July 24, 2024

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Stocks rose after the CPI, as the Fed approached

Stocks rose after the CPI, as the Fed approached

US stocks 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.

The S&P 500 (^GSPC) built on its 27th record close of the year, rising more than 1.2%. The Nasdaq Composite (^IXIC) rose nearly 1.8%, also adding to a record close from the previous day. The Dow Jones Industrial Average (^DJI) also rose by about 0.5%.

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.

This has changed market expectations for federal 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 up from the 53% probability the day before.

The 10-year Treasury yield (^TNX) fell about 14 basis points to 4.26%, its lowest level since April 1. Subsequently, interest rate sensitive areas of the market rose. The Russell 2000 (^RUT) small-cap index rose more than 3.1%.

Read more: How does the labor market affect inflation?

But all that could change later this afternoon. The Fed’s decision is a certainty – 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.

He lives9 updates

  • Ark says Telsa could reach $2,600 per share by 2029. Elon Musk calls target ‘attainable’

    Tesla (TSLA) stock rose more than 4% on Wednesday, leading to a crucial shareholder vote on CEO Elon Musk’s pay package, which is expected after the bell on Thursday.

    Ark Invest published New Tesla research On Wednesday, heading into the vote. The company, led by Cathie Wood, believes Tesla shares could be worth $2,600 per share by 2029.

    Wood’s team believes the launch of Tesla’s robotaxi “in the next couple of years” will boost most of the stock’s value.

    “ARK estimates that approximately 90% of Tesla’s value and profits will be attributed to its robotics business in 2029,” the report reads. “At the same time, electric vehicles could account for nearly a quarter of total sales and about 10% of Tesla’s potential profits, as we believe the robotaxi business will deliver much higher margins.”

    Arc believes in Tesla's bullish scenario, where robotaxi revenues will amount to nearly 90% of Tesla's total revenues.Arc believes in a bullish scenario for Tesla, where robotaxi revenues will amount to nearly 90% of Tesla's total revenues.

    Arc believes in a bullish scenario for Tesla, where robotaxi revenues will amount to nearly 90% of Tesla’s total revenues.

    Tesla was trading below $180 per share on Wednesday, meaning Ark expects a more than 1,300% increase in shares over the next five years.

    CEO Elon Musk Response to research note on XPointing out that this would be “very difficult, but achievable.”

  • Positive CPI reading for May

    Consumer price increases slowed more than expected during May.

    This data from the Bureau of Labor Statistics made economists feel better about another inflation measure, personal consumption expenditures, which is the Fed’s preferred measure of inflation and is scheduled for release at the end of June.

    Morgan Stanley chief economist Ellen Zentner said Wednesday’s CPI data indicated core personal consumption expenditures, which exclude volatile food and energy categories, rose 0.12% in May.

    Zentner notes that this will be the slowest increase in core personal consumption expenditures for 2024 and “the second straight reading that adds to the compelling evidence that the Fed needs to start lowering soon.”

    “We expect further slowdowns in the future, especially in… [second half of 2024]“We continue to call for a first cut in September of this year, followed by cuts at each meeting until mid-2025,” Zentner said.

  • Apple is regaining its position as the world’s largest stock

    Apple (AAPL) stock rose nearly 4% on Wednesday morning, extending gains from its best single-day move in a year on Tuesday.

    The move pushed iPhone’s market capitalization higher than Microsoft’s (MSFT), making it the world’s largest stock. Apple’s market cap surpassed $3.3 trillion on Wednesday, surpassing Microsoft’s market cap of $3.25 trillion.

    Apple shares rose as investors digested the announcement of its artificial intelligence platform, Apple Intelligence, which some Wall Street analysts welcomed as a potential catalyst to spark the iPhone’s next upgrade cycle.

    Here’s a look at the market capitalization, in trillions, of the largest stocks on US markets.

    Source: Yahoo FinanceSource: Yahoo Finance

    Source: Yahoo Finance

  • Stocks rise at the open as yields fall

    US stocks 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.

    The S&P 500 (^GSPC) built on its 27th record close of the year, rising more than 0.8%. The Nasdaq Composite (^IXIC) rose nearly 0.9%, also adding to a record close from the previous day. The Dow Jones Industrial Average (^DJI) also rose by about 0.9%.

    The 10-year Treasury yield (^TNX) fell by about 10 basis points to 4.3%.

  • 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 up from 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..

    Shout out 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

    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 covers 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.