Dow futures rose 400 points after a lighter-than-expected inflation report

Stock futures rose and bond yields fell after the long-awaitedJuly summer price report was much better than expected.

Prices rose 8.5% in July year-on-year, at a slower pace than in June. Month to month, inflation was flat as energy prices broadly fell 4.6% and gasoline fell 7.7%. This was offset by a 1.1% monthly increase in food prices and a 0.5% increase in shelter costs. Economists polled by Dow Jones expected the headline CPI to rise 8.7% year over year and 0.2% monthly.

Excluding volatile food and energy prices, core CPI rose 5.9% annually and 0.3% monthly, compared to related estimates of 6.1% and 0.5%.

—John Milloy, Jeff Cox

Investors cheered a Inflation report colder than expectedDow futures jumped 400 points. Nasdaq 100 futures are gaining more than 2%, which means the tech-heavy Nasdaq Composite could erase its losses from Tuesday when the options market.

In the bond market, Treasury yields fell after the report.

– Jesse Pound

Shortly before the CPI report, futures built on their morning gains.

Dow Jones Industrial Average futures rose 101 points, or 0.3%. S&P 500 futures rose 0.4% and Nasdaq 100 futures rose 0.5%.

– Jesse Pound

Galaxy Digital CEO Michael Novogratz said on “Squawk Box” that he was watching the Treasury yield curve as a leading indicator of what could happen next for the markets.

“The most amazing thing is the 2- to 10-second incline,” Novogratz said. Curve flattened to minus 50 basis points between 2 and 10 seconds [50] years, only once in the 1970s. At some point, that will regress, and I think that will be the biggest inflection point.”

A base point is 0.01 percentage point.

When the two-year Treasury yield is trading above the 10-year yield, many on Wall Street see it as a strong indicator of a recession. On Wednesday, the two-year yield was trading at 3.278%, while the 10-year yield was at 2.803%.

Novogratz said he thinks investors are overconfident in a future pivot from the Federal Reserve, which may be one reason long-term interest rates are trading below short-term rates.

— Jesse Pound

Goldman Sachs lowered its forecast for gold, saying it overestimated how much recession fears could drive prices.

The company now sees gold averaging $1,850/toz over the next three months, before surging slightly to $1,950/toz over the remainder of the year.

The new forecast is lower than the previous 12-month forecast of $2,500/toz. The company said it reached that goal after looking at how gold has traded over the past 20 years, noting that stagnation risks around tightening cycles have previously been a more important driver than real rates.

“While we expected an increase in nominal interest rates on the back of Fed increases, we did not expect inflation expectations to drop much after the passing narrative failure and persistently high inflation surprises,” Goldman wrote in a note to clients.

“The main conclusion is that in the current environment of policy tightening and continuing recession fears, gold’s tactical direction will be determined by shifts in the Fed’s priority function between fighting inflation and supporting growth,” the company added.

US gold futures were traded at $1,811.40 an ounce on Wednesday.

– Peppa Stevens

The recent rally in the market could put stocks at risk of pulling back from Wednesday’s CPI reading, according to BTIG technical strategist Jonathan Krinsky.

The strategist said in a note to clients Tuesday night that stocks have made some counter-intuitive moves after this year’s CPI reports, and rankings ahead of the report appear to be a key factor in how the market reacts.

“At the end of the day, nobody knows what the number will be or how the market will react to that number, but from our perspective, things are overbought leaving room for the market to move lower after the number,” Kreinsky wrote. .

— Jesse Pound

Elon Musk Tesla shares sold for nearly $6.88 billion – despite saying earlier this year that he “has no further sales plans for TSLA”.

Tesla’s CEO has sold 7.92 million shares in the electric car company, according to a series of financial filings Tuesday night. Securities and Exchange Commission (SEC) filings showed that the transactions occurred between August 3. 5 and 9. Tesla held its annual shareholder meeting on August 3. 4.

Earlier this year, Musk took to social media to say he had no plans to sell Tesla stock after April 28. The billionaire investor is currently engaged in a legal battle with Twitter, which he agreed to buy for approximately $44 billion.

Tesla shares are up 2% in Wednesday’s pre-market trading. Twitter is up 4%.

– Sarah Min

European markets were mixed on Wednesday morning as global investors awaited key US inflation data.

pan europe Stokes 600 It was almost flat late in the morning. Travel and leisure stocks jumped 1.3%, while healthcare stocks fell 0.8%.

On the data front in Europe, German final consumer price inflation for July came in at 7.5% yoy and 0.9% monthly, official figures revealed on Wednesday, roughly in line with expectations.

Earnings remain the main driver of individual stock price movements in Europe. Ahold Delhaize, ABN AMRO, E.On, TUI Group, Metro, Deliveroo, Prudential and Aviva were among the major companies reporting before the bell on Wednesday.

– Elliot Smith

China’s consumer price index in July reached a two-year high as pork prices rebounded, according to official data released on Wednesday.

Pork prices rose 20.2% in July from a year ago, marking the first increase since September 2020, according to data from Wind Information.

In addition, pork prices recorded the largest monthly increase ever – by 25.6%. Farmers’ reluctance to sell – hoping for higher prices in the future – has contributed to higher pork prices, Nanhua Futures agricultural products analyst Bian Shuyang said in a statement.

A statement added that live pig producers are now operating at a profit, indicating that there is more supply to come. He said the upcoming two Chinese holidays in September and October would help support consumer demand for pork.

however, Inflation data on Wednesday It continued to reverse lackluster demand in the Chinese economy.

The Consumer Price Index rose 2.7% in July, missing expectations for a 2.9% increase, according to analysts polled by Reuters. In addition, despite the summer holidays, the tourism price component rose only 0.5% in July from last year.

– Li Yingshan and Evelyn Cheng

Market watchers are looking to the July inflation report – due for release later today – for clues about what the Federal Reserve will do at its next meeting in September.

before the report is issued, CNBC Pro researched Wall Street research To determine what investment banks are watching for signs of consumer weakness, and their advice on how investors position themselves in this environment.

Find out more about the consumer-related stocks that analysts at Goldman Sachs, Bank of America and Barclays love.

– Xavier Ong

In addition to Wednesday’s CPI report, markets will also absorb Fedspeak from two regional bank chiefs. It may give more insight regarding the central bank’s path forward and the magnitude of future rate hikes, especially at the September meeting.

Charles Evans, president of the Federal Reserve Bank of Chicago, will speak Wednesday at 11:00 a.m. ET at Drake University in Des Moines, Iowa.

Later, Minneapolis Fed President Neil Kashkari will speak at a panel discussion on stagflation at the Aspen Economic Strategies Group.

– Carmen Renick

July inflation report It may show that prices have cooled At least that’s what economists and investors are hoping for.

Economists estimate for a July report that the consumer price index rose only 0.2%, down from the 1.3% jump in June, according to Dow Jones. This would push the pace of consumer inflation year-on-year in July to 8.7%, down from 9.1% in June.

If the reading is lower than it was last month, it may show that we are past the peak of inflation and beginning to head in the right direction. This will show how aggressively the Federal Reserve will raise interest rates in the future.

– Carmen Renick

Coinbase and Roblox shares are making some of the biggest moves in after-hours trading on Tuesday after reporting earnings that failed to meet Wall Street expectations.

Coinbase fell more than 5% after that Earnings reporting Shows a larger-than-expected loss during the quarter, and the company missed revenue estimates.

Roblox is down over 16% after losing it on profits and revenue. In addition, the company also reported only 52.2 million daily active users, down from 54.1 million users in the previous quarter.

– Carmen Renick