NEWS
Stocks Fly On Tepid CPI

It was a wild day in the markets after inflation data turned rate cut expectations on their head. Bulls ultimately regained control and closed the market green. Semiconductor stocks were the major bright spot as investors finally found the courage to buy the dip in hyper-growth names. 👀

Today's issue covers why a 50 bp cut is off the table, a better place for meme stock traders, and palladium punching through resistance. 📰

Here’s the S&P 500 heatmap. 6 of 11 sectors closed green, with technology (+3.41%) leading and consumer staples (-0.93%) lagging.

And here are the closing prices: 

Most bullish/bearish symbols on Stocktwits at the close: 📈 $PLCE, $BQ, $PCT, $FSLR, $MOD 📉 $SIG, $OXM, $MANU, $PR, $DJT*

*If you’re a business and want to access this data via our API, email us.

ECONOMY
Traders Take 50bps Off The Table 😒

Consumer price growth came in at its lowest level since February 2021, with the headline reading rising 2.90% YoY, down from July’s 2.90%. The 0.20% MoM increase matched expectations. 👍

Meanwhile, core inflation rose 0.30% MoM and 3.20% YoY, as shelter prices reaccelerated after fifteen months of decline. The 5.20% YoY increase in shelter accounted for more than 70% of core CPI’s annual increase.

These readings are encouraging enough for the Fed to go through with its plan to cut rates next week. However, the market now expects a 25 bp cut instead of 50 bp, given that core inflation and shelter prices remain elevated (and a risk to the Fed’s 2% mandate). 🔻

As we discussed last week, the Fed was unlikely to cut 50 bps anyway because of the alarming message it could send to the market. With inflation continuing to move lower and the labor market cooling at moderate paces, the Fed’s path will remain slow and steady unless the data shifts dramatically toward the risk side of the equation. And so far, it hasn’t. 🤷

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