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Wall Street closed sharply higher on Friday as investors confidence boosted by two major inflation data released last week. Market participants are expecting the inflation to \cool gradually going forward. Moreover, the U.S. Congress also cleared a major Inflation Reduction Act bill. All the three major indexes ended in positive territory. For the week, these indexes finished in green too.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) advanced 1.3% or 424.38 points to close at 33,761.05. Notably, 29 components of the 30-stock index ended in positive territory while 1 in red. The tech-heavy Nasdaq Composite finished at 13,047.19, rising 2.1% or 267.27 points due to strong performance of large-cap technology stocks.
The S&P 500 surged 1.7% to end at 4,280.15. All 11 broad sectors of the index closed in positive zone. The Consumer Discretionary Select Sector SPDR (XLY), the Technology Select Sector SPDR (XLK) and the Materials Select Sector SPDR (XLB) rallied 2.3%, 2% and 1.9%, respectively.
The fear-gauge CBOE Volatility Index (VIX) was down 3.3% to 19.53. A total of 9.99 billion shares were traded Friday, lower than the last 20-session average of 11.04 billion. Advancers outnumbered decliners on the NYSE by a 4.43-to-1 ratio. On Nasdaq, a 2.76-to-1 ratio favored advancing issues.
Inflation Inches Down in July
The Department of Labor reported that Consumer price index (CPI) for July remained flat with June. However, year over year, CPI increased 8.5% in July compared with 9.1% in June. The decline was primarily due to a 4.6% drop in energy prices, especially, the gasoline price fell 7.7%. However, food prices rose 1.1% in July.
The core CPI (excluding volatile food and energy items) increased 0.3% in July compared with 0.7% in June. The consensus estimate was 0.5%. Year over year, core CPI appreciated 5.9%, below the consensus estimate of 6.1%.
The producer price index (PPI) declined 0.5% in July compared with the consensus estimate of a rise of 0.2%. The data for June was revised downward to a rise of 1% from 1.1% reported earlier. Year over year, the PPI climbed 9.8%, the lowest rate since October 2021. That compares with an 11.3% increase in June and the record 11.7% gain in March.
The core PPI (excluding food, energy and trade services) declined 0.2% in July compared with the consensus estimate of a rise of 0.4%. The data for June was revised downward to a rise of 0.4% from 0.5% reported earlier. Year over year, core PPI appreciated 5.8%.
U.S. Congress Clears Inflation Reduction Act
On Aug 12, the House of Representatives passed a $430 billion Inflation Reduction Act, which was already cleared by the Senate on Aug 6. Now, President Biden’s signature will convert this bill into a law. The size of the bill may rise up to $737 billion in 10 years. Democrats have estimated that the bill will reduce government deficit by more than $300 billion.
The bill has provisions of $390 billion to combat climate change. Per the Biden administration, the most important way to restore a clean climate is to encourage Americans to shift toward electric vehicles (EV). Democrats are of the opinion that the legislation will reduce carbon emissions by 40% by 2030.
The University of Michigan reported that the preliminary data for consumer sentiment in July increased to 55.1% from 51.5% in June. The consensus estimate was 52.7%. Moreover, inflation expectation for the next one year dropped to 5% in July from 5.2% in June.
Weekly Roundup
Last week was an impressive one for Wall Street. The Dow, the S&P 500 and the Nasdaq Composite rallied 2.9%, 3.15 and 3.3%, respectively. The S&P 500 and the Nasdaq Composite recorded fourth straight week of win, marking their longest weekly winning streak since the week ended Nov 5, 2021.
Decline in two major inflation data and an increase in consumer sentiment data bolstered market participants confidence in risky assets like equities.
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Stock Market News for Aug 15, 2022
Wall Street closed sharply higher on Friday as investors confidence boosted by two major inflation data released last week. Market participants are expecting the inflation to \cool gradually going forward. Moreover, the U.S. Congress also cleared a major Inflation Reduction Act bill. All the three major indexes ended in positive territory. For the week, these indexes finished in green too.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) advanced 1.3% or 424.38 points to close at 33,761.05. Notably, 29 components of the 30-stock index ended in positive territory while 1 in red. The tech-heavy Nasdaq Composite finished at 13,047.19, rising 2.1% or 267.27 points due to strong performance of large-cap technology stocks.
The S&P 500 surged 1.7% to end at 4,280.15. All 11 broad sectors of the index closed in positive zone. The Consumer Discretionary Select Sector SPDR (XLY), the Technology Select Sector SPDR (XLK) and the Materials Select Sector SPDR (XLB) rallied 2.3%, 2% and 1.9%, respectively.
The fear-gauge CBOE Volatility Index (VIX) was down 3.3% to 19.53. A total of 9.99 billion shares were traded Friday, lower than the last 20-session average of 11.04 billion. Advancers outnumbered decliners on the NYSE by a 4.43-to-1 ratio. On Nasdaq, a 2.76-to-1 ratio favored advancing issues.
Inflation Inches Down in July
The Department of Labor reported that Consumer price index (CPI) for July remained flat with June. However, year over year, CPI increased 8.5% in July compared with 9.1% in June. The decline was primarily due to a 4.6% drop in energy prices, especially, the gasoline price fell 7.7%. However, food prices rose 1.1% in July.
The core CPI (excluding volatile food and energy items) increased 0.3% in July compared with 0.7% in June. The consensus estimate was 0.5%. Year over year, core CPI appreciated 5.9%, below the consensus estimate of 6.1%.
The producer price index (PPI) declined 0.5% in July compared with the consensus estimate of a rise of 0.2%. The data for June was revised downward to a rise of 1% from 1.1% reported earlier. Year over year, the PPI climbed 9.8%, the lowest rate since October 2021. That compares with an 11.3% increase in June and the record 11.7% gain in March.
The core PPI (excluding food, energy and trade services) declined 0.2% in July compared with the consensus estimate of a rise of 0.4%. The data for June was revised downward to a rise of 0.4% from 0.5% reported earlier. Year over year, core PPI appreciated 5.8%.
U.S. Congress Clears Inflation Reduction Act
On Aug 12, the House of Representatives passed a $430 billion Inflation Reduction Act, which was already cleared by the Senate on Aug 6. Now, President Biden’s signature will convert this bill into a law. The size of the bill may rise up to $737 billion in 10 years. Democrats have estimated that the bill will reduce government deficit by more than $300 billion.
The bill has provisions of $390 billion to combat climate change. Per the Biden administration, the most important way to restore a clean climate is to encourage Americans to shift toward electric vehicles (EV). Democrats are of the opinion that the legislation will reduce carbon emissions by 40% by 2030.
In the United States, Tesla Inc. (TSLA - Free Report) is the undisputed leader in the EV space with General Motors Co. (GM - Free Report) , Ford Motor Co. (F - Free Report) and Toyota Motor Corp. (TM - Free Report) having joined the race already. As a result, shares of Tesla, General Motors, Ford and Toyota rose 1.7%, 2.7%, 2.2% and 1.7%, respectively. Tesla carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Economic Data
The University of Michigan reported that the preliminary data for consumer sentiment in July increased to 55.1% from 51.5% in June. The consensus estimate was 52.7%. Moreover, inflation expectation for the next one year dropped to 5% in July from 5.2% in June.
Weekly Roundup
Last week was an impressive one for Wall Street. The Dow, the S&P 500 and the Nasdaq Composite rallied 2.9%, 3.15 and 3.3%, respectively. The S&P 500 and the Nasdaq Composite recorded fourth straight week of win, marking their longest weekly winning streak since the week ended Nov 5, 2021.
Decline in two major inflation data and an increase in consumer sentiment data bolstered market participants confidence in risky assets like equities.