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US close: S&P ends session at fresh record high following CPI data

By Iain Gilbert

Date: Tuesday 13 Apr 2021

US close: S&P ends session at fresh record high following CPI data

(Sharecast News) - Wall Street stocks turned in a mixed performance on Tuesday after the Food and Drug Administration and the Centers for Disease Control recommended the use of Johnson & Johnson's single-dose Covid-19 vaccine be temporarily halted after six people out of the 7.0m who received the jab developed blood clots.
At the close, the Dow Jones Industrial Average was down 0.20% a 33,677.27, while the S&P 500 was 0.33% firmer at 4,141.59 and the Nasdaq Composite saw out the session 1.05% stronger at 13,996.10.

The Dow closed 68.13 points lower on Tuesday, extending losses recorded in the previous session, while the S&P 500 closed at another fresh record high.

America's economic recovery from the Covid-19 pandemic was in throughout the session on Tuesday after the FDA's recommendation that J&J's vaccine be paused in order to observe "an abundance of caution" after six reported cases of a rare and severe type of blood clot following the vaccine's administration.

The FDA said it would investigate the cases and until that process is complete, felt it was important to ensure that the health care provider community was aware of the potential for these adverse events and can plan due to the unique treatment required with the particular type of blood clot.

Acting FDA commissioner Janet Woodcock later said that she expects the pause to last only "a matter of days", while Jeff Zients, the White House's Covid-19 response coordinator, said that the FDA's announcement should not have a material impact on vaccination efforts.

"Over the last few weeks, we have made available more than 25.0m doses of Pfizer and Moderna each week, and in fact this week we will make available 28.0m doses of these vaccines," Zients said. "This is more than enough supply to continue the current pace of vaccinations of 3.0m shots per day, and meet the President's goal of 200.0m shots by his 100th day in office."

On the macro front, the US consumer price index increased 0.6% on a seasonally adjusted basis in March after rising 0.4% in February, according to the Bureau of Labor Statistics, marking the largest rise since a 0.6% jump in August 2012. Over the last 12 months, the all-items index increased 2.6% before seasonal adjustment, a much larger increase than the 1.7% reported for February.

Discussing the reading, Pantheon Macroeconomics' Ian Shepherdson said: "The Fed won't be bothered by a few months of outsized core CPI gains, or the base effects which pushed up year-over-year core CPI inflation in March and will have a much bigger effect in April, driving the rate close to 2.5%. After years of undershooting, the Fed wants inflation above the target for a while.

"Officials will call the increase in inflation 'transitory' and will push back hard against the idea that any sort of policy reponse is needed. That idea will hold for a while, but if the increase in inflation persists, and - especially - if it is accompanied by faster wage growth, then the Fed's line will become untenable. We continue to expect tapering by the end of this year and 50bp in hikes next year."

Elsewhere on the data front, small business optimism hit a four-month high in March, according to the National Federation of Independent Business, coming in at 98.2 for the month, just shy of the 98.5 expected on the Street. The NFIB did also note that the uncertainty index did increase to 81 - a three-month high and up from 75 in February.

The NFIB said: "Main Street is doing better as state and local restrictions are eased, but finding qualified labour is a critical issue for small businesses nationwide. However, owners remain determined to hire workers and grow their business."

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