July 17, 2024

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US futures launch after CPI, with Fed on track

US futures launch after CPI, with Fed on track

US stock futures rose on Wednesday after a new inflation reading showed consumer prices rose less than expected in May. The latest snapshot of inflation comes hours before the Federal Reserve’s upcoming afternoon meeting that will provide the latest signal on the path for interest rates.

S&P 500 futures (ES=F) built on their 27th record close of the year, rising 0.7%. Nasdaq 100 futures (NQ=F) rose nearly 0.9%, also pointing to gains after a record close for the index. Dow Jones Industrial Average futures (YM=F) rose 0.6%.

The Consumer Price Index (CPI) remained flat over the previous month and rose 3.3% year-on-year in May – a deceleration from April’s 0.3% month-on-month increase and 3.4% year-over-year increase in prices. Both measures exceeded economists’ expectations. On a “core” basis, which excludes the more volatile costs of food and gas, prices in May rose 0.2% from the previous month and 3.4% from a year ago – lower than April data. Both measures were also better than economists’ estimates.

Read more: How does the labor market affect inflation?

Meanwhile, the Fed’s decision is all but certain – the central bank is expected to keep interest rates at their current highest levels in 23 years. Investors will be closely watching the release of the Fed’s updated economic outlook in its “dot chart” — specifically, the number of interest rate cuts it expects for the rest of the year.

Last we heard, in March, the number was three. Policymakers will almost certainly reduce this, thanks in part to the aforementioned flatness of inflation at the beginning of this year. These forecasts, along with what Fed Chairman Jerome Powell said in his press conference, may be the latest market-moving events on an unusually busy day.

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In companies, Apple (AAPL) shares calmed after rising to a record high on Tuesday. Shares were down 0.2% premarket.

He lives5 updates

  • It is a risk in the markets after the CPI is printed

    Stock futures rose after a cooler-than-expected reading on consumer prices for May.

    S&P 500 futures (ES=F) built on their 27th record close of the year, rising 0.7%. Nasdaq 100 futures (NQ=F) rose nearly 0.9%, also pointing to gains after a record close for the index. Dow Jones Industrial Average futures (YM=F) rose 0.6%.

    It is worth noting that the interest rate sensitive areas of the market witnessed the largest gains. Russell 2000-related futures (RT=F) rose about 2.3%.

    This came as investors quickly reset their expectations for interest rate cuts this year. After the data was released, markets were pricing in a roughly 69% chance that the Federal Reserve would start cutting interest rates by its September meeting. According to CME FedWatch data. This is higher than the 53% probability the day before.

  • Inflationary pressures fell more than expected

    Consumer price increases in the United States slowed during May, according to a report Latest data Released by the Bureau of Labor Statistics Wednesday morning.

    The Consumer Price Index (CPI) was flat over the previous month and 3.3% year over year in May, a slowdown from 3.4% in April, and below the 3.4% annualized change economists had expected.

    May’s monthly increase fell short of economists’ expectations for a 0.1% rise.

    On a “core” basis, which excludes the more volatile costs of food and gas, prices in May rose 0.2% from the previous month and 3.4% from a year ago – lower than April data. Both measures were below economists’ expectations.

  • Nvidia is like the sun..

    Kudos to Apollo’s chief economist, Torsten Slok, for this vital check on the S&P 500.

    Nvidia (NVDA) is clearly the sun around which 499 other companies revolve.

    Note: Apollo is the parent company of Yahoo Finance.

    It's Nvidia's market.It's Nvidia's market.

    It’s Nvidia’s market. (Apollo)

  • JP Morgan comments on the vote on Musk’s salary package

    Tesla (TSLA) shareholders’ vote on Elon Musk’s $56 billion pay package is now up.

    Before the vote on Thursday, Tesla had just dropped this mail on Musk owned X detailing its CEO’s accomplishments (note that this is a weird thing to see from Company

    A new Yahoo Finance poll now shows that 96% of people who voted believe Musk’s pay package should not be approved.

    Meanwhile, JPMorgan analyst Ryan Brinkman weighs in on this morning’s note:

    “While both ISS and Glass Lewis, as well as several prominent institutional and retail shareholders, have expressed opposition to ratifying Mr. Musk’s 2018 compensation plan for 2024, we suspect it will pass, albeit with a lower approval rate than in 2018 and perhaps By a smaller margin than generally imagined, we base these forecasts on anecdotal evidence of strong support from individual shareholders and on our conversations with institutional investors whose reasons, on the whole, seem similar when asked to vote in favor of the SolarCity acquisition. The investors we spoke to did not support The Solar City acquisition was largely with them at the time, but they were concerned that there might be a more negative reaction to the share price in the event of a vote to reject the deal, given the perception of a vote of no confidence.

    Brinkman reiterated an Underweight (equivalent to Sell) rating on Tesla shares and a $115 price target, which assumes a roughly 32% downside from current price levels.

    Read more here about Musk’s vote and the key CEO pay package votes from Alexis Keenan, chief legal correspondent at Yahoo Finance.

  • Confirmation of continued action after the big Apple deal

    Affirm (AFRM) remains one of the hottest indicators on the Yahoo Finance platform after news broke on Tuesday of an integration with Apple (AAPL) Pay. Shares rose 1.5% before the market open after rising 11% yesterday.

    Last night I sat down with Affirm founder and CEO Max Levchin for a new recording of my podcast called “Unlocking the Show.” The full episode (which addresses Levchin’s views on AI and political sentiment in Silicon Valley) will be released Friday morning on Yahoo Finance and Major podcast platforms.

    But I’m linking below a clip of Levchin’s comments for you to check out.

    Levchin stopped short of sharing how this deal would financially impact Affirm (it could be significant given the 1.4 billion iPhones worldwide), but he hinted that it could be a strong contributor to its P&L over time.

    He acknowledged that the deal “validates” the buy-now-pay-later space — which has been under siege from regulators and other parties almost since its inception.