Investors sifted through hotter-than-expected U.S. consumer-price index data and parsed quarterly results from some of the country’s biggest banks, including JPMorgan Chase & Co. and Goldman Sachs Group Inc., as stocks fell Tuesday afternoon after all three major U.S. stock benchmarks set new highs on Monday. What is the current state of stock benchmarks?
At 34,899.68, the Dow Jones Industrial Average DJIA, -0.24 percent was down 96.5 points, or 0.3 percent.
The S&
The Nasdaq Composite COMP, -0.11 percent fell 28.6 points, or 0.2 percent, to 14,704.66 points.
For the second straight day, all three major indexes finished at all-time highs, with the Dow narrowly missing its first close above 35,000, advancing 0.4 percent to a record 34,996.18.
What is the market’s driving force? In a letter, Thomas H. Kee, chief executive of Stock Traders Daily, stated that while markets initially rebounded from the morning’s drop, the major stock benchmarks were back on the fall in afternoon trading. The consumer price index in the United States increased by 0.9 percent in June. The core reading, which excludes volatile food and energy expenses, increased 0.9 percent as well. Both indicators were predicted to rise by 0.5 percent. The headline CPI increased by 5.4 percent year over year in June, while the core rate, which excludes food and energy expenses, increased by 4.5 percent, the largest increase since September 1991 and well above the forecast of 3.8 percent. In a phone interview Tuesday, Michael Loukas, CEO of TrueMark Investments, said, “All you have to do is go food shopping or fill your car up with petrol to know there’s inflation.” He answered, “We all know it’s out there.” “It’d be like burying your head in the sand if you were astonished by this.” While the statistics may stoke debate about whether the Federal Reserve is behind the curve on inflation by claiming that rising prices are a “transitory” phenomena, market fears of a bout of runaway inflation appear to be in control for the time being. Investors, according to Kee, expect inflation, like earnings growth, to peak soon. “Hot inflation statistics should still be expected,” he wrote, “but if inflation is similar to the market’s projected change in earnings growth rates, the next installment of CPI will be tamer.” “It will be a more serious issue if the CPI figure is this hot next time.” In an interview on Tuesday, Kristina Hooper, chief global market strategist at Invesco, said she still believes “inflation is primarily transitory.” Said to the most recent CPI statistics, increased expenditures are “concentrated in sectors that correspond with the reopening,” according to Hooper, who cited transportation as an example. Hooper also believes the economy will continue to improve this year, with a “pandemic revival” now being the largest tail risk for the stock market, according to her. Meanwhile, the Russell 1000 Growth index RLG, -0.10 percent was up 0.1 percent Tuesday afternoon, while the Russell 1000 Value index RLV, -0.47 percent was down 0.6 percent, according to FactSet. “Growth is a drug that the market is addicted to. “It just is,” Loukas explained. “It was asking for expansion even when the value rotated.” According to the CEO of TrueMark Investments, investors may be flocking to secular growth firms as a hedge against inflation. Okta Inc. OKTA, +1.11 percent, a secular growth stock that Loukas loves, is in cybersecurity and has climbed in Tuesday trading, he added. According to FactSet data, shares of Okta were up 2.3 percent percent as of Tuesday afternoon. Inflation is rising in part due to supply disruptions as demand rises with the reopening of the economy, but some economists fear that if pricing pressures do not reduce soon, the recovery in the United States would be put under even greater strain. So far, members of the Federal Reserve have claimed that inflation will fall quickly as the US and global economies find a more normal footing, citing pricing pressures that are primarily due to temporary supply shortages that will disappear as supply catches up to demand. The robust June inflation reading was predicted, according to Fed’s Daly, and higher prices won’t stay. In other economic news from the United States on Tuesday, the National Federation of Independent Business said that its small-business index surged to its highest level in eight months in June. The index rose 2.9 points to 102.5, breaking through the 100-point barrier for the first time since November. For the first time this year, it had fallen in May. From the outset of the second-quarter earnings reporting season, stock market investors were looking for clues. JPMorgan Chase & Co. JPM, -1.57 percent, and Goldman Sachs Group Inc. GS, -0.98 percent, both banking behemoths, reported earnings early Tuesday that exceeded expectations. JPMorgan Chase’s stock fell after the company reported a profit that more than doubled but a drop in revenue. Goldman shares surged in early trading after exceeding earnings and revenue projections and increasing its dividend by 60%, but then fell. Both banks are Dow Jones Industrial Average participants. Meanwhile, James Bullard, president of the St. Louis Federal Reserve, said Tuesday that the Federal Reserve should begin cutting the stimulus it provides to the US economy, but he stressed that the decrease didn’t have to happen right away. “I think the moment is appropriate to roll back emergency measures now that the economy is growing at 7% and the pandemic is getting better and better under control,” he told The Wall Street Journal in an interview published Tuesday. Which businesses are being scrutinized?
The CDC stated it has received reports of 100 persons suffering Guillain-Barré syndrome after receiving the Johnson & Johnson JNJ vaccine. Guillain-Barré syndrome is an immune system illness that can cause muscle weakness and paralysis. The stock was down 0.1 percent.
Conagra Brands Inc. CAG, -5.22 percent had its stock drop 4.6 percent as the food giant warned of inflationary pressures in the first quarter of fiscal 2022.
PepsiCo Inc. (NYSE: PEP) saw its stock rise 2.4 percent after the beverage and snack giant announced profit and revenue that above forecasts in the second quarter and given an enthusiastic full-year outlook.
Organigram Holdings Inc. OGI, a Canadian cannabis firm, reported a lesser loss in its fiscal third quarter than in the same period a year ago, thanks to sales that exceeded expectations.
The stock was up 11.9 percent.
Altus Power Inc., a Connecticut-based sustainable energy ecosystem firm, is going public through a merger with CBRE Acquisition Holdings Inc. CBAH, a special-purpose acquisition company. The merged company is valued at $1.58 billion. CBRE’s stock was up 1.8 percent. Boeing Co. BA, -3.59 percent shares fell 3% after the aerospace company announced that it has identified extra work that has to be done on its undeliverable 787s, postponing delivery until the end of 2021.
What are the trends in other markets?
The 10-year Treasury note rate increased by nearly 6 basis points to 1.429 percent.
The ICE U.S. Dollar Index DXY, +0.51%, which measures the currency against a basket of six main competitors, was up 0.4 percent.
Oil futures rose a smidgeon, with the US benchmark CL00, +1.71 percent increasing 1.7 percent and gold futures GC00, +0.09 percent climbing 0.2 percent.
The Stoxx 600 Europe SXXP, +0.03 percent increased less than 0.1 percent to a record closing in European markets. The FTSE 100 UKX, -0.01 percent in London dipped by less than 0.1 percent.
In Asia, Hong Kong’s Hang Seng Index HSI, +1.63 percent gained 1.6 percent, while Shanghai Composite SHCOMP, +0.53 percent and Japan’s Nikkei 225 NIK, +0.52 percent both gained 0.5 percent.
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This article was written with the help of Mark DeCambre./n
