A milder than expected inflation report sent stocks higher Wednesday morning, putting the major indexes back near three-month highs. Several IBD 50 stocks topped buy points.
Tesla (TSLA), a big component of the S&P and Nasdaq, pared its gain to 1.3%. Late Tuesday, news broke that CEO Elon Musk sold nearly $7 billion worth of Tesla stock in recent days. Musk has sold about $32 billion worth of shares in the EV maker. Tesla stock has met 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 rallied 2%. Volume fell on the Nasdaq and rose on the NYSE compared with the same time on Tuesday.
Inflation Data Cools But Still High
The consumer price index rose 8.5% in July from a year ago, down from an annual rate of 9.1% in June. Core prices, which exclude food and energy items, climbed 5.9% year over year and 0.3% from June. Most inflation measurements came down from June’s readings, and core month-to-month CPI was unchanged.
Economists expected the July CPI to climb 8.7% from a year ago and 0.2% from the previous month, according to Econoday. Core prices were forecast to rise 6.1% on a yearly basis and 0.5% month to month.
The inflation data cut the odds of a 75-point interest rate hike, which cheered the stock market. CME Group’s FedWatch showed the odds of a three-quarter point hike at less than 40% after the CPI report. On Tuesday, that probability was 68%. Traders now place a better than 60% chance of a half-point rate hike when the Fed meets next month.
The yield on the 10-year Treasury note fell 6 basis points to 2.74%.
U.S. Stock Market Today Overview
Last Update: 10:06 AM ET 8/10/2022
“We finally got some good news with the Consumer Price Index dropping from 9.1% to 8.5% on the headline number,” Chris Zaccarelli, chief investment officer of Independent Advisor Alliance, said in a commentary. “But perhaps more importantly for the Fed, the core number stopped increasing . . .and was below the consensus.”
If there was bad news for anyone, it may be for the travel sector.
Sal Guatieri, senior economist at BMO Capital Markets, saw that airlines, hotels, and vehicle rental companies cut prices for a second straight month. “With many travelers now exhausting earlier pent-up demand, fewer people are willing to face hassles at the airport or pay the well-above pre-pandemic cost of flying, rooming at a hotel, or renting a car,” he noted.
Clothing prices and used car prices also fell, though new car prices rose. Residential rents are still rising fast, although slightly 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 out or made other bullish moves.
Celsius Holdings (CELH) led the IBD 50 with a 9% rally in heavy volume as the stock nears new highs. The energy-drink maker reported second-quarter results late Tuesday that beat expectations. The bullish results follow a distribution and investment deal with PepsiCo (PEP).
Intermex (IMXI) added nearly 3% and its 20% rise from a breakout at 21.48 July 1 means investors can take some profits in the international payments provider. Synopsis (SNPS) is rising to a new high in moderate volume.
Cadence Design Systems (CDNS) is just above the 187.61 buy point of a handle entry. Volume was about 50% above average.
Graphic Packaging (GPK) gapped above the 23.09 buy point of a cup-with-handle base in heavy volume. It’s in buy range to 24.24.
Trade Desk, Plug Power Among Stock Market Movers
Outside the IBD 50, Eastern Bankshares (EBC) topped the 20.74 buy point of a cup with handle, though volume was merely average.
Plug Power (PLUG) rose 12% after the hydrogen fuel company missed expectations with a larger than expected loss.
West Texas Intermediate crude oil eased less than 1% to $90.15 a barrel. The $90 level is a key support level for the commodity.
YOU MIGHT ALSO LIKE: