The stock market lost steam near record highs as traders braced for a barrage of economic data and remarks from Federal Reserve speakers that will help shape the outlook for interest rates.
Wall Street is also keeping a close eye on how the market will manage to absorb heavy Treasury and corporate sales amid month-end positioning. U.S. yields rose after Monday’s auctions of two-year and five-year government notes. Meantime, blue-chip companies are expected to sell about US$35 billion in bonds this week. Those firms sold at least $153 billion of debt in the U.S. in February — a record for the month — as they race to seize on investor demand amid a drop in borrowing costs.
As the economy comes back to the forefront, the Fed’s favored inflation gauge is projected to show the biggest increase in a year. Thursday’s core personal consumption expenditures price index will likely highlight the bumpy path the central bank faces in achieving its 2 per cent target. Following a jump in both the consumer and the producer price indexes, the PCE would also validate recent Fedspeak underscoring officials are in no rush to cut rates.
“Economic data will return to center stage,” said Chris Larkin at E*Trade from Morgan Stanley. “After hotter-than-expected CPI and PPI readings earlier this month, more people may be looking to the PCE to for insight into the reinflation threat — and how it may influence the Fed’s timing of rate cuts.”
The S&P 500 remained below…
