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Call this a case of selling the good news. Even as this morning’s much-anticipated inflation data came in better than expected, the S&P 500 and the Nasdaq managed to log their worst trading days in more than two months. Of course, this came after numerous all-time closing highs, back-to-back-to-back seemingly for weeks. Understand this as those market participants who bet big on slowing inflation cashed in some chips today.
In addition, the small-cap Russell 2000 performed well. Very well, in fact: nearly +3.6% on the session. This action is based on the same set of data points: lower inflation means lower interest rates. Lower interest rates means less static for smaller companies. This is a group that had been mired at breakeven for the month while the S&P and Nasdaq were posting ever-higher closes. But after one session, the Russell is now second only to the Nasdaq in terms of monthly performance.
The Dow gained a very quiet +32 points today, +0.08%. The S&P was off 49 points, or -0.88%, while the Nasdaq dropped -364 points, -1.95%. The Russell clocked in at +3.57%. Month to date, the Nasdaq leads while the Dow lags: +5.4% versus +2.6%, respectively. Year to date, the Nasdaq has gained +23% and the S&P +17%, with the Dow and Russell both bringing in roughly +5% from the start of the year. Any way you slice it, it’s been a good year for the market just over halfway through.
Tomorrow brings us new inflation data. The Producer Price Index (PPI) is the wholesale peek at inflation last month, as opposed to the Consumer Price Index (CPI) we saw this morning, which is the retail print. The Inflation Rate from CPI came in at a better-than-expected (for a “soft landing,” that is) +3.0%; PPI year over year last time around reached +2.2%. On month-over-month numbers, PPI is expected to bounce back slightly from negative and flat figures a month ago.
The big news tomorrow will come from Q2 earnings. In years past, we used to call the aluminum giant Alcoa’s (AA - Free Report) earnings the official beginning of earnings season, but after its big spin-off (and subsequent drop for the Dow 30 index), we no longer count AA as the start. That honor goes to the big Wall Street banks: JPMorgan Chase (JPM - Free Report) , Citigroup (C - Free Report) and Wells Fargo (WFC - Free Report) , to name a few. But Zacks Director of Research Sheraz Mian would tell you Q2 earnings season already started when FedEx (FDX - Free Report) and NIKE (NKE - Free Report) reported a week ago.
All three big banks bring a Zacks Rank #3 (Hold) to earnings tomorrow. JPMorgan and Citi have Zacks Style Scores of F, while Wells Fargo gets a D. In terms of expectations, JPM is expected to come in -4% on earnings and +10.6% on revenues. Citi looks for +2.2% earnings growth and +3% on revenues. WFC is expected to improve on earnings per share by +1.6% but come up shy of the year-ago revenues by -1.2%. Questions or comments about this article and/or author? Click here>>
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Markets Sell the News After Satisfying CPI
Thursday, July 11th, 2024
Call this a case of selling the good news. Even as this morning’s much-anticipated inflation data came in better than expected, the S&P 500 and the Nasdaq managed to log their worst trading days in more than two months. Of course, this came after numerous all-time closing highs, back-to-back-to-back seemingly for weeks. Understand this as those market participants who bet big on slowing inflation cashed in some chips today.
In addition, the small-cap Russell 2000 performed well. Very well, in fact: nearly +3.6% on the session. This action is based on the same set of data points: lower inflation means lower interest rates. Lower interest rates means less static for smaller companies. This is a group that had been mired at breakeven for the month while the S&P and Nasdaq were posting ever-higher closes. But after one session, the Russell is now second only to the Nasdaq in terms of monthly performance.
The Dow gained a very quiet +32 points today, +0.08%. The S&P was off 49 points, or -0.88%, while the Nasdaq dropped -364 points, -1.95%. The Russell clocked in at +3.57%. Month to date, the Nasdaq leads while the Dow lags: +5.4% versus +2.6%, respectively. Year to date, the Nasdaq has gained +23% and the S&P +17%, with the Dow and Russell both bringing in roughly +5% from the start of the year. Any way you slice it, it’s been a good year for the market just over halfway through.
Tomorrow brings us new inflation data. The Producer Price Index (PPI) is the wholesale peek at inflation last month, as opposed to the Consumer Price Index (CPI) we saw this morning, which is the retail print. The Inflation Rate from CPI came in at a better-than-expected (for a “soft landing,” that is) +3.0%; PPI year over year last time around reached +2.2%. On month-over-month numbers, PPI is expected to bounce back slightly from negative and flat figures a month ago.
The big news tomorrow will come from Q2 earnings. In years past, we used to call the aluminum giant Alcoa’s (AA - Free Report) earnings the official beginning of earnings season, but after its big spin-off (and subsequent drop for the Dow 30 index), we no longer count AA as the start. That honor goes to the big Wall Street banks: JPMorgan Chase (JPM - Free Report) , Citigroup (C - Free Report) and Wells Fargo (WFC - Free Report) , to name a few. But Zacks Director of Research Sheraz Mian would tell you Q2 earnings season already started when FedEx (FDX - Free Report) and NIKE (NKE - Free Report) reported a week ago.
All three big banks bring a Zacks Rank #3 (Hold) to earnings tomorrow. JPMorgan and Citi have Zacks Style Scores of F, while Wells Fargo gets a D. In terms of expectations, JPM is expected to come in -4% on earnings and +10.6% on revenues. Citi looks for +2.2% earnings growth and +3% on revenues. WFC is expected to improve on earnings per share by +1.6% but come up shy of the year-ago revenues by -1.2%.
Questions or comments about this article and/or author? Click here>>