Wall Street Battles For Fifth Day Of Gains As Inflation Cools, Gives Green Light To Rate Cuts; Financials Outperform: What's Driving Markets Wednesday?

Author: Piero Cingari | August 14, 2024 01:28pm

The July consumer inflation report released Wednesday confirmed a continued cooling trend in price increases across the economy, with the headline Consumer Price Index (CPI) coming in at 2.9% year-over-year, slightly below both the previous and expected 3%.

Core inflation, which excludes food and energy, also saw a modest decline from 3.3% to 3.2% year-over-year, aligning with economists’ forecasts.

For investors, this signals that the Federal Reserve may have the green light to cut interest rates in September. However, the odds of a 25 basis point hike are slightly higher than those of a 50 basis point cut.

Wall Street had a mixed response to the data. Major indices initially rose around 10 a.m. E.T. before flattening out by midday trading in New York.

Both S&P 500 and Nasdaq 100 are striving to secure their fifth consecutive sessions in the green.

Financial stocks outperformed among the 11 sectors of the S&P 500. The biggest laggards were communication services, weighed down by a decline in Alphabet Inc. (NASDAQ:GOOGL)(NASDAQ:GOOG), and consumer discretionary, dragged by Tesla Inc. (NASDAQ:TSLA) and Starbucks Inc. (NYSE:SBUX).

Long-dated Treasury yields fell by 4 basis points, boosting the iShares 20+ Year Treasury Bond ETF (NASDAQ:TLT) by 0.6%.

The U.S. dollar index, as tracked by the Invesco DB USD Index Bullish Fund ETF (NYSE:UUP), remained steady, while gold eased by 1%.

Oil prices, tracked by the United States Oil Fund (NYSE:USO), declined by 1.1%, marking the second consecutive session of losses.

Bitcoin (CRYPTO: BTC) dropped 2.4% to $59,100.

Wednesday’s Performance In Major US Indices, ETFs

Major Indices	Price	1-day %chg
Dow Jones	39,894.49	0.3%
S&P 500	5,442.32	0.1%
Nasdaq 100	18,967.78	-0.2%
Russell 2000	2,081.22	-0.8%

According to Benzinga Pro data:

• The SPDR S&P 500 ETF Trust (NYSE:SPY) was 0.1% higher to $542.64.
• The SPDR Dow Jones Industrial Average (NYSE:DIA) rose 0.4% to $399.25.
• The tech-heavy Invesco QQQ Trust Series (NASDAQ:QQQ) eased 0.1% to $461.91.
• The iShares Russell 2000 ETF (NYSE:IWM) tumbled 0.9% to $206.01.
• The Financials Select Sector SPDR Fund (NYSE:XLF) outperformed, up by 0.8%. The Consumer Discretionary Select Sector SPDR Fund (NYSE:XLY) lagged, down by 0.8%.

Wednesday’s Stock Movers

• Kellanova (NYSE:K) surged 7.7% after the company announced it would be acquired by Mars in an all-cash deal valued at $35.9 billion.
• Alphabet Inc. fell nearly 3% after reports that the U.S. Department of Justice may break up Google following a recent ruling that it monopolized the online search market.
• Charles Schwab Corp. (NYSE:SCHW) jumped over 4% after reporting that total client assets reached $9.572 trillion in July, up 16% year-over-year and 2% from June, with core net new assets surging 112% to $29 billion compared to July 2023.
• Other financial stocks marking strong gains on Wednesday included The Allstate Corp. (NYSE:ALL), The Progressive Corp. (NYSE:PGR) and Morgan Stanley (NYSE:MS) up 5%, 4.8% and 3.2%, respectively.
• Stocks moving on earnings report were Cardinal Health, Inc. (NYSE:CAH), up 4%, Brinker International, Inc. (NYSE:EAT), down 14% and Performance Food Group Company (NYSE:PFGC) up 8%.
• Those reporting after the close include Cisco Systems, Inc. (NASDAQ:CSCO) and Lumentum Holdings Inc. (NASDAQ:LITE).

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This photo was created using artificial intelligence MidJourney.

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