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Markets Strong Ahead of CPI Report; Oracle Beats in Q2
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Major market indices were up significantly across the board on this first trading day of the week, led by the blue-chip Dow index +528 points on the day, or +1.58% — back up over 34K once again. The S&P 500 had a strong +1.43%, while the Nasdaq gained +139 points, or +1.26%. Even the small-cap Russell 2000 reached +1.20% in the session. It was a very good start to bounce back from the single-worst trading week since September.
Transportation stocks rose the highest today, around +3%, partly on cheaper fuel prices of late, particularly in diesel (although the Keystone pipeline shutdown may have something to say about this going forward). But more likely this illustrates market participants expecting good things from tomorrow’s Consumer Price Index (CPI) report for November: consensus headline CPI year over year is currently +7.3%, down 40 basis points (bps) month over month. If, for some reason, we find ourselves even lower on year-over-year CPI, we could see that “Santa Claus Rally” that has so far eluded us.
It was June of this year that saw a 41-year peak in CPI metrics, which interest rate hikes have since been helping bring down, at +9.1%. Last month, four months later, we’d already rolled off to +7.7% — still high, but -140 bps from the peak, and a clear downward trajectory over time. We haven’t seen a sub-7% CPI number in the past 12 months. But even though last week’s sister report, the PPI, did not reach consensus estimates lower, they were still down month over month — a good thing.
The added benefit a lower CPI print tomorrow would offer is some assurance the Fed is not going to shift gears at the last minute and raise interest rates another 75 bps; 50 bps is currently baked into market projections. Thus, we’d finally get some “good news is good news” — a lower inflation read leading to a better outcome from the Fed — instead of “good news is bad news,” as we’ve been living through for months.
Austin, TX-based Oracle Corp. (ORCL - Free Report) reported fiscal Q2 results after the closing bell, unto itself in earnings reportage. It did not disappoint: earnings of $1.21 per share outpaced expectations by 4 cents, while revenues of $12.28 billion surpassed the $12.03 billion anticipated. Oracle only has two earnings misses in the past five years, but they were both within the past four quarters.
Oracle says its earnings beat would have been 9 cents per share higher, had it not been for foreign exchange costs. The company’s deferred revenue came in hotter than expected, which has not been the case for other big tech names during this past earnings season. Shares of ORCL have climbed nearly +3% in late-trading; the Zacks #2-ranked company is now down mid-single-digits year to date.
Image: Bigstock
Markets Strong Ahead of CPI Report; Oracle Beats in Q2
Major market indices were up significantly across the board on this first trading day of the week, led by the blue-chip Dow index +528 points on the day, or +1.58% — back up over 34K once again. The S&P 500 had a strong +1.43%, while the Nasdaq gained +139 points, or +1.26%. Even the small-cap Russell 2000 reached +1.20% in the session. It was a very good start to bounce back from the single-worst trading week since September.
Transportation stocks rose the highest today, around +3%, partly on cheaper fuel prices of late, particularly in diesel (although the Keystone pipeline shutdown may have something to say about this going forward). But more likely this illustrates market participants expecting good things from tomorrow’s Consumer Price Index (CPI) report for November: consensus headline CPI year over year is currently +7.3%, down 40 basis points (bps) month over month. If, for some reason, we find ourselves even lower on year-over-year CPI, we could see that “Santa Claus Rally” that has so far eluded us.
It was June of this year that saw a 41-year peak in CPI metrics, which interest rate hikes have since been helping bring down, at +9.1%. Last month, four months later, we’d already rolled off to +7.7% — still high, but -140 bps from the peak, and a clear downward trajectory over time. We haven’t seen a sub-7% CPI number in the past 12 months. But even though last week’s sister report, the PPI, did not reach consensus estimates lower, they were still down month over month — a good thing.
The added benefit a lower CPI print tomorrow would offer is some assurance the Fed is not going to shift gears at the last minute and raise interest rates another 75 bps; 50 bps is currently baked into market projections. Thus, we’d finally get some “good news is good news” — a lower inflation read leading to a better outcome from the Fed — instead of “good news is bad news,” as we’ve been living through for months.
Austin, TX-based Oracle Corp. (ORCL - Free Report) reported fiscal Q2 results after the closing bell, unto itself in earnings reportage. It did not disappoint: earnings of $1.21 per share outpaced expectations by 4 cents, while revenues of $12.28 billion surpassed the $12.03 billion anticipated. Oracle only has two earnings misses in the past five years, but they were both within the past four quarters.
Oracle says its earnings beat would have been 9 cents per share higher, had it not been for foreign exchange costs. The company’s deferred revenue came in hotter than expected, which has not been the case for other big tech names during this past earnings season. Shares of ORCL have climbed nearly +3% in late-trading; the Zacks #2-ranked company is now down mid-single-digits year to date.
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