By Caroline Valetkevitch
NEW YORK (Reuters) -U.S. Treasury yields dipped while the S&P 500 ended slightly higher on Tuesday after data showed U.S. producer prices rose less than expected in December, but investors remained cautious ahead of U.S. consumer price data on Wednesday and the start of quarterly earnings reports.
The U.S. producer price index climbed 0.2% month-on-month in December, below expectations for a 0.3% increase and down from 0.4% in November.
Investors have been worried about persistent U.S. inflation. The PPI report did not change the view that the Federal Reserve would not cut interest rates again before the second half of this year, and investors still await the more closely watched U.S. consumer price index report.
CPI data is expected to show month-on-month inflation held at 0.3% in December while the year-on-year figure climbed to 2.9%, from 2.7% in November.
Investors are also gearing up for U.S. fourth-quarter 2024 earnings, with results from some of the biggest U.S. banks due starting Wednesday. Lenders were expected to report stronger earnings, fueled by robust dealmaking and trading.
The S&P 500 shifted between gains and losses throughout the session before ending 0.1% higher. The Dow also ended the day higher, while the Nasdaq finished lower.
“Tomorrow really marks the start of earnings season. With everything going on market wise, economy wise, and politically, it’s going to be a cautious period for a while. I’m not expecting much out of the markets until we get well into earnings season and see what companies report and what they say about how things are,” said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia.
The Dow Jones Industrial Average rose 221.16 points, or 0.52%, to 42,518.28, the S&P 500 rose 6.69 points, or 0.11%, to 5,842.91 and the Nasdaq Composite fell 43.71 points, or 0.23%, to 19,044.39.
MSCI’s gauge of stocks across the globe rose 2.62 points, or 0.31%, to 834.41. The STOXX 600 index fell 0.08%.
The potential for tariffs that could boost inflation once President-elect Donald Trump is in office also hangs over the market.
Bloomberg reported that Trump’s aides were weighing ideas including increasing tariffs by 2% to 5% a month to increase U.S. leverage and to try to avoid an inflationary spike.
“There’s a lot of concern over the Trump platform and whether it will be inflationary, both from a tariff perspective as well as from a tax reduction perspective,” said Rick Meckler, partner at Cherry Lane Investments, a family investment office in New Vernon, New Jersey.
The yield on the benchmark 10-year Treasury note eased, but it remained close to its 14-month high.
It was last down slightly at 4.788% after hitting 4.805% overnight, the highest since November 2023.
Higher yields have weighed on equities by making bonds relatively more attractive and increasing the cost of borrowing for companies.
The dollar weakened against the euro but stayed near its highest level in more than two years.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro,
fell 0.21% to 109.19, with the euro down 0.03% at $1.0304.
Oil prices fell after a U.S. government agency forecast steady U.S. oil demand in 2025 while it raised its forecast for supply.
U.S. crude fell $1.32 to settle at $77.50 a barrel and Brent dropped $1.09 to settle at $79.92.
(Reporting by Caroline Valetkevitch in New York; additional reporting by Harry Robertson in London; Editing by Christina Fincher, Angus MacSwan, Cynthia Osterman and Daniel Wallis)
