THE GIST (“THE WHAT”)
July’s benign CPI report raised the odds of Fed’s rate pause, boosting the S&P index during the opening hour. Initial rally, however, faded as bond yields moved higher following hawkish comments by San Francisco Fed President Daly. The index closed the volatile session with a fractional gain of 1.14 points (0.03%) at 4468.84.
Note: Our daily “S&P 500 Trading plan” will be posted around 9:30/10:00am EDT, every trading day.
Trading Plans for THU. 08/10: Slow-growth of Inflation Good News, For Now
For the last published Results of the Morning Trading Plans, please click here
THE DETAILS (The “How & Why”):
July’s monthly inflation reading came in better than expected, bolstering hopes that the Fed could be close to ending its aggressive interest rate hiking campaign. The U.S July CPI rose by 3.2% year-on-year, as against the expected increase of 3.3%. U.S. weekly initial unemployment claims also rose to a 5-week high of 248,000, jumping by 21,000 showing signs of weaking labor market.
Bond yields fell following a benign inflation report but bounced back from a one-week low after hawkish comments by San Francisco Fed President Daly that the Fed might still be a long way from restrictive interest rate policy. The 10-year T-note yield finished higher by 7.2 basis points at 4.080%, rebounding on hitting a one-week low of 3.942%. The S&P 500 index erased early session gains as yields jumped higher.
Walt Disney led the gainers within the index, jumping 4.85% despite the entertainment giant’s third quarterly earnings showed signs of weakness across its business segments. Investors focused on the company’s guidance that it expects improvement in direct-to-consumer losses following price increases in ad-free streaming offering and lower capital expenditure during the next year.
FleetCor Technologies and Wynn Resorts were the other strong gainers of the session, gaining 3.31% and 2.63% on beating earnings estimates. Cybersecurity stocks also received a boost after CyberArk Software reported an unexpected profit of 3 cents that came in much better-than-expected loss of 13 cents. Zscaler, Crowdstrike Holdings, and Fortinet all closed more than 1% higher.
On the bearish side, leading the decliners, Tapestry plunged 15.93% after announcing its acquisition of Capri Holdings Ltd for $8.5 billion. Automakers also traded lower on reports that the United Auto Workers are calling for wage increases that could add close to $80 billion in expenses for Ford and General Motors. Ford shed 4.48% and General Motors fell 5.78%.