US stocks march higher after CPI surprise

Markets moved higher to kick off the trading day on Tuesday, despite a hotter-than-expected inflation print for the month of February.

The S&P 500 (^GSPC) rose 0.5%, while the tech-heavy Nasdaq Composite (^IXIC) climbed roughly 0.7% after two days of losses. The Dow Jones Industrial Average (^DJI) ticked up about 0.3%.

Inflation pressures remained persistent in February as prices for shelter and gas rose, according to the latest data from the Bureau of Labor Statistics released Tuesday morning.

The Consumer Price Index (CPI) rose 0.4% over the previous monh and 3.2% over the prior year in February, slightly higher than January’s 0.3% month-over-month increase and 3.1% annual gain.

Both measures roughly matched economist forecasts of a 0.4% month-over-month increase and a 3.1% annual increase, according to data from Bloomberg.

On a “core” basis, which strips out the more volatile costs of food and gas, prices in February climbed 0.4% over the prior month and 3.8% over last year. Both measures were higher than economist expectations of a 0.3% monthly increase and 3.7% annual gain.

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Apple’s (AAPL) stock has been looking a little less sweet in the past month.

Shares of the tech beast are off by 8.5%, lagging the S&P 500’s 1.8% advance. The pundits have pointed to disappointment over Apple not yet revealing its AI plans as the main reason for the stock’s weakness. Concern on the pace of China demand hasn’t helped sentiment, either.

But there may be more at play here, points out EvercoreISI tech analyst Amit Daryanani in a new note to clients this morning.

Daryanani shares three reasons behind the Apple sell-off:

“We have fielded a large number of investor questions around what could unlock the upside on the stock and help drive the momentum back up. Overarchingly, we think there are three things that’s driven the “underperformance’ for AAPL over the last few weeks – 1) Risk On + Skew to Nvidia/AI: Heard this a LOT from investors that want to go overweight “AI” names like Nvidia (NVDA) especially on the mega cap side, which makes them more comfortable taking dollars away from AAPL. 2) China Worries – There continues to be data sets that suggests that China demand is broadly soft and within smartphones Apple is perhaps ceding back some of the share and 3) Regulatory worries – That continue to impede comfort around Apple. Notably, we have heard worry around DOJ/Google implications and also EU anti trust issues.”