Stocks Rise After CPI Report Shows Inflation Declined To 8.5% In July

The Nasdaq Composite Index returned to bull territory and the longest Nasdaq bear market since the financial crisis ended as U.S. equities roared into the close on Wednesday.

The primary motivator was the first weak consumer inflation report in a number of months, which encouraged investors to increase their bets that the Federal Reserve will be able to moderate the pace of the rate-increase campaign that has roiled markets for the majority of 2022 due to softening price trends.

  • To reach 33309, the Dow Jones Industrial Average gained 535 points or 1.6%.
  • The S&P 500 increased by 88, or 2.1%, to 4210.
  • Nasdaq increased 361, or 2.9%, to 12854, ending the longest bear market since 2008.
  • A bear market is a loss of 20% from a previous high.
  • A bull market is defined as an increase of at least 20% from a recent low.

Indexes increased as CPI data revealed that inflation had modestly decreased to an annual rate of 8.5%. Even a modest softening at this stage is sufficient to spark gains, even though that is still very near to a four-decade high. (At least for now.)

Investigate Increasing Grocery Costs

Both grocery stores and restaurants are charging more for food. To see the differences between one year and the next for particular products, such as rice or lunchmeats, click the boxes in this interactive tool.

Important U.S. Stock Indices Rise Wednesday

U.S. market indexes rallied throughout the day when the CPI report for July came in with a little lower annual rate of 8.5%, and they closed Wednesday’s trading session on a positive note. Despite investors exhaling in relief, sentiment is still unsteady because inflation is still very near a four-decade high.

The Dow Jones Industrial Average increased by 1.6% and the S&P 500 increased by 2.1%. After locking in more than 20% gains from its previous low, the tech-heavy Nasdaq Composite increased 2.9%, returning to a bull market.

After the CPI print revealed that the prices of petrol, fuel oil, and utilities all increased last month, energy stocks continued to decline today. Following the release of new inflation statistics that fell short of forecasts for ongoing monthly inflation, Treasury yields—which decrease as bond prices rise—dropped throughout the day.

Disney shares soar ppost-marketfollowing earnings beat Walt Disney shares surged in after-hours trading after reporting better-than-anticipated quarterly earnings. Recently, extended trading saw a 5.8% increase in the stock.

Disney’s Report Is As Follows:

Earnings per share after adjustments: $1.09 vs 97 cents Fact Set’s consensus calculation

$21.5 billion in revenue as opposed to $20.99 billion Fact Set’s consensus calculation

Investors also paid special attention to Disney+ earnings, the company’s leading streaming service:

On A CPI Rally, Small Caps Shine

Wednesday saw small-cap equities outperform shares of larger corporations, partially correcting a significant trend for 2022. The Russell 2000 increased by 2.95%, outpacing the S&P 500’s increase of 2.1%.

Since the beginning of the year, shares of smaller publicly traded companies have suffered as investors have been concerned about the state of the economy. The S&P 500 ended the day down 14% from its January high and the small-cap benchmark was down 22% from its November peak.

A recent meme favourite, Bed Bath & Beyond, jumped 7.4%, Signet Jewellers increased 7.9%, and casual food brand Cheesecake Factory increased 8.4%. According to Louise Goudy Wilmerding, a partner at asset management company Crewe Advisors, “Small caps have been so battered up.”

Know How To Exit A Financial Trap

Famously, J. Paul Getty said that the secret to success was to “rise early, work late, and strike oil.” Companies benefit from being in the right location at the right time, just like it does for people. U.S. Silica Holdings, the third entry in Heard on the Street’s Sixth Annual Stock Picking Contest, appeared to be going bankrupt a few years ago, just like many of its contemporaries.

But after losing 98% of its worth, the company, which mines sand, clay, and related commodities, was saved by a rebound in the American oil patch. Given the enormous demand for its fracking sand, there may still be significant potential.

Even though spot prices in the Permian Basin, the hub of shale oil and gas production, have more than doubled so far this year. The company’s CEO predicts a multi-year upcycle and is ready for all happenings. However, investors who can recall the prior boom and the current one are treating the rebound with caution.

The stock of U.S. Silica is valued at less than ten times projected earnings for the following year and less than eight times estimates for 2024. When the shale patch was last prosperous, the corporation bought a supplier of industrial products, which contributed to its problems. The business now claims that it is devoted to paying off debt.

So Who Considers an Inflation Rate of 8.5% A Reason For Joy?

Some investors are warning against getting carried away in the wake of today’s rise. Even though inflation slowed down in July, it was still quite high. According to Jake Jolly, senior investment strategist at BNY Mellon Investment Management, “I don’t think that we should be rejoicing too much.” We’re still not out of the woods in this area.


Will The Market Increase Today?

Market update for shares: Nifty crosses 17,500; Sensex increases by 465 points; M&M and Bajaj Finserv gain. Nifty increases 127 points to 17,525 while the Sensex closes 465 points higher at 58,853. After a day of losses on Friday, the Indian market ended higher thanks to increases in the banking and IT sectors.

In 2022, Will The Stock Market Crash?

In essence, no one can accurately anticipate when the stock market will crash. A rise might be stopped in its tracks by inflation and interest rates, turning July 2022 into a dead cat bounce and sending the market into a spiral of decline.

How Long, As Of 2022, Will This Bear Market Last?

Investors may anticipate the S&P 500 to drop to nearly 3,017, or a roughly 22 percent decrease from mid-July levels if these averages were to come true during the current bear market. Based on the market’s peak on January 3, 2022, the average time from peak to trough would indicate that the market could bottom in mid-December 2022.

Leave a Reply