Wall Street cheers inflation slowdown
Consumer prices rose 4% during the past 12 months, the smallest year-over-year increase in more than two years. Tech stocks keep rallying too on cloud and AI hype.
Whew! It’s a busy morning for an almost summer Tuesday. Here’s a quick look at all that’s going on.
Inflation pressures are cooling off dramatically. Consumer prices rose “just” 4% over the past 12 months, the lowest level since March 2021. Investors now think it’s a virtual lock that the Federal Reserve will NOT raise rates tomorrow. Fed funds futures are pricing in an almost 100% chance of a pause.
But as I wrote yesterday, it’s still not clear what happens in the next few Fed meetings. Another rate hike isn’t off the table yet for later this summer.
Stocks are, unsurprisingly, rallying on this news. Techs in particular are getting a big boost. But that may have more to do with the continued hype about artificial intelligence and cloud computing.
Software giant Oracle reported strong earnings and sales Monday, led by growth in its cloud business. Shares of Larry Ellison’s company popped Tuesday morning on the news and are trading at an all-time high.
And semiconductor leader Intel was up a bit Tuesday following a solid rally Monday. There are reports that Intel is in talks to be an “anchor investor” in the upcoming IPO of Softbank-owned chip giant Arm. An Intel investment in Arm could give Intel a bigger presence in the world of AI, an area where Intel has been lagging.
Shares of Intel are doing well this year, up about 25%. But while that may sound great, Intel’s stock performance is trailing the broader Philadelphia Semiconductor Index. And Intel is way behind rivals Nvidia and Advanced Micro Devices. AMD has nearly doubled while Nvidia has soared more than 170% this year, pushing its market cap to about $1 trillion.
In other news, shares of Tesla are higher this morning. If Elon Musk’s EV giant finishes the day in the green, that will extend the stock’s winning streak to an astonishing thirteen sessions.
And for all you soccer/football aficionados out there, Manchester United (which is publicly traded) appears set to be sold. Reports suggest that Qatar’s Sheikh Jassim is on the verge of taking over the club. The stock is up more than 10% on the news. That may soften the blow somewhat for the team’s fans after Man U lost the FA Cup earlier this month to rival (and treble winning) Manchester City. Oh. Who am I kidding?