Strong Gains on Wall Street. Now It’s Time for Inflation

Tuesday’s session on Wall Street ended with strong gains in major indexes. Investors are waiting for Wednesday’s data on US inflation in July, but the already released producer price index data, which came in lower than expected, has calmed the mood and contributed to the rise in stock markets.

The Dow Jones Industrial Average closed up 1.04% at 39,765.64. The S&P 500 rose 1.68% at the end of the day. It reached 5,434.43 points. The Nasdaq Composite Index rose 2.43%. It is at 17,187.61 points. The Russell 2000 mid-cap index rose 1.64%. It reached 2,095.81 points. The VIX Volatility Index fell 12.99% to 18.02 points.

However, volatility may return to the markets, and the US CPI data for July – released on Wednesday and information from the US labor market – on Thursday will be carefully analyzed in the markets for further clues from investors about the state of the US economy.

“It can be argued that stocks are still recovering from last week’s shock and investors are holding off on deploying capital until we get key US data this week with the US GDP growth outlook remaining the most important topic,” said Chris Weston, head of investment research at Pepperstone.

The US producer price index rose 0.1% in July. On a monthly basis, it rose 2.2% on a yearly basis. Excluding food and energy prices, the producer price index was 0.0%. MDM, and rose 2.4% on a yearly basis. The producer price index was expected to record 0.2%. MDM and 2.3% y/y, as well as the core index of 0.2% and 2.7%, respectively.

“Today’s PPI data is further evidence that the tide has turned toward inflation, particularly in services,” said David Russell, global head of market strategy at TradeStation. “Investors who recently dumped stocks, expecting lower prices, may be disappointed.”

On Wednesday at 2.30 pm Polish time, the US CPI for July will be published, analysts expect an increase in both the headline and core CPI by 0.2%. mdm.

“We sit and wait for tomorrow. We have confidence that the Fed will cut rates this year, but the question is how much and for how long,” said Jens Peter Sorensen, director of fixed income research at Danx Bank.

According to CME’s FedWatch tool, CME firms remain evenly split between a 25 basis point cut in their expectations for the US Federal Reserve to cut interest rates in September and a 50 basis point cut. Markets expect the key rate to be in the range of 4.25-4.50 percent by year-end.

“It can be argued that stocks are still recovering from last week’s shock and investors are holding off on deploying capital until we get key US data this week with the US GDP growth outlook remaining the most important topic,” said Chris Weston, head of investment research at Pepperstone.

Some weak economic data has caused a sell-off in stock markets over the past few weeks, but that doesn’t mean a recession is in the cards, according to Goldman Sachs.

In addition to the recent weakness in the U.S. labor market, there are signs of a slowdown in Europe and China, but the stock market remains bullish, strategist Guillaume Gison said in a note to clients late Tuesday.

“Cyclical stocks underperformed during the correction, but the U.S. stock market appears to be headed for a recession,” she said in a note.

Among companies, Starbucks shares rose 23% during Tuesday’s session. The company announced a change in its CEO position, with outgoing Laxman Narasimhan replacing current Chipotle CEO Brian Niccol.

Shares of electric car maker Tesla rose more than 5 percent. Nvidia rose more than 6 percent. Home Depot rose 1 percent, and the home improvement retailer warned that sales would be weaker than expected in the second half of 2024.

On Holding gained nearly 5%. At the end of the day despite previous strong declines. The company beat analysts’ estimates for second-quarter revenue. BuzzFeed rose 23%. After the digital media company narrowed its second-quarter net loss to $6.6 million from $22.5 million a year earlier.

In the oil market, August West Texas Intermediate crude futures fell 2.26% to $78.25 a barrel, and August Brent crude futures fell 2.02% to $80.64 a barrel. (Business)

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