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Market Snapshot
Last Updated: Aug. 10, 2023 at 12:28 p.m. ET First Published: Aug. 10, 2023 at 5:14 a.m. ET
U.S. stocks pare early gains, but remain higher on the day
U.S. stocks are higher Thursday after July inflation data.
Scott Olson/Getty Images
[]U.S. stocks climbed, but were off session highs, on Thursday after a July report on consumer prices showed inflationary pressures remained relatively subdued last month, helping to cement expectations that the Federal Reserve may be finished raising interest rates.
What’s happening
- The Dow Jones Industrial Average DJIA was up 119 points, or 0.3%, to 35,241.
- The S&P 500 SPX gained 13 points, or 0.3%, to 4,480.
- The Nasdaq Composite COMP rose by 50 points, or 0.4%, to 13,771.
[]The S&P 500 has declined six of the last seven sessions as stocks have seen a rocky start to August, but both the S&P 500 and Dow managed to shake off losses from earlier in the week as they fought to avoid a second straight weekly decline.
What’s driving markets
[]U.S. consumer prices rose by 0.2% in July on both a headline and core basis, with the latter excluding food and energy prices. Both measures were in line with economists’ expectations.
[]See: U.S. inflation rate creeps back up, CPI shows, but probably not enough to worry the Fed
[]On a year-over-year basis, headline prices rose by 3.2%, less than the 3.3% forecast by economists polled by The Wall Street Journal, but higher than the 3% reading from the prior month, and it was the first reacceleration in 13 months. Meanwhile, the increase in core inflation, excluding food and energy prices, over the past year slowed to 4.7% from 4.8%, the lowest rate in almost two years.
[]The report may boost the Fed’s case for leaving interest rates on hold in September, analysts said.
[]Economists noted declines in both used and new car prices in July, while dismissing a 7.7% year-over-year increase in shelter prices, reasoning that slower growth in rents in July would help ameliorate price pressures in a sector that is being closely watched by the Fed. Based on how individual categories are weighted in the overall CPI data, the cost of rent and housing accounted for more than 90% of the increase in consumer prices last month.
[]“Overall, the underlying details of the July CPI inflation data are consistent with ongoing progress on disinflation,” said Gurpreet Gill, global fixed income macro strategist at Goldman Sachs Asset Management, in emailed commentary.
[]“Although core services inflation trended higher on the month, other component-level trend are evolving in line with our expectations. In particular, rents and used car prices softened, alongside clothing and airfares.”
[]Traders now see less than 14% chance of a September rate rise by the Fed after the CPI data but down from more than 20% a week ago, according to the CME’s FedWatch tool.
[]One analyst said the data could help to reverse some of stocks’ August slump.
[]“Today’s inflation report is good news for a market that’s seen profit-taking and worries about summer volatility,” said David Russell, vice president of market intelligence at TradeStation.
[]Still, some analysts, including a team at Citigroup Inc., worry rising energy prices could potentially cause inflation to reaccelerate later this year. West Texas Intermediate crude for September delivery CLU23, -1.43% settled at $84.40 a barrel on the New York Mercantile Exchange on Wednesday, its highest level of 2023.
[]Read: Why ‘stunning’ jump in jet fuel, diesel prices may complicate Fed’s inflation fight in months ahead
[]Also see: 3 reasons why investors should be cautious about July’s ‘very encouraging’ CPI reading
[]In other economic news, the latest reading on unemployment claims showed the number of Americans applying for unemployment benefits increased last week by 21,000 to 248,000.
[]Treasury yields, which have been in focus for stocks lately, were little-changed on the day in recent trade as an initial knee-jerk decline after the release of the CPI data faded.
[]The yield on the 10-year Treasury note BX:TMUBMUSD10Y was marginally lower at 4.002% after falling as low as 3.95% shortly after the inflation data were released at 8:30 a.m. Eastern Time.
[]The U.S. dollar also weakened, with the ICE U.S. Dollar Index DXY off 0.2% at 102.30.
Companies in focus
- Walt Disney Co. shares DIS, +4.64% rose after the media giant reported a mixed third-quarter and said it would raise prices on almost all of its streaming packages in an aggressive push to boost profit.
- Capri Holdings shares CPRI, +56.05% jumped after Tapestry TPR, -15.07%, the owner of Coach, announced a deal to buy the company, the parent company of Michael Kors, Jimmy Choo and Versace.
- Plug Power Inc. stock PLUG, -14.15% dropped after the alternative-energy company saw losses for the second quarter increase more than Wall Street expected.
- Alibaba Group Holding Ltd. BABA, +5.66% shares rose after the Chinese e-commerce giant topped expectations with its latest revenue and earnings.
- Roblox Corp. RBLX, +3.25% shares rose modestly, paring some of a post-earnings decline.
[]––Steven Goldstein contributed reporting to this article.
July CPI to come in close to expectations as U.S. settles into final mile along the road to lower inflation, traders say
[]The financial market’s savviest inflation traders are bracing for Thursday’s release of the consumer price index for July to reaffirm that U.S. inflation remains on a rocky road toward 2% in the months to come.
[]Joy Wiltermuth is a news editor and senior markets reporter based in San Francisco.
[]Joseph Adinolfi is a markets reporter at MarketWatch.
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