A softer-than-expected inflation report sent stocks higher on Wednesday morning, bringing major indices back near three-month highs. Several IBD 50 stocks broke above buy points.
The Nasdaq composite jumped 2.1% at 10 a.m. ET as leading technologies Apple (AAPL), Microsoft (MSFT), Alphabet (Google T Nvidia (NVDA) climbed more than 2%.
You’re here (TSLA), a major component of the S&P and Nasdaq, trimmed its gain to 1.3%. Late Tuesday, news broke that CEO Elon Musk had sold nearly $7 billion worth of Tesla stock in recent days. Musk sold about $32 billion worth of shares in the electric vehicle maker. Tesla stock encountered resistance at the 200-day moving average.
The S&P 500 rose 1.6% and the Dow Jones Industrial Average climbed 1.5%. The small-cap Russell 2000 rebounded 2%. Volume fell on the Nasdaq and rose on the NYSE from the same time on Tuesday.
Inflation data cooling but still elevated
The consumer price index rose 8.5% in July from a year ago, compared to an annual rate of 9.1% in June. Core prices, which exclude food and energy products, rose 5.9% year-on-year and 0.3% from June. Most measures of inflation were down from June readings, and core CPI month-over-month was unchanged.
Economists had expected July’s CPI to climb 8.7% from a year ago and 0.2% from the previous month, according to Econoday. Core prices are expected to rise 6.1% year on year and 0.5% month over month.
Inflation data reduced the chances of an interest rate hike by 75 points, which encouraged the stock market. CME Group’s FedWatch showed the odds of a three-quarter point rise to less than 40% after the CPI report. On Tuesday, that probability was 68%. Traders are now pinning more than a 60% chance of a half-point rate hike at the Fed meeting next month.
The yield on the 10-year Treasury fell 6 basis points to 2.74%.
Overview of the US stock market today
|Index||Symbol||Price||loss of profit||% To change|
Last Updated: 10:06 a.m. ET on 08/10/2022
“We finally had good news with the consumer price index falling from 9.1% to 8.5% on the headline figure,” said Independent Advisor Alliance Chief Investment Officer Chris Zaccarelli. in a comment. “But perhaps more importantly for the Fed, the base number stopped rising … and was below consensus.”
If there’s been bad news for anyone, it might be for the travel industry.
Sal Guatieri, senior economist at BMO Capital Markets, found that airlines, hotels and car rental companies cut prices for a second month in a row. “With many travelers now exhausting pent-up demand, fewer people are willing to deal with airport hassles or pay the much higher cost than before the pandemic to fly, stay in a hotel or rent a car,” he noted.
Used car and clothing prices also fell, although new car prices rose. Residential rents continue to rise rapidly, although a little slower than in June, Guatieri said.
IBD 50 stocks make bullish moves
Innovator IBD 50 ETF (FFTY) rose 1.7% as several stocks in the index broke or made other bullish moves.
Celsius Fund (CELH) led the IBD 50 with a strong 9% rally in volume as the stock approaches new highs. The energy drink maker on Tuesday evening announced second-quarter results that beat expectations. The bullish results follow a distribution and investment agreement with PepsiCo (DYNAMISM).
Interex (IMXI) added almost 3% and its 20% rise from a breakout at 9:48 p.m. on July 1 means investors can take profits on the international payments provider. Synopsis (SNPS) reached a new high in moderate volume.
Cadence Design Systems (CDNS) is just above the buy point of 187.61 from a handful entry. The volume was about 50% above average.
Graphic packaging (GPK) traded above the 23.09 buy point of a cup base with handle in significant volume. It’s in the buy range at 24.24.
Trade Desk, Plug Power among stock movers
Excluding IBD 50, Eastern Bank Stocks (EBC) exceeded the buy point of 20.74 of a cup with handle, even if the volume was only average.
Commercial counter (TTD) on Tuesday night reported revenue that hit views and revenue topped estimates. The digital advertising company gave advice that exceeded expectations. TTD climbed 32% in big volume.
Plug hole (PLUG) rose 12% after the hydrogen fuel company missed expectations with a bigger-than-expected loss.
West Texas Intermediate crude oil fell less than 1% to $90.15 a barrel. The $90 level is a key support level for the commodity.
YOU MIGHT ALSO LIKE:
Get Free IBD Newsletters: Market Readiness | Technical Report | How to invest
What is CAN SLIM? If you want to find winning stocks, you better know
IBD Live: learn and analyze growth stocks with the pros
MarketSmith’s tools can help the individual investor