Stocks are set for a slow start on expiration Friday after the latest inflation numbers came in a bit hotter than expected, but not strong enough to fuel fears of inflation. Thirty minutes before the opening bell on Wall Street, stock index futures indicated that both the Dow Jones Industrial Average ($INDU) and the NASDAQ ($COMPQ) would open the session modestly lower.
Prices on the consumer level rose a bit more than expected last month, according to the latest statistics from the Labor Department. The Consumer Price Index [CPI], which tracks the prices consumers pay for a basket of goods, rose .4% in February. Economists were looking for a .2% gain. However, excluding food and energy, the core CPI rose .2%, which was in-line with economist forecasts.
The strong headline CPI number follows a much higher than expected reading from the Producer Price Index [PPI] on Thursday. Consequently, concerns about inflation make it less likely that the Federal Reserve, which meets next week, will cut rates any time soon. Bonds are taking a hit on the news. The benchmark ten year Treasury note is down 7 ticks. It's yield, which moves opposite to price, sits near 4.56%.
A report on February industrial production is due out at 9:15 a.m. Eastern time. Economists expect the report to show a .3% increase and a capacity utilization rate of 81.3%. Consumer confidence data follows 45 minutes later, with economists expecting the University of Michigan index to fall to 89 in March, from 91.3 the month before.
Not much stock news to report. Newmont Mining (NEM) might see early strength after BusinessWeek said the company might be a takeover play. Carnival Cruise (CCL) is due to report earnings. Ann Taylor (ANN) posted quarterly profits of 31 cents a share, which was in-line with analyst estimates. Hewlett Packard (HPQ) might help the Dow in early trading after Matrix Research upgraded shares to "buy" from "hold".
Elsewhere, trading is relatively uneventful. Crude is up 41 cents to $57.96 a barrel. Gold is higher as well, up more than $6.00 to $653.00 an ounce. Markets in the Asia/Pacific and Europe traded mixed. For the US, the outlook is for cautious trading at the start. However, it is also a quadruple witch expiration: a day when futures, single stock futures, equity options, and index options expire. Consequently, volatility might surface later in the day due to the heavy volume associated with the quarterly expiration.
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