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S&P 500 Pares Gains as Treasury Yields Move Off Lows Despite Easing Inflation

Stock Markets Aug 11, 2022 03:47PM ET
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By Yasin Ebrahim

Investing.com -- The S&P 500 pared gains Thursday, as Treasury yields bounced off session lows, but remained supported by further signs of easing inflation and a jump in energy stocks.

The S&P 500 fell 0.2%, the Dow Jones Industrial Average gained 0.02 %, or 5 points, the Nasdaq was down 0.64%.

The U.S. producer price index, a measure of wholesale inflation, declined by 0.5% in July after rising 1% in June, driven by a large decline in energy prices.

It was the first monthly decline in more than two years, and – following Wednesday’s softer consumer inflation report - added to expectations that inflation is nearing a peak.

“I think inflation will continue to look better and will give the Fed more of a reason toward the end of the year to potentially signal a pause,” Jimmy Lee, the founder and CEO of The Wealth Consulting Group, told Investing.com in an interview on Thursday.

Bets that the Federal Reserve isn’t likely to dramatically step up the pace of monetary policy continue to gain traction, with the odds of a 75 basis point hike in September falling to 19% from 34% a day earlier, according to Investing.com’s Fed Rate Monitor Tool.

Fresh signs of easing inflation come just as the labor market continued to show strength as jobless claims of 262,000 in the week ended July 30 fell short of economists’ estimates.

“The modest pickup in claims suggests that turnover may be increasing in weaker firms that are struggling with slowing growth,” Jefferies said in a note.

Tech, meanwhile, struggled to hold gains as Treasury yields rebounded from session lows forcing Google-parent Alphabet (NASDAQ:GOOGL), Meta (NASDAQ:META), Apple (NASDAQ:AAPL), and Microsoft (NASDAQ:MSFT) to pare some gains.

Energy stocks, however, supported the broader market, rising 2% on strength in oil prices on demand optimism after the International Energy Agency lifted its oil demand growth estimate for this year.

The IEA boosted its outlook on oil demand for this year by 380,000 barrels per day, with demand now seen rising by 2.1 million bpd to a total of 99.7 million bpd in 2022.

The earnings front offered a mixed picture.

Walt Disney Company (NYSE:DIS) was the standout performer, rising more than 4% after its quarterly results topped estimates. The company also said it would hike the subscription price of its streaming service Disney+ and launch an ad-supported version of the service on Dec. 8.

The price hikes provide a “path to profitability for [Disney’s streaming business],” Credit Suisse said, but “streaming losses will be higher than expected in F4Q22/FY23…tough still peak in FY22 and hit profitability during FY24.”

Bumble Inc (NASDAQ:BMBL), however, after the dating service operator slashed its full-year revenue guidance after delivering mixed quarterly results as losses came in wider than expected in the second quarter. Its shares fell more than 7%.

Six Flags Entertainment New (NYSE:SIX), meanwhile, fell more than 19% after reporting second-quarter earnings that fell short of expectations, weighed down by a 22% drop in theme park visitors.

S&P 500 Pares Gains as Treasury Yields Move Off Lows Despite Easing Inflation
 

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Comments (7)
Marshall Bristow
Marshall Bristow Aug 11, 2022 6:49PM ET
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love it Marshall bristow.
Ricardo Diogo
Rcd72 Aug 11, 2022 4:17PM ET
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easing inflation... pathetic Talk! 8.5%. highest since 1980
First Last
First Last Aug 11, 2022 4:17PM ET
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False.   It dropped from around 9.5% to 8.5%, so can't be "highest".  www.bls.gov/regions/mountain-plains/images/96665.png
First Last
First Last Aug 11, 2022 4:17PM ET
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That chart is for mid-west, but data is similar for the whole US.
Ross Dre
Ross Dre Aug 11, 2022 4:09PM ET
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“Pares gains”. Favorite soft wording.
First Last
First Last Aug 11, 2022 4:09PM ET
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And accurate since S&P is closed 0.07% in red.
Michael Wilson
Michael Wilson Aug 11, 2022 3:45PM ET
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Inflation is not peaking. Go check. Energy and commodity prices have soared the last few days. It looks like the last CPI reading only caught a temporary drop.
First Last
First Last Aug 11, 2022 3:45PM ET
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"few days" worth of data is not very significant.  Looking at few months, crude, nat gas, & copper prices have not exceeded their prices from early June.
First Last
First Last Aug 11, 2022 3:16PM ET
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If your reading comprehension is bad, it's ok to stay silent  ;-)
Ronald Warren
Ronald Warren Aug 11, 2022 3:16PM ET
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If your schwartzenagen reaches your cornholio you can pluck yourself.
Jouni Matero
Jouni Aug 11, 2022 3:16PM ET
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Indeed. When the title says "despite easing inflation" it can't be interpreted signs of easing inflation, even if that is mentioned later on. So, if your reading comprehension is bad, it's ok to not post anything about reading comprehension ;-)
First Last
First Last Aug 11, 2022 3:16PM ET
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Jouni Matero  Core PPI is 0.4% in June and 0.4% expected for July.  July's # is lower, at 0.2% instead.  It can be interpreted as both "easing inflation" AND "signs of easing inflation" to come.
First Last
First Last Aug 11, 2022 3:16PM ET
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You guys should also understand headlines have limited space; read the body for further nuances
AI Wu
AI Wu Aug 11, 2022 3:04PM ET
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Easing inflation is an illusion. Neither rent nor food became cheaper. The Wall Street boys play the game. The ordinary people pay the price.  The mass media is part of that circus.
Robert Egart
Robert Egart Aug 11, 2022 3:02PM ET
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.2% is easing inflation? LoL
First Last
First Last Aug 11, 2022 3:02PM ET
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"signs of easing inflation" to come, not easing yet.  The market is forward looking.
Jouni Matero
Jouni Aug 11, 2022 3:02PM ET
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That is mentioned only later on, title clearly says inflation is already easing. Editor is writing BS.
First Last
First Last Aug 11, 2022 3:02PM ET
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Going from 0.4% to 0.2% is a decline, or an "easing".
 
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