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Stock ETFs Remain Mixed on Tuesday

Stocks and index ETFs were a mixed bag on Tuesday following a better-than-expected March CPI report and a pause on the rollout of the Johnson & Johnson vaccine.

The Dow Jones Industrial Average dropped 0.5%, while the S&P 500 inched up 0.15% to score a fresh intra-day record high. The Nasdaq Composite advanced 0.76% thanks to moves from key tech companies.

Major stock ETFs are also mixed on Tuesday, with the SPDR Dow Jones Industrial Average ETF (DIA) showing losses while the SPDR S&P 500 ETF Trust (SPY), and Invesco QQQ Trust (QQQ) are both gaining just before 2 PM EST.

The consumer price index, a key measure of inflation, climbed 0.6% in March and gained 2.6% from the same period a year ago. Economists polled by Dow Jones predicted an increase of 0.5% month over month and 2.5% year over year.

Meanwhile, core CPI, which measures volatile food and energy costs, gained 0.3% monthly and 1.6% year over year.

Private sector strategists and economists also said that the reading may not be a true gauge of rising prices.

“We will soon see impact from the 2020 Covid-19 pandemic on the economic data. A particular focus area will be inflation. Our message is simple: Don’t fall prey to this head fake,” Putnam Investments said in a note on Monday.

Fed officials said they will allow inflation to increase for a period of time without altering their accommodative policy stance, including asset purchases and a benchmark interest near zero.

FDA Pauses the J&J Vaccine

The FDA said it’s recommending a halt and reevaluation of the Johnson & Johnson coronavirus vaccine after six reported cases of a rare and dangerous type of blood clotting. The administration is asking for a break in the dissemination of the vaccine until the Centers for Disease Control and Prevention completes its investigation into these cases.

The news saw JNJ stock dive 2.6% Tuesday, while the iShares U.S. Pharmaceuticals ETF(IHE), which holds the stock, fell 0.9%.

“Until that process is complete, we are recommending this pause,” the FDA said. “This is important to ensure that the health care provider community is aware of the potential for these adverse events and can plan due to the unique treatment required with this type of blood clot.”

Acting FDA Commissioner Janet Woodcock said later Tuesday that she sees the pause as a short-term situation, lasting “a matter of days.” Over 6.8 million doses of the single-dose vaccine have been administered in the U.S.

Jeff Zients, the White House coronavirus response coordinator, explained that the FDA’s announcement should not have a significant effect on the national effort to vaccinate.

“Over the last few weeks, we have made available more than 25 million doses of Pfizer and Moderna each week, and in fact this week we will make available 28 million doses of these vaccines,” he added. “This is more than enough supply to continue the current pace of vaccinations of 3 million shots per day, and meet the President’s goal of 200 million shots by his 100th day in office—and continue on to reach every adult who wants to be vaccinated.”

The news also hurt reopening stocks and ETFs, which are counting on the vaccine to ensure a strong economic rebound. Among those stocks were airlines like United Airlines, whose stock dropped 1.3% and American Airlines, which lost 2.8%. The U.S. Global Jets ETF (JETS) lost 0.82% amid the news.

Meanwhile, rival vaccine maker Moderna saw its shares jump 7.7%.

“I don’t think there’s going to be a huge reaction in the market beyond the knee-jerk reaction we’re getting here right now,” said Mike Wilson, chief U.S. equity strategist for Morgan Stanley, on CNBC’s “Squawk Box.” “We’re optimistic, very optimistic that we’re going to be reopened fully in the second half of this year.”

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