Dow Falls on J&J Vaccine Pause, S&P 500 Sets Record High

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Stocks traded mixed Tuesday as investors looked past an uptick in U.S. consumer inflation and health officials recommended a pause in the use of Johnson & Johnson’s  (JNJ) – Get Report coronavirus vaccine following rare clotting cases.

The Dow Jones Industrial Average fell 167 points, or 0.5%, to 33,578, the S&P 500 rose 0.11% and set an intraday all-time high and the Nasdaq was up 0.61%.

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Both the Food and Drug Administration and the Centers for Disease Control and Prevention will stop using J&J’s COVID-19 drug, developed by the company’s Janssen Pharmaceuticals division, at federal vaccination sites after six people were found to have developed a rare blood clot issue within two weeks of receiving the single-dose shot.

Shares of Johnson & Johnson declined 2.04% on Tuesday.

Consumer price inflation in the U.S. during March increased at the fastest pace in eight-and-half years as the economy began reopening from the pandemic.

The consumer price index rose 0.6% in March, higher than economists’ estimates that called for an increase of 0.5%. On an annual basis, CPI rose 2.6% vs. expectations of 2.5%. 

Core CPI, which excludes volatile food and energy prices, rose 0.3% in March and 1.6% on the year, the Labor Department reported.

The yield on the 10-year U.S. Treasury slipped Tuesday to 1.65% after the inflation data and ahead of an auction of 30-year bonds. Sales of three- and 10-year notes were met earlier this week with slightly lower demand than previous auctions.

“After years of undershooting, the (Federal Reserve) wants inflation above the target for a while. Officials will call the increase in inflation ‘transitory’ and will push back hard against the idea that any sort of policy response is needed,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.

“That idea will hold for a while, but if the increase in inflation persists, and – especially – if it is accompanied by faster wage growth, then the Fed’s line will become untenable. We continue to expect tapering by the end of this year and 50bp in hikes next year,” Shepherdson added.

Earnings season kicks off Wednesday with reports from JPMorgan Chase  (JPM) – Get Report, Wells Fargo  (WFC) – Get Report and Goldman Sachs Group  (GS) – Get Report.

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Bitcoin jumped to an all-time high Tuesday of more than $63,200 as the cryptocurrency sector prepares for this week’s market debut of Coinbase Global  (COIN) – Get Report.

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