The CPI surprised nominally on the downside offering evidence that the Central Bank may be able to cut rates as soon as September.
Briefly, the core CPI climbed 0.1% from May, the smallest advance since August 2021. The year-over-year measure rose 3.3%, also the slowest pace in more than three years.
The Treasury market rallied on the news, causing the curve to steepen.
However, equities were bifurcated as the NASDAQ 100 fell 2%, the S & P 500 tumbled 1% even as over 400 of its members advanced. A version of the benchmark index that strips out market cap bias gained 1.2%, berating the weighted index by the most since November 2020.
Perhaps of more significance the Russell 2000 surged over 3.2%. The 5% difference between the NASDAQ 100 and the Russell 2000 is the most since March 2020.
A Bloomberg Index that tracks the Magnificent 7 tumbled tumbled as much as 4.1%, on pace for it biggest decline since July 2023.
Is big tech turning on itself and the rest of the market benefitting? One day does not make a trend given the years’ long overperformance of mega tech, however the velocity of change is incredible.
Earning season commences this morning as both JP Morgan and Citicorp post results. Also posted today is June’s PPI. How will the earnings and data be interpreted?
Last night the foreign markets were up. London was up 0.27%, Paris up 0.72% and Frankfurt up 0.38%. China was up 0.03%, Japan down 2.45% and Hang Seng up 2.59%.
Futures are flat. The 10-year is off 1/32 to yield 4.22%.
Kent Engelke
Chief Economic Strategist Managing Director
The views expressed herein are those of Kent Engelke and do not necessarily reflect those of Capitol Securities Management. Any opinions expressed are statements of judgment on this date and are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated or projected. Any future dividends, interest, yields and event dates listed may be subject to change. An investor cannot invest in an index, and its returns are not indicative of the performance of any specific investment. Past performance is not indicative of future results. This material is being provided for informational purposes only. Any information should not be deemed a recommendation to buy, hold or sell any security. Certain information has been obtained from third-party sources we consider reliable, but we do not guarantee that such information is accurate or complete. This report is not a complete description of the securities, markets, or developments referred to in this material and does not include all available data necessary for making an investment decision. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Investing involves risk and you may incur a profit or loss regardless of strategy selected. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct. If you would like to unsubscribe from this e-mail distribution, please reply to this e-mail and indicate that you wish to unsubscribe in your response.
