THE GIST (“THE WHAT”)
Extending previous session’s gains, the S&P 500 index consolidated near 14-month highs, closing the choppy session at 4369.01, up 30.08 points (0.69%). The keenly awaited CPI data for the month of May suggested that the headline inflation rose by a less-than-estimated 4% on a year-on-year basis, primarily due to declines in energy costs, solidifying market expectations of a pause in Fed’s aggressive rate hike cycle.
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Trading Plans for Tue 06/13: Celebrating the Lowest High Inflation Numbers?
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THE DETAILS (The “How & Why”):
The broader index rallied at the open after the CPI report for the month of May suggested moderating price pressures, paving the way for the Fed to pause its aggressive monetary tightening cycle. The Core CPI data, however, came in-line with estimates at 5.3%, the smallest increase since almost one and half years.
Reports that China is now considering stimulus measures to revive its struggling economy further boosted the risk-on sentiment. China’s central bank unexpectedly lowered its short-term lending rate for the first time in 10 months. The 10-year Treasury yield settled at a 2-week high at 3.841% ahead of the Fed’s policy decision tomorrow.
Chip stocks led the tech sector higher for the second session in a row. Nvidia became the first chipmaker to join the mega-cap valuation of $1 trillion. It’s close rival Advanced Micro Devices, however, fell 3.6% after unveiling its new set of AI processors that failed to impress investors. Microchip Technology, Intel and Analog Devices all closed higher by more than 2% each.
Regional bank stocks rebounded from yesterday’s slide, led by a strong 6% rally in Comerica on reports that it plans to exit one of its lending businesses. Albemarle, Ulta Beauty and Assurant were other strong performers of the session on the back of stock upgrades, all higher by 4% each.