July CPI meets expectations, inflation eases: Will the expected cuts be significant?

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S&P 500, Nasdaq Composite and Dow Jones Industrial Average All Rise Slightly on Tame CPI Data

Jerry Kronenberg joined discussion · Aug 15 04:34

Stocks ended higher Wednesday after July's Consumer Price Index showed falling U.S. inflation, keeping market hopes alive for Federal Reserve interest-rate cuts. The gains allowed the S&P 500 to recoup all losses from its Aug. 2-5 meltdown.

The $S&P 500 Index (.SPX.US)$ gained 20.78 points (0.4%) to end at 5,455.21 – higher than the 5,446.68 that it closed at on Aug. 1 just prior to a two-session sell-off earlier this month that followed a weaker-than-expected July U.S. jobs report.

The $Dow Jones Industrial Average (.DJI.US)$ likewise added 2242.75 ticks (0.6%) to a 40,008.39 finish – the index's first close about 40,000 since before the Aug. 2-5 sell-off. However, the Dow industrials remain some 300 points below the 40,347.97 they closed at on Aug. 1

Meanwhile, the $Nasdaq Composite Index (.IXIC.US)$ inched up 4.99 points (0.03%) to a 17,192.6 close.

The three indexes rose after the U.S. Bureau of Labor Statistics reported before the bell that the Consumer Price Index – which measures retail inflation – grew 0.2% in July, matching economists' forecasts.

However, annual inflation eased to 2.9% -- below the 3% analysts had forecast, as well as the lowest level seen since 2021.

Markets hope that lower inflation will allow the Fed to cut its benchmark Federal Funds Rate when the central bank meets on Sept. 17-18. Lower rates traditionally help stocks by making bond and money-market yields less attractive to investors.

Meanwhile, individual stocks that saw significant gains Wednesday included:

-- $Mercury Systems (MRCY.US)$, better by 17.7% after releasing well-received earnings Tuesday evening.

-- $Victoria's Secret (VSCO.US)$, up 16.4% on word of Hillary Super’s appointment as its new CEO.

-- $Qifu Technology (QFIN.US)$, which added 12.3% following its earnings release Tuesday night. QFIN hit an 18-month intraday high earlier in the session.

-- FanDuel parent $Flutter Entertainment (FLUT.US)$, which finished 8.1% higher following its earnings report Tuesday night.

And stocks that rang up significant losses included:

-- $Ibotta (IBTA.US)$, down 26.7% following the release after the bell Tuesday of disappointing quarterly earnings.

-- Chili's parent $Brinker International (EAT.US)$, which fell 10.7% on poorly received fiscal Q4 results and forward guidance.

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Jerry Kronenberg

Director of Financial Content

Former top editor at Seeking Alpha, Fidelity.com, TheStreet.com and UPI.

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