Stock market today: Indexes edge up as cool July inflation locks in rate cut expectations
- US stocks rose slightly after July's inflation report met expectations, boosting rate cut bets.
- Consumer Price Index showed a 2.9% year-over-year increase, slightly below the 3% forecast.
US stocks rose slightly on Wednesday after July's inflation report met with economists' expectations, cementing the outlook for a rate cut from the Federal Reserve next month.
Major indexes ticked higher in early-morning trading, while long-dated bond yields dipped slightly.
Inflation rose 2.9% year-per-year in July, according to the latest Consumer Price Index report, slightly below the 3% yearly growth economists were expecting. Core inflation, meanwhile, grew 0.2% over the last month, in-line with economists' expectations.
Price growth overall continues to decline, instilling confidence that the Fed is poised to cut rates at its September policy meeting.
Markets see a 100% chance of a Fed rate cut in September, with 57% odds central bankers will trim rates 25 basis-points, according to the CME FedWatch tool.
"The long and lagged effects from the Fed raising interest rates by 500 basis points over the past two years are finally showing their teeth as inflation is moderating towards their 2% target and the employment picture is weakening," Skyler Weinand, the chief investment officer of Regan Capital, said in a note, predicting that the Fed would lower rates back to 4% over the next year to loosen its grip on the economy.
"Evidence is piling up that consumers are struggling under the combined weight of high prices, elevated interest rates, and the cooling job market. Even with the 'as expected' readings, prices broadly continued to rise last month," Mark Hamrick, a senior economic analyst at Bankrate, added.
Investors are still on high alert for any signs of economic weakness, especially after a weak jobs report for July that sparked a painful sell-off in stocks this month. Traders will be tuned into the slew of economic data points coming over the next week, with jobless claims and manufacturing data due on Thursday.
Here's where US indexes stood shortly after the 9:30 a.m. opening bell on Wednesday:
- S&P 500: 5,447.35, up 0.24%
- Dow Jones Industrial Average: 39,781.85, up 0.09% (+36.76 points)
- Nasdaq composite: 17,199.61, up 0.07%
Here's what else is going on:
- Investors are missing out on gains by passing up the market's least-favorite stocks, according to investing legend Rob Arnott.
- Don't rush back into the stock market — more pain is coming if the economy keeps slowing, Stifel said.
In commodities, bonds, and crypto:
- West Texas Intermediate crude oil ticked higher 0.37% to $78.64 a barrel. Brent crude, the international benchmark, rose 0.46% to $81.06 a barrel.
- Gold inched 0.11% higher to $2,468 per ounce.
- The 10-year Treasury yield was nearly flat at 3.856%.
- Bitcoin climbed 3% to $60,772.