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A muted Tuesday for markets as investors seek shelter from a coming storm.

What you need to know today

• U.S. markets were flat for a second straight day as investors await further inflation data. Asia-Pacific stocks were mostly higher Wednesday. Japan's Nikkei 225 climbed 0.63% as the country's producer price index rose 7.2% last month, cooling down from February's reading of 8.2%.

• The International Monetary Fund expects the global economy to grow around 3% five years from now — its lowest medium-term forecast since 1990. The fund is also pessimistic about inflation, which it believes won't drop to 2% before 2025.

• The IMF's baseline forecast assumes problems in the banking industry have been contained. Yet IMF Chief Economist Pierre-Olivier Gourinchas thinks banks are still "in a more precarious situation." If financial instability continues, it could cause global growth to plummet to 1% this year.

• Pimco Chief Economist Paul McCulley thinks the Federal Reserve will pause interest rate hikes next month and start loosening monetary policy later this year. Wall Street, however, disagrees with McCulley. Analysts mostly expect the Fed to raise rates by 0.25% in May.

• Chinese consumers are starting to spend more on luxury and discretionary goods, said Bank of America's Chief China Equity Strategist. Even China's real estate sector, which slumped in 2022, is seeing signs of recovery, adding to the optimism that China's economy is rebounding.

• PRO Goldman Sachs Chief U.S. Equity Strategist David Kostin told CNBC that companies will continue struggling with low margins because of stubborn inflation. But he said there are some companies that have sustained earnings growth even amid a recession.

The bottom line

It was a muted Tuesday for markets. Yesterday's trading volume was one of the lowest of 2023, according to BTIG's Jonathan Krinsky.

Indeed, the S&P 500, an index of the 500 largest companies listed on U.S. exchanges, was essentially flat. Investors didn't want to make any big moves before the consumer and producer price indexes come out later today and tomorrow, respectively. The Dow Jones Industrial Average added 0.29%, while the Nasdaq Composite lost 0.43%.

That's not to say there weren't notable movements in individual stocks. CarMax, for example, popped 9.64% after the used car seller soundly beat earnings expectations for its fiscal fourth quarter. Airline stocks, too, rose after Boeing reported it delivered 64 planes in March, the most since December.

But those increases were more than counterbalanced by losses in tech, which explains why the broader S&P ended flat while the tech-heavy Nasdaq was in the red. Microsoft fell 2.27%, Amazon slid 2.2% and Nvidia lost 1.49% yesterday — though it's still up 89.79% this year. The Technology Select Sector SPDR Fund slid 0.94%.

"It kind of feels like the calm before the storm," said Ryan Detrick, chief market strategist at the Carson Group.

While it's nice to have a calm day or two, investors shouldn't ignore the warning of an impending storm. If the IMF's predictions are anything to go by, the global economy is more unstable than markets are assuming. But all investors can do now is to wait for inflation data and earnings reports from big banks this week. The lack of activity in markets is motivated more by trepidation than calm.

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