US stocks drop as inflation data shows prices rose more than expected in June

NYSE Trader
A trader works on the floor of the New York Stock Exchange (NYSE) in New York, U.S., March 9, 2020.

US stocks dipped at the open after key inflation data showed prices rose more than expected in June.

The Consumer Price Index increased 0.9% in June, far higher than Bloomberg’s consensus estimate among economists of 0.5%. The reading marked the largest one-month change since June 2008.

On a year-over-year basis, prices increased 5.4%, higher than economists’ expectations for a 4.9% year-over-year increase. However, June 2020 was the lowest point for Core CPI during the pandemic shutdown, so year-over-year increases are expected.

“A white-hot June CPI print has the markets jittery this morning. Stripping away food and energy, it was the highest print for Core CPI since November 1991 on a year-over-year basis, however moving forward we expect these inflation numbers to begin to cool,” said Cliff Hodge, Cornerstone Wealth chief investment officer.

Here’s where US indexes stood at the 9:30 a.m. ET open on Tuesday:

Bank earnings began this morning, with JPMorgan beating expectations as the banking giant benefited from record investment-banking fees and the release of cash set aside to cover loan losses.

Goldman Sachs also handily exceeded analysts’ estimates. Investment banking generated its second highest quarterly net revenues ever, just behind the first quarter of 2021, thanks in large part to a robust IPO market. The strong numbers in that segment offset a slowdown in Goldman’s trading business.

Although CPI came in higher than expected, a June Bank of America survey reveals most fund managers believe the global economy has reached “Peak Boom.” Month on month, 2% fewer respondents to the bank’s monthly global fund manager survey believe economic growth and inflation will rise above current predictions. Overall, 74% of fund managers still expect growth and inflation to be “above trend.”

The yield on the US 10-year Treasury gained 1.5 basis points to 1.378%.

West Texas Intermediate crude rose 0.1%, to $74.18 per barrel. Brent crude, oil’s international benchmark, increased 0.4%, to $75.43 barrel.

Gold was flat at $1,805.70 per ounce.

Read the original article on Business Insider

US stocks rise and bond yields fall to 5-month lows as investors await FOMC minutes for clues on inflation

NYSE Trader

US stocks rallied back Wednesday after the S&P 500’s seven-day record-high winning streak ended the previous day amid services sector data that suggested activity peaked in June.

The Federal Reserve is set to release its minutes from its June FOMC meeting at 2 p.m. ET. Investors will be eagerly searching for clues on the central bank’s approach to inflation and its plan to taper asset purchases.

“Given the recent rate of change in yields, we suspect the market has largely priced in a less hawkish tone buried within the minutes,” Craig Johnson, Piper Sandler chief market technician said.

The yield on the US 10-year Treasury fell six basis points to 1.30%, the lowest point since late February.

Here’s where US indexes stood at the 9:30 a.m. ET open on Wednesday:

US stocks kicked off the second half of 2021 with a record-setting rally, with some strategists anticipating that re-opening momentum and accommodative fiscal and monetary policy will continue to drive the stock market.

“Fear over runaway inflation has receded along with interest rates, setting up a potential passing of the baton from value to growth,” said Piper Sandler’s Johnson. “While we do not expect stocks to continue posting record-highs on a daily basis, we do believe the fundamental and technical backdrop supports a buy the dip strategy for investors.”

Bitcoin traded just under $35,000.

Oil prices recovered after falling on Tuesday, despite rising sharply earlier in the day after a meeting between the OPEC+ group of oil-producing countries was abruptly called off.

West Texas Intermediate crude rose 0.71% to $73.90 per barrel. Brent crude, oil’s international benchmark, gained 0.68%, to $75.04 per barrel.

Gold climbed 0.6% to $1,805 per ounce.

Read the original article on Business Insider