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Major market averages opened Thursday’s trading session higher, riding the wave of the lower CPI and latest wholesale inflation numbers.
Early on, the Nasdaq Composite (COMP.IND) was +0.9%, the S&P 500 (SP500) was +0.5% and the Dow (DJI) was +0.3%.
“Markets have put in a very strong performance over the last 24 hours, thanks to a promising US CPI report that boosted hopes of a soft landing in the markets’ eyes,” Deutsche Bank’s Jim Reid said. “There were several details that investors liked, but a key one was that it marked the first time in 29 months that the monthly core inflation print had been beneath 2% on an annualized basis. So the Fed would be very happy if we got some more reports like yesterday’s, and markets moved to price in more rate cuts for next year as a result.”
Fed funds futures have brought forward chances of a rate cut to January 2024 from March.
Rates are mostly lower. The 10-year Treasury yield (US10Y) fell 5 basis points to 3.80%. The 2-year yield (US2Y) fell 10 basis points to 4.64%.
June PPI edged up less than expected. June PPI was +0.1% versus the anticipated +0.2% figure. Core PPI came in at +0.1% compared to the consensus number of +0.2%.
At the same time, weekly initial jobless fell by 12K to 237K versus the expected 250K level.
“Today’s US producer price inflation data release better represents the pricing power of most listed companies, and will not reflect profit-led inflation,” UBS’ Paul Donovan said.
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