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.

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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While other ‘meme stocks’ like GameStop and Trump Media & Technology tumbled on weak fundamentals, the momentum has shifted to another beaten-down retailer. 👀

Children's Place was mulling bankruptcy earlier this year but was able to shore up its liquidity to mount a turnaround story. Unlike many other ‘meme stocks, ’ the company is actually making some improvements.

The company’s second-quarter results saw gross profit margins rise to 35%, with selling, general, and administrative (SGA) expenses hitting 15-year lows. That helped offset a 7.50% YoY decline in sales, which remains the key challenge. 🔺

Additionally, the company posted positive comparable store sales for the first time in ten quarters, helping it generate $3.90 million in adjusted income (or $0.30 per diluted share).

The heavily shorted stock surged 86% on the day, and the Stocktwits community expects the momentum to continue as sentiment pushed into ‘extremely bullish’ territory. 🐂

Additionally, many other smaller market-cap (speculative) stocks experienced momentum, including Quhuo Ltd. ($QH), FTC Solar $(FTCI), Nano Nuclear Energy ($NNE), and more. For a full list of undercover names, check out the list of the most active and most watched stocks today. 🧐

Over the summer, we outlined the precious metal that was getting little love from the market but showing meaningful signs of improvement: palladium.

Below is the chart we shared back then, with prices stabilizing above long-term support and momentum improving. Since then, prices have continued to churn sideways but are now turning higher. 🔺

Technical analysts are now pointing to another improvement, this time on the daily chart, with prices breaking firmly above their 200-day moving average.

This long-term trend indicator has been declining for roughly three years, signaling continued selling pressure. Now, with prices treading water for the last nine months, that moving average has begun to flatten out and turn higher. The longer prices stay above this, the faster it will turn higher. 🤔

Overall, analysts say these signs point to the slow but gradual reversal of this market’s downtrend into a new uptrend. Palladium futures are one way to play it, but traders are also looking to leverage commodity ETFs like $PALL and mining stocks with exposure to the commodity. ⚒️

Economic data: European Central Bank Rate Decision (8:15 am ET), Producer Price Index - PPI (8:30 am ET), Initial/Continuing Jobless Claims (8:30 am ET), European Central Bank Press Conference (8:45 am ET), WASDE Report (12:00 pm ET), and Monthly Budget Statement (2:00 pm ET). 📊

Pre-Market Earnings: Big Lots ($BIG), Kroger ($KR), Signet Jewelers ($SIG), DouYu International Holdings ($DOYU), and Innate Pharma ($IPHA). 🛏️

After-Hour Earnings: Adobe ($ADBE), Restoration Hardware ($RH), Lovesac ($LOVE), Radiant Logistics ($RLGT), and Farmer Bros ($FARM). 🎧

P.S. You can listen to all of these earnings calls and more straight from the Stocktwits app or website. You’ll find them on the calendar page and individual symbol pages once they’re set to begin! We’ll see you there. 👍

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🚨 Atlanta Fed’s Bostic violated trading rules, central bank watchdog says

💰 OpenAI in talks to raise funds at $150 bln valuation, Bloomberg News reports

🍔 Restaurant chain BurgerFi files for Chapter 11 bankruptcy protection

💵 Americans’ inflation-adjusted incomes rebounded to pre-pandemic levels last year

🛒 Amazon launches new Amazon Saver private label to help shoppers save, take on Walmart, Target

😡 Homeowner who sold ‘billionaire bunker’ Miami mansion for less than asking price sues realtor for not disclosing Jeff Bezos was buyer

*3rd Party Ad. Not an offer or recommendation by Stocktwits. See disclosure here.

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