Thoughts For Thursday: Back To The Races
It was back to the races at the stock market on Wednesday, as stocks surged on news of July's flat CPI. A better than expected July inflation reading was all that was needed to get investors and traders charging out of the gate.
Yesterday the S&P 500 closed at 4,210, up 88 points or 2.13%, the Dow closed at 33,310, up 535 points or 1.63%, and the Nasdaq Composite closed at 12,855, up 361 points or 2.89%.
Most actives were across all sectors including travel and leisure which had Carnival Cruise Lines (CCL) up 9.2% on the most actives list and, Norwegian Cruise Lines (NCL) up 12.1% and Royal Caribbean (RCL) up 9.8%, on the top gainers list. Leading the most actives was Advanced Micro Devices (AMD) up 3.7%.
Chart: The New York Times
In early morning trading market futures are trading in the green. S&P market futures are up 10 points, Dow market futures are up 117 points and Nasdaq 100 futures are up 18 points.
Looking at the charts at the end of the trading day TalkMarkets contributor Declan Fallon notes the S&P Sneaks A Breakout.
"After Monday's reversal candlesticks there were risks of 'bull traps' for the Nasdaq and Russell 2000, but today's gains have managed to negate not just the 'bull trap' risk, but also the bearish inverse hammer and doji from Monday. In addition, the S&P managed to register a breakout.
The breakout in the S&P came on higher volume accumulation, although On-Balance-Volume remains on a 'sell' trigger. The index has also accelerated its underperformance relative to the Russell 2000 - although this is more bullish than bearish for the broader market.
The Nasdaq has gapped off a small bull flag and has again resumed its advance towards its 200-day MA. But, like the S&P it has a 'sell' trigger in On-Balance-Volume. The index continues its outperformance relative to the S&P.
The further we move away from June lows, the more the FOMO crowd sitting on the sidelines waiting to buy the bottom will feel pressured to participate in the rally...The Russell 2000 is the index to watch as it will determine if the next rally is just a flash in the pan or something more sustainable."
Contributor Wade Dawson says The Bulls Are In Charge and I recommend a quick look at a relatively short article to catch up on the latest bullish outlook.
"After a brief shift into a neutral stance, today’s move higher in the SPY pushed it back into a bullish reading which suggest more strength over the short to intermediate term.
Today's price action can mean only one thing, the market is bullish on mild inflation numbers."
"The U.S. market has seen impressive consecutive weeks of gains and today the market soared even higher. The latest U.S. consumer inflation figures released Wednesday morning were crucial and the moderate inflation data is playing a key role in driving markets up.
As measured by the Consumer Price Index (CPI), Inflation in the United States was expected to decline to 8.7% yearly in July from 9.1% in June and inflation came in at 8.5%. The U.S. Federal Reserve remains committed to tightening its policy rate to battle inflation, and better-than-expected CPI figures are significantly impacting how markets price in the September rate decision.
It's worth noting that investors will also pay close attention to the Core CPI figure, which excludes volatile food and energy prices. Nevertheless, a modest decline in the annual CPI today is also causing investors to scale down their hawkish forecasts on Fed tightening...
The tech stock market is in a significant uptrend. The overall sentiment for technology and growth is positive, but with some uncertainty, especially due to short-term treasury yields and valuations."
TM Contributor Greg Feirman is quick to take profits when he can and believes The Easy Money Has Been Made.
"This morning’s cooler-than-expected July CPI Report has catalyzed a nice rally in stocks and created a “the coast is clear” mentality. The Peak Inflation Narrative appears to be confirmed and therefore the Fed is expected to slow its pace of tightening. Fed Futures are now anticipating only a 50 basis point hike in September as opposed to 75 before the report.
Everything is going according to plan – and that’s when I start to get nervous. While I’m likely early in selling my tech trading positions today, the easy money for this bear market rally has been made in my opinion. Late arrivals will likely continue to pile in over the next few days driving the market even higher – but I’m happy to sell to them at this point."
Regardless of the latest CPI report, contributor Mish Shedlock notes that Food At Home Is Up 13.1 Percent From A Year Ago, Most Since February 1979. Shedlock provides two charts, one that highlights the food component in the CPI and one that breaks down the rise in prices by types of food. Have a look.
- CPI: 8.5 Percent
- CPI Less Food: 8.1 Percent
- CPI Food: 10.9 Percent
- CPI Food at Home: 13.1 Percent
- CPI Food and Beverage: 10.5 Percent
- CPI Energy (Not Shown): 32.9 percent
- Meat, Poultry, Fish, Eggs: 10.9 Percent
- Cereals, Bakery: 15.0 Percent
- Dairy: 14.9 Percent
- Fruits and Vegetables: 9.3 Percent
- Beverages: 13.8 Percent
- Other Food at Home: 15.8 Percent
- Away From Home: 7.6 Percent
- At Home: 13.1 Percent
So that's just what some of our TalkMarkets contributors have to say about the latest inflation data. See the homepage for more.
Rounding out the column today, contributor Tyler Durden writes that Disney Soars After Smashing Subscriber Expectations, Hikes Streaming Price By 38%.
"Disney DIS came out of the Q2 earnings gate blazing, with numbers that smashed expectations (the company added 14.4 million new Disney+ subs, smashing estimates of 9.8 million) and announcing that it is raising the price of its flagship Disney+ streaming service by 38% to $11, part of a plan to generate more revenue for its money-losing online businesses and build on third-quarter results that beat estimates for sales, profit and subscriber growth. Prices for some packages that include Hulu and ESPN+ will also rise. The uber-woke mouse also took a page out of the NFLX playbook and said that on Dec. 8, Disney will introduce an ad-supported version of the flagship streaming service.
Here are the details:
- Adjusted EPS $1.09 vs. 80c y/y, estimate 96c
- Disney+ subscribers 152.1 million, +31% y/y, beating estimate 148.4 million
- ESPN+ subscribers 22.8 million, +53% y/y, estimate 23.2 million
- Hulu & Live TV subscribers 4.0 million, estimate 4.1 million
- Total Hulu subscribers 46.2 million, +7.9% y/y, estimate 46.4 million
- Revenue $21.50 billion, +26% y/y, estimate $21 billion
- Media and entertainment distribution revenue $14.11 billion, +11% y/y, estimate $14.33 billion
- Parks, experiences and products revenue $7.39 billion, +70% y/y, estimate $6.65 billion
- Total segment operating income $3.57 billion, +50% y/y, estimate $3.36 billion
- Media and entertainment distribution operating income $1.38 billion, -32% y/y, estimate $1.51 billion
- Parks, experiences and products operating income $2.19 billion vs. $356 million y/y, estimate $1.71 billion
- ESPN+ ARPU $4.55, missing estimate $4.98
- Hulu SVOD ARPU $12.92, estimate $13.29"
Not everything the company had to say was great news and I refer you to the full article for the details. However investors responded positively to the Q2 earnings announcement and
"Shares of Disney rose as much as 6.1% to $119.33 in extended trading after the announcement."
As always, Caveat Emptor.
Have a good one.
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