Stock Market Today: Stocks higher as inflation, jobs data supports rate cut bets

Stocks need a firmer push to extend their record run following a hawkish rate message from Fed Chairman Jerome Powell.

Jun 13, 2024 - 18:30

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Stock Market Today: Stocks higher as inflation, jobs data supports rate cut bets

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U.S. equity futures moved higher in early Thursday trading, with Treasury yields slipping lower, as investors reacted to big changes in the Federal Reserve's interest rate forecasts while looking ahead to another busy session of data releases on Wall Street.

Updated at 8:37 AM EDT

Rate bet boost

Weekly jobless claims jumped higher over the period ending June 8, the Labor Department reported, rising by 13,000 to 242,000 and topping Wall Street's 225,000 forecast.

Producer price inflation, meanwhile, came in below Street forecasts, easing to 2.2% on the year in May and falling 0.2% on the month, a bigger-than-expected decline that echoes the softer consumer price inflation reading from Wednesday.

Benchmark 10-year note yields fell another 5 basis points to 4.251% following the data releases, while 2-year notes slipped to 4.672%

Stock futures were also on the rise, with the S&P 500 set for a 22 point opening bell gain and the Nasdaq called 180 points higher.

❖ U.S PPI (MOM) (MAY) ACTUAL: -0.2% VS 0.5% PREVIOUS; EST 0.1%

❖ U.S PPI (YOY) (MAY) ACTUAL: 2.2% VS 2.2% PREVIOUS; EST 2.5%

❖ U.S CORE PPI (MOM) (MAY) ACTUAL: 0.0% VS 0.5% PREVIOUS; EST 0.3%

❖ U.S CORE PPI (YOY) (MAY) ACTUAL: 2.3% VS 2.4% PREVIOUS; EST 2.4%— *Walter Bloomberg (@DeItaone) June 13, 2024

Stock Market Today

Stocks ended higher last night, with the S&P 500 and the Nasdaq recording their third straight set of record high closes, as Treasury yields tumbled on the back of a cooler-than-expected reading for CPI inflation over the month of May.

The headline tally, which showed the slowest monthly advance for overall price pressures in four years, pulled benchmark 10-year notes yields more than 10 basis points lower on the day as investors bet that easing inflation would move the Fed towards a series of autumn rate cuts.

However, the central bank's new Summary of Economic Projections, better-known as the 'dot plots', pointed to only one rate cut between now and the end of the year when they were released following the Fed's rate decision, which held the benchmark lending rate steady at between 5.25% and 5.5%.

*Federal Reserve Chair Powell suggested the central bank is only looking to one rate cut between now and the end of the year.*
Tom Williams/Getty Images

"Given the coordinated commentary from Fed members leading up to the June Fed meeting, it wasn’t surprising to see rate cuts delayed into the end of the year," said Charlie Ripley, senior investment strategist for Allianz Investment Management.

"However, moving from three cuts expected at the March meeting to only one cut for this year seems like an overly gloomy view on inflation progress," he added.

The CME Group's FedWatch pegs the odds of a September rate cut at around 61%, with similar chances for a follow-on move at the final meeting of the year in December.

Benchmark 2-year notes were trading at 4.756% heading into the start of the New York session, with 10-year notes holding at 4.308% ahead of a $22 billion auction of 30-year bonds later in the afternoon.

On Wall Street, stocks are set for a mixed open ahead of weekly jobless claims data and the Commerce Department's producer price inflation report for the month of May, both of which are expected at 8:30 am Eastern time.

Futures contracts tied to the S&P 500, which is now up 3.17% for the quarter and 13.65% for the year, are priced for a 3 point opening bell gain, while those linked to the Dow Jones Industrial Average are indicating a 139 point pullback.

The tech-focused Nasdaq, meanwhile, is looking at a firmer open of around 117 points.

Stocks on the move include Tesla (TSLA) , which is set for one of its best two-day gains in at least three years, rising 4.9% after CEO Elon Musk said he has won two key shareholder votes, including the authorization of a $55.8 billion pay deal.

Broadcom (AVGO) shares, meanwhile, surged 12.7% after the chip and networking equipment maker boosted its full-year AI revenue forecast and unveiled plans for a 10-for-1 stock split.

More Wall Street Analysts:

In overseas markets, Europe's Stoxx 600 benchmark slumped 0.97% in early Frankfurt dealing, while the FTSE 100 was marked 0.5% lower in London.

Overnight in Asia, the regional MSCI ex-Japan benchmark rose 0.73% heading into the close of trading while the Nikkei 225 ended 0.4% lower in Tokyo.