Coffee With Greta: Stocks Surge On Cool CPI
DJIA Futures: +709 (+2.1%)
SPX Futures: +109 (+2.7%)
NASDAQ Futures: +446 (+3.8%)
Good morning friends!
Futures are surging after the release of cooler-than-expected inflation data.
Let’s get right to it!
CPI Cools More Than Expected
Consumer prices cooled more than expected in November in a sign the Fed’s rate hikes are working to slow inflation.
The Bureau of Labor Statistics’ consumer price index rose 0.1% monthly and 7.1% year over year last month.
That was better than economists’ expectations for +0.3% monthly, +7.3% annually.
Shelter and food prices continued to rise while energy prices dropped.
Grocery prices rose 0.5% monthly and 12% year over year while shelter prices rose 0.6% monthly and 7.1% annually.
Those gains were offset by the 2% monthly drop in gas prices, 3.5% monthly decline in utility gas prices, and 2.9% drop in used car and truck prices.
The core CPI, which excludes food and energy, also cooled more than expected.
Core prices were up 0.2% monthly and 6% year over year vs +0.3% monthly and +6.1% annually expected.
Yields Tumble After CPI
Treasury yields are tumbling this morning after the release of that better than expected inflation data.
The 2-year yield is down 13 basis points to 4.23% while the 10-year yield is down 9 basis points to 3.48%.
CME Group’s FedWatch Tool now shows 79.4% of traders expecting the Fed to pivot to a smaller 50 basis point rate hike this week.
The central bank kicks off its policy meeting today with the rate hike decision set to be released at 2:00 p.m. ET on Wednesday.
Oil Prices Climb On Supply Disruptions, Optimism About China
Oil prices are higher this morning as the market faces supply disruptions and Covid restrictions continue to ease in China.
West Texas Intermediate crude futures are up 1.9% to over $74.50 bbl while Brent crude futures are up 2.1% to over $79.50 bbl.
The Keystone Pipeline which ships Canadian crude to the U.S. is still shutdown after a rupture last week.
The timetable to restart that pipeline is still unclear.
That shutdown has raised expectations U.S. crude inventories will decline sharply.
The American Petroleum Institute releases the first report of supply levels at 4:30 p.m. ET today.
Oracle Rallies On Earnings Beat
Oracle (ORCL) shares are up 4.6% ahead of the open after beating fiscal Q2 expectations.
Here’s how the software company’s results compared to analysts’ expectations:
- Adjusted EPS: $1.21 vs $1.17 expected
- Revenue: $12.28 billion vs $11.96 billion expected
The CEO called for revenue to increase 17% to 19% in fiscal Q3.
That suggests a total between $12.3 billion and $12.5 billion.
Oracle guided for adjusted EPS of $1.17 to $1.21.
Analysts were estimating adjusted EPS of $1.23 on $12.21 billion in revenue.
In Case You Missed It
- Consumer inflation expectations improved in November. The New York Fed’s survey of consumer expectations showed respondents see inflation at 5.2% one year from now. That was down 0.7% from the October reading and the lowest since August 2021. The three year projection also improved by 0.1% to 3% while the five year outlook declined by 0.1% to 2.3%.