Stock Market Climbs As Price Pressures Ease; Coupa Software Plummets 19%

The U.S. stock market climbed Tuesday as price pressures eased in the latest inflation report while oil prices continued to fall.

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The Nasdaq composite, which sank to the lowest in more than a year Monday, bounced 0.9%. The S&P 500 regained 0.7%. The Dow Jones Industrial Average rose 0.6%.

The small-cap Russell 2000 climbed 0.4%. Major stocks such as Apple (AAPL), Microsoft (MSFT) and Alphabet (GOOGL) made moderate rebounds. Amazon.com (AMZN) and Nvidia (NVDA) jumped nearly 2.5%.

Volume fell on the NYSE and Nasdaq compared with the same time on Monday.

Inflation Hot, But Slows Down

Wholesale inflation climbed 10% in February from a year ago and 0.8% from the previous month, the Bureau of Labor Statistics reported this morning. February’s producer price index moderated from a revised 1.2% increase for January.

The year-over-year increase matched the consensus Econoday forecast, while the monthly increase from January was a bit less than the 1% economists expected. Excluding food and energy items, wholesale prices rose 8.4% from a year ago and 0.7% from January. Both were slightly above economist forecasts.

Jeffrey Roach, chief economist for LPL Financial, said the impacts of a stronger U.S. dollar eased the pricing impact for producers. “Next month’s report will include the geopolitical shocks from the Russian invasion of the U.S., so we expect volatility in the underlying data, given the spikes in commodity prices.”

In another break for rising costs, the price of U.S. crude oil tumbled 7% to $95.77 a barrel. Oil has plunged 27% from the high above $130 on March 7, even as the U.S. banned imports of Russian oil. Energy Select Sector SPDR (XLE) fell 4.3%, and is off more than 7% for the week.

Among major movers, Coupa Software (COUP) plummeted 19% to the lowest since January 2019 at session lows. The cloud software company’s January-quarter earnings report and management’s guidance for the current fiscal year disappointed investors.

Innovator IBD 50 ETF (FFTY) fell 0.8% as many of the natural resource stocks that had been leading were down broadly.

Steelmaker Cleveland-Cliffs (CLF) fell below its 24.77 buy point from a double bottom. Callon Petroleum (CPE) fell below its 50-day moving average. Mining company Vale (VALE) is now almost 7% below its 18.25 buy point.

Pharmaceuticals led the IBD 50, as Regeneron (REGN), Vertex Pharmaceuticals (VRTX), Corcept Therapeutics (CORT) and Novo Nordisk (NVO) climbed more than 1%. Regeneron is getting closer to the 673.96 buy point of a cup base.

Health Care Leads Stock Market; Chinese Stocks Plunge

Health care was one of the morning’s best performing sectors, with Health Care Select Sector SPDR up nearly 1%.

Chinese stocks plunged overnight, with the Shanghai Composite down 5% in the largest single-day drop and largest two-day decline (7.4%) since February 2020. The Hong Kong Hang Seng Index plunged 5.7% in the biggest decline since July 8, 2015. A three-day rout has cost the Hang Seng nearly 12%, the biggest since October 2008.

China is dealing with a surge in Covid-19 cases, and authorities are imposing travel restrictions and otherwise limiting the movement of millions of Chinese. Other worries hitting Chinese stocks include further regulations on China’s tech sector, possible Chinese military aid to Russia, and continued distress in the property sector.

KraneShares China Internet ETF (KWEB) fell 1.2% as it remains near record lows. IShares China Large-Cap ETF (FXI) lost 2.5%.

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