- Consumer prices are slightly below expectations, but inflation is still historically high
- Oracle shares weakened in overnight trading after the company reported earnings
- Apple’s event later reported on new iPhones, watches and media
Inflation remains a big issue, but today’s August Consumer Price Index (CPI) report has given momentary hope to anyone who wants to see prices fall a bit.
The Bulls could have been able to stick to this, as the year-over-year CPI growth rate was 5.3%, just below analysts’ consensus of 5.4%. In addition, monthly growth of 0.3% was slightly below Wall Street’s consensus of 0.4%, which was collected by research firm Briefing.com prior to the report.
As the economy emerged from the Covid-19 blockade and put pressure on the supply chain, the first sparkle of inflation for some time may have begun to cool slightly after a significant rise in months. There are media reports that there is still a stagnation in the supply chain of all kinds and it is difficult to find backed up ships and rail cars in the port. Today’s CPI report, which shows the slightest mistake in inflation, doesn’t change either because one report isn’t a trend.
The Federal Reserve Board may scrutinize today’s data and last Friday’s Producer Price Index (PPI) to determine if it needs to intervene in a bond purchase program to begin cuts. there is. Numbers like today show that inflation remains a big problem, even if it’s lower than expected.
Despite the uplift from CPI news, the market remains “unmanned”
Still, stock index futures seem to have shown a great rise shortly after the data flash. This is in contrast to the way stocks closed above highs on Monday. Be aware of all sorts of follow-throughs to the downside early on, as such weak closes can get caught up in trading in the next session.
Also, a day’s recovery after a long period of weakness does not necessarily mean that we are out of the forest. After this week’s CPI and retail sales, we’re entering a strange time of lack of important data and numbers. Revenue is also a kind of desert. In this “land without people”, the market is looking for trade-offs.
One thing to look at is late today when Apple (AAPL) plans to host an event that begins early this afternoon on East Coast time. According to media reports, the event could include the launch of the iPhone 13 and the new Apple Watch. stay tuned. Also, in the past, these events haven’t usually ignited big under AAPL stock, but as the saying goes, it’s all new.
Yesterday was a kind of “yo-yo” day for the market. One of the reasons is that people didn’t have much fresh data or revenue to trade. We are in this strange time, so today could be a “yo-yo” day as well. on the other hand, Cboe Volatility Index (VIX) flirts again at 20, crude oil is over $ 70 a barrel, 10-year yields are about to return to 1.35%, and 30-year yields are about to return to 2%.
The same new boss as the old one
Monday’s results were a bit different after the overall market fell for five days, but some of the same factors as last week continued.
Most obvious, the weaknesses of Tech that I recently saw are: S & P500 Index (SPX) and Dow Jones Industrial Average ($ DJI) Yesterday ended higher. Instead, three of the five “FAANG” stocks have been ousted. Semiconductors have increased overall, but the two most closely followed, Nvidia (NVDA) and Advanced Micro Devices (AMD), both closed in the red on Monday.
The point here may be that Tech stocks may have arrived very quickly and are being rebalanced around the market. The bad news of AAPL and Alphabet (GOOGL) last week is still this when the judge ruled that Apple wasn’t allowed to prohibit developers from providing links that keep users away from Apple’s in-app purchases. It may be a little heavy on the sector.
Despite a tough week at Tech when Oracle shares fell in trading before Tuesday’s opening bell, the company’s earnings were above Wall Street’s average expectations. The problem for investors seemed to be ORCL’s earnings, which was a bit shy to the consensus analyst’s quote. Other than that, the ORCL outperformed the guidance on most measures, which looked like a good quarter. But when it works, expectations can be very high. Maybe it’s one of those things that people sell the news first and then look better and rethink.
Bank, energy leads pack at the beginning of the week
Sufficient about technology and its issues, as the energy and financial sectors started the week with positive notes. Given that $ DJI was the best weekly start of the major indexes, rising by more than 0.75%, it was very clear. The index includes banks and energy companies. Monday’s energy was partially boosted by the rise in crude oil. However, much of the alternative energy stock has also increased, partly with the news that the Democratic Party’s $ 3.5 trillion settlement bill will encourage more use of electric vehicles and non-carbon-burning energy sources.
For example, First Solar (FSLR) rose nearly 7% yesterday and SunPower (SPWR) rose more than 4%. Tesla (TSLA) rose almost 1%, and General Motors (GM) and Ford (F) were not left behind.
It’s a little early to start expecting what the bill could do for alternative energy and electric vehicles, as there is a long way to go before the bill passes and many factors can change. Interestingly noteworthy, as the higher tax credits offered to those who buy electric cars manufactured by trade unions in the United States appear to be aimed at helping GMs and Fs in the world, where trade unions are still quite strong. It may be a thing. TSLA does not have a union in a factory that produces cars for the US market.
You may have noticed that Covid-19 vaccine makers Moderna (MRNA) and Pfizer (PFE) didn’t get off to a good start this week. Softness may reflect reports from well-known medical journals questioning the need for booster shots.
Strange sisters: Do “Megacap” tech stocks behave like utilities? It’s a bit strange to compare some of the fastest-growing companies traditionally to sectors that are “bond agents” and are traditionally known to provide dividends to investors but not grow very well. May sound like. But recently, a major Wall Street investment bank made a comparison in a memo to investors, stating that megacaps such as AAPL GOOGL and Microsoft (MSFT) are also other stocks that can be considered “bond proxies.” I did. Their performance often tracks the bond market. In fact, there may be something in it.
Remember the beginning of the year when benchmark 10-year Treasury yields jumped from about 90 basis points (0.9%) to 1.75% in just about two months? Megacaps fell at about the same time, with some, including AAPL, falling by nearly 20% (the amount of loss traditionally defining the bear market). During the summer, 10-year yields fell to 1.1% and megacaps almost rebounded. Currently, yields are close to 1.3% and there isn’t much direction, but Big Tech plummeted quite sharply last week. You can go ahead and speculate that the Fed could soon taper off and how it was related, but that’s …