Better CPI Pushes Markets Higher

May 20, 2024

Better CPI Pushes Markets Higher – May 17 Market Recap

Indices

Dow 40,003 (new record close), +492 or +1.25%.
Nasdaq 16,685, +345 or +2.11%.
S&P 5,303, +81 or +1.55%.
MSCI EAFE 2381.35, +35.19 or +1.50%.
USD10Y 4.42%, -8.3bp or -1.84%.
WTI Crude $80.00 bbl, +$1.80 or +2.30%.

Although a hotter than expected Producer Price Index (wholesale prices) report on Tuesday continued to feed the “sticky inflation” narrative, the following day saw a better-than-expected Consumer Price Index report which not only calmed the markets but pushed all three indices to new record closes on Wednesday. A much cooler April U.S. Retail Sales report also supported the rally and the notion that the PPI number aside, perhaps the “last mile” fight against inflation is finally starting to show results. The next major inflation data point will be the Personal Consumption Expenditure on May 31.

This Week: May 20 – May 24

It’s retail earnings week with Lowes (LOW), Macy’s (M), Target (TGT), TJ Maxx (TJX), Williams-Sonoma (WSM), and Ross Stores (ROST) all reporting. In the tech sector, internet security firm Palo Alto Networks (PANW) will report as will Zoom Video (ZM). However, the 800lb gorilla on the earnings calendar is chip manufacturer extraordinaire, Nvidia (NVDA), which will report on Wednesday, after the close.

The economic calendar is very light this week with the FOMC’s May minutes the highlight on Wednesday.

Economic Calendar

Monday – N/A. Earnings: Palo Alto Networks (PANW), Zoom Video Communications (ZM).
Tuesday – N/A. Earnings: Lowe’s (LOW), Macy’s (M).
Wednesday – May FOMC minutes. Earnings: Target (TGT), TJ Maxx Stores (TJX), Williams-Sonoma (WSM), Nvidia (NVDA).
Thursday – Initial Jobless Claims, May Flash S&P Manufacturing and Services PMI. Earnings: Ross Stores (ROST).
Friday – April Durable Goods Orders. Earnings: N/A.

If you know of any friends or family members who could benefit from our services and these types of communiques, we are accepting new clients and offer a complimentary one-hour review.

Last Week‘s Daily Trading Recap…

Monday – Dow -81 to 39,431, Nasdaq +47 to 16,388, S&P -1 to 5,221, USD10Y -2.3bp to 4.481%.

Nine of eleven S&P sectors traded down today, led lower by Industrials, Financials, and Consumer Staples.
Roaring Kitty, the Redditor behind the rise of the meme stocks GameStop (GME) and AMC Entertainment (AMC) amongst others, posted on Reddit (RDDT) for the first time in three years. GME and AMC immediately spiked higher on massive volumes with GME trading up +74.4% and AMC trading up +78.35%. To be continued…

Tuesday – Dow +126 to 39,558, Nasdaq +122 to 16,511, S&P +26 to 5,246 USD10Y -3.6bp to 4.445%.

Eight of eleven S&P sectors traded higher today, led by Technology, Real Estate, and Communication Services.
The April Producer Price Index (PPI) was hotter than expected at +0.5% vs +0.3% expected and vs last month’s -0.1% reading. Year-over-year PPI rose to +2.2% vs +1.8% last month.
April Core PPI was also stronger than expected at +0.4% vs +0.2% last month and vs +0.2% last month.
Earnings: Home Depot (HD) beat earnings on softer than expected revenues; HD traded flat.

Wednesday – Dow +349 to 39,908 (record close), Nasdaq +231 to 16,742 (record close), S&P +61 to 5,308 (record close), USD10Y -8.9bp to 4.356%.

Ten of eleven S&P sectors traded higher today, led by Technology, Real Estate, and Health Care.
The April Consumer Price Index (CPI) was lower than expectations at +0.3% vs +0.4% expected and down vs last month’s +0.4% reading as well. Year-over-year CPI fell to +3.4%, in line with expectations and down from last month +3.5% reading.
April Core CPI fell to +0.3%, in line with expectations and down vs last month’s +0.4% print. Year-over-year Core CPI fell to +3.6% in line with expectations but down vs last month’s +3.8% reading.
April U.S. Retail Sales also showed signs of cooling with a +0.0% reading vs +0.4% expected and last month’s +0.6% reading.
May Empire State Manufacturing continued to show challenges with a -15.6 print vs -10 expected and vs -14.3 last month.
Earnings: Cisco Systems (CSCO) beat their earnings and revenue estimates, guided 2024 revenues higher and traded up +4.93% post close.

Thursday – Dow -38 to 39,869, Nasdaq -44 to 16,698, S&P -11 to 5,297, USD10Y +2.1bp to 4.377%.

Ten of eleven S&P sectors traded down today, led lower by Technology, Consumer Discretionary, and Industrials.
Jobless rose to 222,000 vs 219,000 forecast and vs. last week’s slightly revised higher print of 232,000 (originally 231,000).
May Philadelphia Federal Manufacturing Survey was lower than expectations at 4.5 vs 8 expected and vs 15.5 last month.

Friday – Dow +134 to 40,003, Nasdaq -12 to 16,685, S&P +6 to 5,303, USD10Y +4.3bp to 4.42%.

Eight of the eleven S&P sectors traded higher today, led by Energy, Materials, and Financials.
April Leading Economic Indicators were -0.6% vs -0.3% expected and vs last month’s -0.3% print.

If you know of any friends or family members who could benefit from our services and these types of communiques, we are accepting new clients and offer a complimentary one-hour review.

Disclaimer: This is not a recommendation to buy or sell any of the securities listed above. I personally, or a family member whose account I control, have positions in the following securities/assets…Bitcoin, Cardano, Chainlink, Ethereum, ACHR, AVGO, BITB, ETHE and GBTC.