US Open: Euphoria on Wall Street as lower CPI data sparks optimism 🚀

• Wall Street opens higher after lower than expected CPI in the US
• US500 futures on this year high above 4500 points
• Barkin from FED says that inflation is still too high

Wall Street opens with strong gains after lower than expected CPI figures. S&P 500 gains 0.8% and Nasdaq 100 is up by 0.5%. CPI figures show that US inflation significantly cooled last month, offering hope that the Federal Reserve can end its aggressive interest-rate hikes after July’s meeting.

The CPI rose by 3% y/y, with a 0.2% increase from May. Excluding food and energy, the core CPI rose by 0.2% from the previous month and 4.8% y/y. Treasury yields dropped, stock futures rose, and the dollar slid in response to the report. The likelihood of an additional Fed rate hike after this month dropped below 50%. Although price pressures have reduced since last year's peak, they remain above the Fed's target, leading policymakers to consider raising interest rates again at their upcoming meeting. The slowdown in overall inflation can be attributed to the comparison with June 2022, which experienced a surge due to rising energy prices following geopolitical events. 

After the publication, FED Barkin stated:

• Barkin says US inflation is still too high despite a slowdown in June
• Barkin warns that if the Fed backs off too soon, inflation could return stronger
• Recent data shows US inflation in June was the slowest in over two years
• Most Fed officials expect interest rates to rise due to persistent price pressures and a strong labor market
• Barkin emphasizes the risks of premature policy easing
• Fed Chair Jerome Powell is open to two consecutive rate hikes this year

US500 index is currently trading at 4512, marking the highest level reached this year. The index recently broke through a key resistance line at 4500, indicating bullish momentum. The next resistance level to watch is around 4550. If the index manages to close above 4500 on a daily basis, the previous resistance at 4500 is expected to become a new support level. However, if the bullish scenario is invalidated and the index fails to maintain support above 4500, the next support level to monitor is approximately 4400.

S&P 500 Index categorized by sector and industry, Software and Media&Services are among the biggest gainers so far. Size indicates market capitalisation. Source: xStation5

Company News:

• Domino’s Pizza (DPZ.US) climbs 10% on an agreement allowing US customers to order Domino’s products through the Uber Eats marketplace, with deliveries handled by Domino’s. Uber (UBER) shares are up 1.3%.
• GoodRx (GDRX.US) gains 7% after the drug-pricing comparison software company said it was partnering with CVS Health to launch a savings program that will help lower pharmacy out-of-pocket drug costs.
• Coty (COTY.US) shares jump 1.0% after the Wall Street Journal reported that Kim Kardashian was in talks to repurchase the minority stake of SKKN BY KIM, previously known as KKW Holdings, citing people familiar with the matter.
• JD.com (JD.US) and Alibaba (BABA.US) are among Chinese ADRs trading higher in the US after a report said China’s Premier Li Qiang met with executives from internet companies including JD and Meituan on Wednesday. JD is up 3% ahead of the bell, BABA gains 1.5%.