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October CPI Does Not Jeopardize December Rate Cut

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Wednesday, November 13, 2024

We start this mid-week trading day in the pre-markets with important inflation data: the Consumer Price Index (CPI) for October. Results were in-line with expectations across the board (see below for details) and pre-market futures had initially gathered steam on the indexes.

As it happens, a few minutes after the CPI report release, the Dow had jumped above +80 points from around +50; it’s back at  +65 currently. The S&P 500 — which broke a five-day winning streak that brought record closing high after record closing high — is up 10 points at this hour. The Nasdaq is up +30 points right now.

October CPI In-Line with Estimates; December Cut Looks OK


Headline CPI month over month came in at +0.2%, in-line with expectations and the September print. Stripping out volatile food and energy prices, core CPI month over month reached +0.3%, also in-line with both the consensus and the prior month.

Year-over-year headline CPI — aka the “Inflation Rate” — rose 20 basis points (bps) from September to +2.6% for last month, which was also as expected. And while this is a couple ticks up, contextually it’s no big deal: consider we were at +3.7% in September of 2023 and 40-year highs of +9.1% in June 2022. Core CPI year over year was in-line with expectations and the previous month at +3.3%.

These days, economic reports are always measured by their probability of affecting the Fed’s dot-plot on interest rates. Ahead of this morning’s CPI numbers, odds were waning that the Fed would keep its intended -25 bps cut at its December 18th meeting. Those odds have gotten somewhat better, removing a bit of the “threat” that the Fed might pass on bringing rates from their current range of +4.50-4.75%.

That said, there is a lot of economic data to come between now and mid-December. But common wisdom seems to be that in-line numbers won’t alter the Fed’s current plans. What it means for further cuts in 2025, however, especially with new economic policy initiatives from a second President Trump term, is very much in question.

Zacks Rank #1 (Strong Buy) CyberArk Trounces Q3 Estimates

Israel-based software firm CyberArk (CYBR - Free Report) has outperformed estimates on its bottom line for Q3 by a wide margin this morning: earnings of 94 cents per share more than doubled the 45 cents expected (for a positive earnings surprise of +108.9%). Revenues of $240.1 million in the quarter also outpaced expectations, +2.65%. 

This morning’s report even bettered the trailing four-quarter moving average of +89% earnings beats. The company has only underperformed on earnings once in the past five years. Shares are up slightly on the news in the pre-market, and +39% year to date. For more on CYBR’s earnings, click here.

Check out the updated Zacks Earnings Calendar here.

What to Expect for Hump Day in the Stock Market


A slew of Fed participants will share their views on the economy in light of the new CPI data after today’s open. Thy include Minneapolis’ Kashkari, New York’s Williams, Dallas’ Logan, St Louis’ Musalem and Kansas City’s Schmid. We’ll also get a new monthly federal budget this afternoon prior to the closing bell, expecting to sink to -$243 billion from -$67 billion posted a month ago.

After the close, fiscal Q1 results from Cisco Systems (CSCO - Free Report) are expected to come in -21% on earnings from a year ago and -6% on its top line. (Cisco literally never misses on earnings.) Also, Brazilian digital banking company Nu Holdings (NU - Free Report) is anticipated to bring +40% gains on both top and bottom lines in Q3 this afternoon.

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