S&P 500 hits document, Nasdaq provides 1% as shares shrug off J&J vaccine cease, larger inflation

US stocks traded higher for the most part on Tuesday after a March inflation report turned out not to be as bad as some traders feared, but the effects of a halt to the Johnson & Johnson vaccine rollout kept optimism at bay.

The S&P 500 gained 0.45% to hit a new intraday record high, while the Nasdaq Composite, the relative outperformer, gained 1.1% while Apple, PayPal and semiconductor maker Nvidia each gained at least 2% gained. Tesla rose 8.3%.

The Dow Jones Industrial Average fell 20 points, less than 0.1%, after falling more than 150 points at the start of the session.

Stores to reopen came under pressure Tuesday morning after the U.S. Food and Drug Administration announced it would recommend a hiatus in the Johnson & Johnson Covid-19 vaccine after reported cases of blood clotting.

According to the FDA, six cases of rare and severe blood clots were reported after receiving the J&J vaccine. The government is calling for the vaccine to be suspended until the Centers for Disease Control and Prevention has completed their investigation into these cases.

“Until this process is complete, we recommend taking this break,” said the FDA. “This is important to ensure that the healthcare provider community is aware of the potential of these adverse events and can plan based on the unique treatment that is required for this type of blood clot.”

Acting FDA Commissioner Janet Woodcock said later Tuesday that she expected the hiatus to be “a matter of days”. More than 6.8 million doses of the single-dose vaccine have been administered in the United States. J&J shares lost 1.3%.

Jeff Zients, the White House’s Covid-19 response coordinator, responded that the FDA’s announcement shouldn’t have a material impact on national vaccination efforts.

“For the past few weeks we’ve provided more than 25 million doses of Pfizer and Moderna each week, and in fact we will be delivering 28 million doses of these vaccines this week,” he added. “This is more than enough offer to continue the current vaccination rate of 3 million shots a day and meet the President’s goal of 200 million shots by his 100th day in office.”

Still, stocks of companies that would be hurt the most if the vaccine rollout slowed fell below expectations on Tuesday.

Alaska Air stock was down 1.7% while American Airlines was down 1.5%. Avis Budget car rental company lost 1%. Stocks of Moderna, another coronavirus vaccine, rose 7.1% after J&J News, first reported by the New York Times.

“I don’t think there will be a big reaction in the market beyond the current reaction,” said Mike Wilson, chief US equity strategist at Morgan Stanley, in CNBC’s “Squawk Box.” “We are optimistic, very optimistic that we will be fully reopened in the second half of this year.”

Trader on the New York Stock Exchange.

Source: NYSEa

The consumer price index, one of Wall Street’s most popular inflation indicators, rose 0.6% in March, up 2.6% year over year. Economists surveyed by Dow Jones forecast an increase in the leading index by 0.5% compared to the previous month and by 2.5% compared to the previous year.

The core CPI, which excludes volatile food and energy costs, rose 0.3% monthly and 1.6% year over year.

Government officials, including Federal Reserve chairman Jerome Powell on Sunday, and Biden administration economists on Monday, stressed that while the change can be expected to spike in inflation in the coming months, it is based on comparisons with last year’s pandemic lockdowns Annual and additional consumer spending could prove to be temporary, stimulus checks and pent-up demand.

Private sector strategists and economists also said the reading may not be a true measure of rising prices. Fed officials said they were ready to let inflation run hot for a period of time without changing their accommodative policy stance, including buying assets and a benchmark interest rate close to zero.

“US stocks are trending slightly higher on Tuesday as investors digest higher-than-expected inflation on the CPI report and position themselves ahead of Q1 21 earnings starting Wednesday,” wrote Chris Hussey, managing director of Goldman Sachs, in a note.

“Beneath the surface, the market is now taking a defensive stance led by Mega-Cap Tech and the Bond Proxies – Utilities and Real Estate,” he added.

The market was calm for the past week as Wall Street plunged into doldrums ahead of the first quarter earnings season. The company news is expected to gain momentum as the week progresses. JPMorgan Chase, Goldman Sachs, and Delta Air Lines are among the companies to release quarterly results.

The bond market was also subdued on Tuesday, with the 10-year government bond yield dropping to just over 1.65%. The returns move inversely to the prices.

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