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US futures soar after CPI as Fed looms
US stock futures rose on Wednesday after a new inflation reading showed consumer prices increased less than expected in May. The latest inflation snapshot comes hours before a much-anticipated afternoon Federal Reserve meeting provides the latest signal on the path of interest rates.
S&P 500 Futures (ES=F) built in a record 27th closing of the year, rising 0.7%. Futures on the tech-heavy Nasdaq 100 (QN=F) rose almost 0.9%, also pointing to gains after the index’s record closing. Dow Jones Industrial Average Futures (YM=F) gained 0.6%.
The Consumer Price Index (CPI) remained stable month-on-month and rose 3.3% year-on-year in May – a slowdown from April’s 0.3% monthly increase and annual price gain of 3.4%. Both measures exceeded economists’ expectations. On a “baseline” 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 last year – cooler than data from April. Both measures were also better than economists’ estimates.
See more information: How does the job market affect inflation?
Meanwhile, the Fed’s decision is almost certain – the central bank is expected to keep rates at their current highest levels in 23 years. Investors will be paying closer attention to the Fed’s updated economic projections on its “dot plot” — specifically, how many rate cuts it anticipates for the rest of the year.
The last time we heard this was in March, there were three. Policymakers will almost certainly reduce this, thanks in part to the aforementioned stickiness in inflation earlier this year. These projections, along with what Fed Chairman Jerome Powell said at his press conference, could be the last developments that move the market on an extraordinarily busy day.
In companies, Apple (AAPL) shares cooled after reaching a record on Tuesday. Shares fell 0.2% in premarket trading.
Live updates5
- Wednesday, June 12, 2024 at 2:54 pm GMT+2
It’s a risk in the markets after the CPI print
Stock futures soared following the colder-than-expected consumer price reading for the month of May.
S&P 500 Futures (ES=F) built in a record 27th closing of the year, rising 0.7%. Futures on the tech-heavy Nasdaq 100 (QN=F) rose almost 0.9%, also pointing to gains after the index’s record closing. Dow Jones Industrial Average Futures (YM=F) gained 0.6%.
Notably, interest rate-sensitive areas of the market saw the biggest gains. Futures linked to the Russell 2000 (TR=F) rose around 2.3%.
This comes as investors quickly recalibrate their expectations for rate cuts this year. Following the release of the data, markets were predicting a roughly 69% probability that the Federal Reserve would begin cutting rates by its September meeting, according to data from the CME FedWatch tool. This represents about a 53% chance on the previous day.
Inflationary pressures decline more than expected
U.S. consumer price increases cooled during the month of May, according to the latest data from the Bureau of Labor Statistics released Wednesday morning.
The Consumer Price Index (CPI) was flat month-on-month and up 3.3% year-on-year in May, a slowdown from April’s 3.4% and lower than the 3.4% annual change what economists expected.
May’s monthly increase was lower than economists’ forecasts of a 0.1% rise.
On a “baseline” 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 last year – cooler than data from April. Both measures were below economists’ expectations.
Nvidia like the sun…
Hat tip to Apollo Chief Economist Torsten Slok for this vibe check on the S&P 500.
Clearly, Nvidia (NVDA) is the sun around which 499 other companies revolve.
Note: Apollo is the parent company of Yahoo Finance.
It’s an Nvidia market. (Apollo)
JP Morgan weighs vote on Musk’s salary package
The Tesla (TSLA) the shareholder vote on Elon Musk’s $56 billion pay package is coming to an end.
Before the vote on Thursday, Tesla just abandoned this publish on the Musk-owned X detailing its CEO’s accomplishments (note that this is strange to see on a corporate X account, but hey, this is Musk we’re talking about here).
A new Yahoo Finance search is currently showing that 96% of people who voted think Musk’s salary package should not be approved.
Meanwhile, JP Morgan analyst Ryan Brinkman is commenting this morning:
“Although ISS and Glass Lewis, as well as several prominent institutional and retail shareholders, have expressed opposition to the 2024 ratification of Mr. Musk’s 2018 compensation plan, we suspect it will be approved, albeit with a lower approval rate than in 2018 and perhaps by a smaller margin than popularly imagined. We base this expectation on anecdotal evidence of strong support from retail shareholders and our conversations with institutional investors whose reasoning generally appears similar to that when asked to vote. in favor of the Solar City acquisition. Investors we spoke to at the time were largely unsupportive of the Solar City acquisition, but were concerned that there would be a more negative stock price reaction if the transaction was rejected, given the perception of a vote. of distrust.
Brinkman reiterated an underweight (equivalent to sell) rating on Tesla shares and a $115 price target, which assumes a downside of about 32% from current price levels.
Read more here on Musk’s vote and key CEO compensation package votes from Yahoo Finance senior legal reporter Alexis Keenan.
Affirm still on the move after big Apple deal
Claim (AFRM) is still one of the hottest tickers on the Yahoo Finance platform after news broke Tuesday about an Apple integration (AAPL) Pay. Shares rose 1.5% in premarket trading after rising 11% yesterday.
I met last night with Affirm founder and CEO Max Levchin for a new recording of my ‘Opening bid‘ podcast. The full episode (which covers Levchin’s views on AI and the political vibes in Silicon Valley) will be released Friday morning on Yahoo Finance and top podcast platforms.
But I’ve put a clip of Levchin’s comments on the call below for you to check out.
Levchin stopped short of sharing how this deal will impact Affirm financially (it could be big, given the 1.4 billion iPhones available worldwide), but suggested it could be a strong contributor to the bottom line 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.
