Dow Jones edges lower as markets consolidate after run to records

What’s driving markets

After the rally late last week off Nvidia earnings and their market implications, the action has been sideways for a couple of days, according to Art Hogan, chief market strategist at B. Riley Wealth Management.

“I think it’s more a wait-and-see environment than a risk-on or risk-off environment,” Hogan said in a phone interview.

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

“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,” said Stephen Innes, managing partner at SPI Asset Management.

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.

“Nvidia was your must-see-TV last week,” Hogan said. This week, it’s the PCE numbers. But after January’s hotter than expected print for the consumer-price index, Hogan said markets priced in the chance of fewer interest rate cuts. “It would take a significant upside surprise to adversely affect markets,” Hogan said.

See: Should stock-market investors care more about Nvidia or the Fed? Inflation data will provide a test.

The Fed-preferred inflation gauge may be the big numbers of the week, but there’s other data before then.

That starts with a new look at consumer confidence. It fell to 106.7 from January’s revised read of 110.9, a six-month high. The stumble comes after a brightening mood and better numbers in recent looks at sentiment.

The pullback is “probably just a slight bump in the recent upward trend that began in October, and perhaps some pickup in interest rates in January (which curbs housing demand),” said Sonu Varghese, global macro strategist at Carson Group. Looking deep into the numbers, Varghese said the data “suggests the labor market remains in a healthy place.”

The housing market may not be helping consumer’s moods. 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.

Meanwhile, 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.

Companies in focus

• Viking Therapeutics Inc.
  VKTX,
  +98.87%
  shares soared almost 82% 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,
  +3.42%
  shares were up 4.5% 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,
  +2.89%
  shares were 3% 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.