U.S. stock futures were mixed Wednesday evening after July’s consumer price index showed that inflation eased last month, propelling the tech-heavy Nasdaq Composite into bull-market territory earlier in the day.
Prices for all items rose 8.5% compared with a year ago, a notch below the consensus expectation for 8.7% and more than half a percentage point lower than June’s 9.1% reading. Stocks started the morning higher and maintained their momentum throughout the session, as the S&P 500, the Dow Jones Industrial Average, and the Nasdaq finished up 2.1%, 1.6%, and 2.9%, respectively.
On a good day for growth stocks, the Nasdaq’s bump lifted the index into bull-market territory, which is defined as 20% above a recent low. The index ended the trading day about 20.8% above its 2022 closing low on June 16 and exited its longest bear market since 2008; however, the Nasdaq is still about 20% off its all-time high from last November. And inflation remains elevated, hovering around a 40-year high even as lower fuel prices last month moved it in the right direction—toward the Federal Reserve’s 2% target price level.
The resoundingly strong sentiment didn’t quite continue into Wednesday evening, even as investors reacted positively to Disney ’s (ticker: DIS
) latest quarterly earnings and $21.5 billion in revenue, which both beat expectations.
At 6:30 p.m. Eastern time, futures for the S&P 500 and Nasdaq were down 0.05% and 0.13%, respectively, while futures for the Dow were up 0.04%.
In Wednesday’s better-than-expected inflation figures, bullish investors saw the possibility that the Federal Reserve may not need to increase its target federal-funds rate as aggressively as it would have if July inflation remained near June’s level.
“The lower-than-expected inflation report was the last near-term hurdle for equity bulls—and the worst fear for shorts,” Wells Fargo analysts Christopher Harvey, Gary Liebowitz and Anna Han wrote in a research note.
The probability of a more moderate 0.5-point increase to the Fed’s target interest rate in September, as assessed by the CME FedWatch Tool, nearly doubled Wednesday, increasing to 58% from 32% the day prior. Meanwhile, the chance of another larger 0.75-point rate increase fell. August’s CPI will come out before the Federal Open Market Committee makes its next rate decision in late September.
Disney , trading at almost twice the volume of the next most active single ticker, was the largest gainer in after-hours trading Wednesday evening. Shares in the media and entertainment icon rose 6.8% as the company paired strong earnings results with the announcement that its streaming service, Disney
+, ended the quarter with a better-than-expected 152.1 million subscribers. Disney plans to raise the price of that subscription in December while also introducing a lower-priced, ad-supported alternative.
Expeditors International ( EXPD
), down 3.7%; Sealed Air ( SEE
), down 3%; Healthpeak Properties ( PEAK
), down 2.7%; and NRG Energy ( NRG
), which fell 2.6%, were among the after-hours laggards in the S&P 500.
The producer price index, the CPI’s less popular cousin focusing on suppliers’ price changes, comes out Thursday morning at 8:30 a.m. Producer prices are expected to have increased again in July but not as fast as they did in June, according to the consensus estimate on FactSe. It lists 10.4% as the expected year-over-year increase and 0.3% as July’s anticipated monthly increase.
Brookfield Asset Management ( BAM
), Cardinal Health ( CAH
), Aercap ( AER
), US Foods ( USFD
), Six Flags ( SIX
), Warby Parker ( WRBY
), and Utz Brands ( UTZ
), among others, report their latest quarterly results before the market opens Thursday.
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