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While you were sleeping: Eyes on US consumer prices, retail sales

Wednesday 14th February 2018

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Wall Street was mixed as investors eyed reports on US consumer prices and retail sales, both due Wednesday, to help assess bets on the pace of Federal Reserve interest rate increases.

In 1.21pm trading in New York, the Dow Jones Industrial Average inched 0.04 percent lower. However, the Nasdaq Composite Index gained 0.2 percent. In 1.06pm trading, the Standard & Poor’s 500 Index fell 0.2 percent.

“Investors are probably positioning with a bit of a risk-off mindset going into those two [reports] tomorrow,” Matt Miskin, market strategist at John Hancock Investments, told Reuters.

“The core CPI estimate is a modest decrease from last month,” Miskin noted. “But in the event that inflation does accelerate, that could lead volatility to continue as the Goldilocks environment may be under further pressure.”

Wall Street’s fear gauge—the CBOE Volatility Index or the VIX—rose 2.5 percent to 26.24 as of 1.09pm in New York.

The Dow moved lower as declines in shares of United Technologies and those of General Electric, recently both down 1.4 percent, offset gains in shares of Caterpillar and those of Walmart, recently up 0.9 percent and 0.6 percent respectively.

Bucking the generally lacklustre trend, shares of Under Armour jumped, up 13.2 percent as of 1.26pm in New York, after the athletic-wear company posted quarterly results that surpassed expectations, bolstered by a jump in overseas sales. 

Some remained cautious about the company's outlook.

“While investors may cheer the modest upside on Under Armour’s top line and 2018 guidance that looks pragmatic, the fourth quarter provides a stark reminder that the company has a long road ahead of it,” William Blair analyst Sharon Zackfia said in a note, Reuters reported.

Shares of PepsiCo seesawed after the beverage and snack company reported quarterly profit and sales that bettered analysts' expectations as increased appetite for its Frito-Lay products outweighed a drop in demand for its drinks. 

PepsiCo will increase its dividend payment by 15 percent, and plans to buy back up to US$15 billion of its shares, it said in a statement. 

"We met or exceeded most of the financial goals we set out at the beginning of the year," CEO Indra Nooyi said in the statement. "We delivered these results in the midst of a dynamic retail environment and rapidly shifting consumer landscape.”

The stock traded 0.1 percent weaker at US$111.81 as of 1.12pm in New York. Earlier in the day it fell as low as US$110.68 and rose as high as US$112.50.

Also dealing with shifting consumer tastes, McDonald’s, aiming to extend a three-year growth run, is aiming to become a "credible chicken player" in the US, according to internal McDonald's documents reviewed by Bloomberg. 

The initiative has been dubbed "Better Chicken," the fast-food giant said in a letter to franchisees, who operate about 90 percent of its US locations, Bloomberg reported. 

"It's definitely a transformational era for McDonald's," Jason Moser, an analyst at Motley Fool, told Bloomberg. "Chicken is part of that."

Shares of McDonald’s traded 0.6 percent weaker as of 1.24pm in New York.

In Europe, the Stoxx 600 Index ended the day with a 0.6 percent drop from the previous close. Germany’s DAX Index shed 0.7 percent, France’s CAC40 Index declined 0.6 percent, while the UK’s FTSE 100 index slipped 0.1 percent.


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