Dow opens little changed as markets consolidate after run to records

What’s driving markets

Tentative trading extended into a second day after a rally that has left the S&P 500 up 11.4% over just the last three months.

“U.S. markets paused for breath after a strong run powered by a largely successful earnings season and renewed excitement over the potential of AI, which has driven the main indices to hover around record highs,” said Richard Hunter, head of markets at Interactive Investor.

The cautious tone also comes as investors eye economic data in coming sessions that may clarify the timing of Federal Reserve interest rate cuts.

“The ongoing rates debate continues into the new week without significant resolution or change,” said Stephen Innes, managing partner at SPI Asset Management.

“Monday brought little color as market participants observed a familiar landscape, with traders and investors bracing for a busy data calendar, and the update on the Fed’s preferred price gauge (PCE) is of keen interest,” Innes added.

The PCE, or personal consumption expenditure price index, will be published before the market opens on Thursday, and any notable uptick in the gauge may finally kill off any lingering hopes of a Fed rate cut in May.

The rest of the week is also chock-full of Fed officials making comments, though on Tuesday there is just Fed Vice Chair for Supervision Michael Barr, who is due to speak at 9:05 a.m. Eastern.

The market in recent weeks has reacted to a concerted effort by Fed officials to challenge the idea that rate cuts might have started next month. Their campaign has helped push the yield on the 10-year Treasury up from about 3.8% to the current 4.26%.

The Fed-preferred inflation gauge may be the big numbers of the week, but there’s other data before then. U.S. orders for durable good dropped by 6.1% in January, a deeper than expected decline. Economists polled by the Wall Street Journal were expecting a 5% drop.

Meanwhile, home prices in the 20 largest metro areas reached record highs in December, according to the S&P Case-Shiller home price index. It’s the 11th straight increase, highlighting the nagging shortage of homes for sale.

Other U.S. economic updates include February consumer confidence at 10 a.m.

Meanwhile, away from monetary policy, investors continue to react to corporate news, with the latest batch of earnings reports proving mixed. Sentiment on Tuesday may be supported by a 10% rise in shares of Zoom Video Communications
ZM,
+5.52%
after the videoconference company late Monday delivered well-received results.

However, shares in Unity Software
U,
-8.84%
tumbled 20% after the app-monetization group’s earnings and forecasts underwhelmed.

Companies in focus

• Viking Therapeutics Inc.
  VKTX,
  +89.25%
  shares soared 76% after the company announced positive results in a Phase 2 trial of a weight-loss drug to treat obesity and diabetes. Nearly nine in ten patients on the treatment achieved at least 10% weight loss versus 4% on the placebo.

• Macy’s Inc.
  M,
  +3.55%
  shares were up 3.5% following an earnings beat and the announcement of a strategy to boost growth that includes closing 150 stores. The new approach “challenges the status quo to create a more modern Macy’s,” Chief Executive Tony Spring said in a statement.

• Lowe’s Cos. Inc.
  LOW,
  +2.82%
  shares were 0.2% higher after a quarterly report from the home improvement retailer. The company beat on profit but saw a drop in sales, due to slowing do-it-yourself demand and bad weather in January. Its full-year outlook also disappointed analysts.