Fed's Favorite Inflation Gauge Falls To 2.5%, Lowest Since February 2021, But Core Remains Sticky: 10 ETFs To Monitor Thursday

Author: Piero Cingari | July 26, 2024 09:28am

The latest Fed’s favorite inflation report, unveiled Friday by the Bureau of Economic Analysis, showed mixed results for market participants.

What Happened: The headline Personal Consumption Expenditure (PCE) price index fell to 2.5% year-on-year in June, as expected.

The core component remained steady at 2.6%, countering expectations of a drop to 2.5%.

The headline index’s decline to 2.5% marks the lowest point since February 2021, a level also seen in January and February 2024.

This data kept market-based probabilities for a September rate cut largely unaffected, with fed futures continuing to indicate a 100% chance of rate reductions, according to CME Group’s FedWatch tool.

The Bureau of Economic Analysis also reported lower-than-expected monthly increases in both personal spending and personal income last month.

• Personal income rose 0.2% in June, down from 0.4% in May and below the expected 0.4%.
• Personal spending increased 0.3%, also down from 0.4% in May and missing the forecasted 0.3%.

Market reactions and pre-market ETF performances

U.S. equity futures maintained strong gains during premarket trading, despite a slight dip in large-cap index futures following the PCE report.

The U.S. dollar index remained broadly unchanged, while Treasury yields inched slightly lower, boosting bond-related exchange-traded funds (ETFs) in pre-market trading.

Interest-rate sensitive sectors, such as real estate, miners, and small caps, rose. Technology stocks also sharply rallied following declines in the previous two sessions.

Investors and traders are closely monitoring these exchange-traded funds, which showed notable pre-market gains:

1. iShares Semiconductor ETF (NYSE:SOXX) up 2.3%
2. ARK Innovation ETF (NYSE:ARKK) up 1.8%
3. Technology Select Sector SPDR Fund (NYSE:XLK) up 1.6%
4. Invesco Solar ETF (NYSE:TAN) up 1.5%
5. iShares Russell 2000 ETF (NYSE:IWM) up 1.3%
6. Communication Services Select Sector SPDR Fund (NYSE:XLC) up 1.2%
7. US Global JETS ETF (NYSE:JETS) up 1.2%
8. VanEck Gold Miners ETF (NYSE:GDX) up 1.1%
9. Vanguard Real Estate ETF (NYSE:VNQ) up 0.9%
10. iShares 20+ Year Treasury Bond ETF (NASDAQ:TLT) up 0.5%

Now Read:

• Investors Go All In On Small Caps, Pour Over $6 Billion Into Russell 2000 ETF This Month: They ‘Will Return To Larger-Cap Alternatives,’ Veteran Analyst Says

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Posted In: ARKK GDX GLD IWM JETS SOXX TAN TLT USO VNQ XLC XLK