U.S. stocks are showing mixed movement this Wednesday as investors grapple with the results of the latest Consumer Price Index (CPI) report. The S&P 500 was up a modest 0.15%, while the tech-heavy Nasdaq Composite was down 0.2%. The Dow Jones Industrial Average is faring the best, climbing 0.4%
Market Movers:
- Tech Wobbles on Antitrust Concerns: Shares of Alphabet (GOOG), Google's parent company, are down over 2.98% on news that the U.S. Justice Department is considering breaking up the tech giant. This follows a recent landmark ruling finding Google's search and ad practices violated antitrust laws.
- Pringles Parent Pops on Acquisition: Kellanova (K), the maker of Pringles, is soaring over 7.6% after Mars, the owner of Skittles and M&M's, announced a $36 billion acquisition deal. This is the biggest deal in the packaged food industry so far.
Inflation Cools Off
The key driver of today's market action is the CPI report released this morning. The data showed that consumer prices rose 2.9% year-over-year in July, down from June's 3.0% annual gain. This marks the first time since March 2021 that overall inflation has dipped below 3%. Core inflation, which excludes food and energy prices, also showed signs of cooling, coming in at 3.2% year-over-year. These figures are in line with analyst expectations and suggest continued progress in taming inflation.
Fed Rate Cut on Horizon
The positive inflation reading is seen as a green light for the Federal Reserve to potentially cut interest rates at its September meeting. Market bets currently place the likelihood of a 50 basis point cut at around 44%, according to the CME FedWatch tool. This is down slightly from a day ago due to some cautiousness following the data.
Looking Ahead
Overall, the market seems to be cautiously optimistic based on the inflation data. While the Fed rate cut appears likely, investors are watching for further economic signals before making significant moves. Geopolitical tensions and ongoing corporate earnings reports are also factors that could influence market direction in the coming days.