, and the Nasdaq Composite (.IXIC) was up 104.62 points, or 0.88%, at 11,996.41.

Coca-Cola Co (KO.N) slipped 0.4% despite a strong full-year profit forecast.

Marriott International Inc (MAR.O) edged up 0.8% after the hotel operator forecast first-quarter earnings above Wall Street estimates as it benefited from strong travel demand.

Palantir Technologies (PLTR.N) soared 9.9% after the data analytics firm forecast its first profitable year and said it had slowed hiring, cut stock-based payouts and reduced cloud computing investments in response to lower spending from recession-wary businesses. read more

Nearly 69% of more than half of the S&P 500 firms that have reported results have beaten profit expectations, as per Refinitiv on Friday. However, analysts expect fourth-quarter earnings to fall 2.8% from a year earlier.

Advancing issues outnumbered decliners by a 1.56-to-1 ratio on the NYSE and 1.54-to-1 ratio on the Nasdaq.

The S&P index recorded 6 new 52-week highs and no new low, while the Nasdaq recorded 40 new highs and 39 new lows.

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Reporting by Johann M Cherian and Sruthi Shankar in Bengaluru, additional reporting by Stephen Culp in New York; Editing by Maju Samuel and Sriraj Kalluvila

Our Standards: The Thomson Reuters Trust Principles.