S&P 500 set for muted open on strong inflation By Reuters

© Reuters. FILE PHOTO: A U.S flag is seen on the New York Stock Exchange in the Manhattan borough of New York City

By Medha Singh and Shivani Kumaresan

(Reuters) – The was set for a subdued open on Tuesday as data showed consumer prices increased by the most in more than 8-1/2 years in March, while Johnson & Johnson (NYSE:) slipped as federal health agencies recommended pausing the use of its COVID-19 vaccine.

The U.S. consumer price index (CPI) jumped 0.6% last month, the largest gain since August 2012, after rising 0.4% in February, the Labor Department said on Tuesday. Economists polled by Reuters had forecast the overall CPI advancing 0.5%.

“There was some level of fear that the numbers would be enormous,” said Thomas Hayes, chairman at Great Hill Capital Llc in New York.

“Going into it, (Federal Reserve Chair Jerome) Powell saying they are not eager to change rates kind of set the stage that ‘regardless of where the number comes in, we are going to stay accommodative to reach full employment’.”

Growing bets that the spike in inflation this year would be transitory have eased concerns over higher interest rates and revived demand for high-growth technology stocks, while the S&P 500 and the Dow have scaled record highs on hopes that speedy vaccinations would lead to a swift economic recovery.

Those hopes were dampened somewhat on Tuesday as U.S. federal health agencies recommended pausing the use of Johnson & Johnson’s single-shot COVID-19 vaccine after six recipients developed a rare disorder involving blood clots.

White House economic adviser Jared Bernstein said it was too soon to say what impact the pause could have on President Joe Biden’s push to reopen the country.

Johnson & Johnson’s shares were down 3% in premarket trading.

Cruise operators, airlines and hotel chains, which are poised to benefit from an economic reopening driven by vaccine distributions, also edged lower.

“We don’t think (the pause on Johnson & Johnson’s vaccine) is a major hiccup at this time,” said Ryan Detrick, senior market strategist at LPL Financial (NASDAQ:) in Charlotte, North Carolina.

“We need more time to study it. Its impact on reopening is minimal at the point. We still have two other vaccines.”

Shares of rival U.S. vaccine makers Pfizer Inc (NYSE:) and Moderna (NASDAQ:) Inc rose 0.8% and 6.7%.

At 08:41 a.m. ET, Dow E-minis were down 67 points, or 0.21%, S&P 500 E-minis were down 0.75 points, or 0.02%.

E-minis were up 58.25 points, or 0.42% as heavyweight tech-related companies that had flourished during lockdowns gained ground. Apple Inc (NASDAQ:), Microsoft Corp (NASDAQ:) and Amazon.com Inc (NASDAQ:) rose between 0.5% and 0.8%.

Investors are also marking time ahead of the start of the first-quarter earnings season, with results from Goldman Sachs (NYSE:), JPMorgan (NYSE:) and Wells Fargo (NYSE:) on deck on Wednesday.

Analysts expect earnings for S&P 500 firms to jump 25% from a year ago, driven by strength in consumer discretionary and financial companies, according to Refinitiv IBES data.

Cryptocurrency and blockchain-related firms including Riot Blockchain (NASDAQ:) and Marathon Digital Holdings jumped 8.3% and 7.5% as bitcoin prices soared 5%, a day ahead of listing of Coinbase, the largest U.S. cryptocurrency exchange.

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