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US Futures Soar After CPI Release, Fed Looms

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U.S. stock futures rose on Wednesday after the latest data on inflation showed consumer price inflation rose less than expected in May, hours before the Federal Reserve’s scheduled afternoon meeting is due to provide the latest signal on interest rate movements.

S&P 500 futures (ES=F) rose 0.7%, hitting their 27th record high this year. Futures for the tech-heavy Nasdaq 100 (NQ=F) rose nearly 0.9%, signaling a rise for the index after the record. Dow Jones Industrial Average futures (YM=F) rose 0.6%.

The Consumer Price Index (CPI) was flat from the previous month and rose 3.3% from a year earlier in May, slowing from April’s 0.3% increase from the previous month and 3.4% increase from a year earlier. Both measures beat economists’ expectations. On a “core” basis, which excludes volatile costs such as food and gasoline, prices rose 0.2% from the previous month and 3.4% from a year earlier in May, lower than the April data. Both measures beat economists’ expectations.

read more: How does the labor market affect inflation?

Meanwhile, with the Fed’s decision all but certain and the central bank expected to keep interest rates at their current 23-year high, investors will be watching more closely for the release of the latest economic projections on the Fed’s “dot plot,” specifically how many rate cuts it expects for the rest of the year.

The last we heard was in March, when the number was 3. Policymakers will almost certainly cut that number significantly, given the aforementioned robust inflation early this year. These projections, along with Fed Chairman Jerome Powell’s comments at his press conference, may be the final market-moving events of a very busy day.

Among corporate stocks, Apple (AAPL) shares fell after soaring to an all-time high on Tuesday. The stock was down 0.2% in premarket trading.

live5 updates

  • Risks rising in the market after the release of the CPI

    Stock futures surged after the May consumer price index came in lower than expected.

    S&P 500 futures (ES=F) rose 0.7%, hitting their 27th record high this year. Futures for the tech-heavy Nasdaq 100 (NQ=F) rose nearly 0.9%, signaling a rise for the index after the record. Dow Jones Industrial Average futures (YM=F) rose 0.6%.

    Interest-rate sensitive markets saw the biggest gains, with futures tracking the Russell 2000 Index (RT=F) up about 2.3%.

    That’s as investors quickly recalibrated their expectations for rate cuts this year: After the data was released, markets were pricing in about a 69% probability that the Fed will start cutting rates by its September meeting, according to data from the CME FedWatch tool, up from about 53% the day before.

  • Inflationary pressures ease more than expected

    U.S. consumer price inflation slowed during May, according to the latest data from the Bureau of Labor Statistics released Wednesday morning.

    The Consumer Price Index (CPI) was flat from the previous month and rose to 3.3% year-on-year in May, slowing from 3.4% in April and lower than the 3.4% year-on-year change that economists had expected.

    The monthly growth rate in May was lower than economists’ expectations of a 0.1% increase.

    On a “core” basis, which excludes volatile food and gasoline prices, prices rose 0.2% in May from the previous month and 3.4% from a year earlier, slower than April’s data, both below economists’ expectations.

  • Nvidia is the sun…

    Kudos to Apollo chief economist Torsten Slok for checking out the S&P 500 mood.

    Obviously, Nvidia (NVDA) is the sun that supports the other 499 companies.

    Note: Apollo is the parent company of Yahoo Finance.

    That's the Nvidia market.That's the Nvidia market.

    That’s the Nvidia market. (Apollo)

  • JPMorgan intervenes in Musk’s compensation package vote

    Tesla (TSLA) shareholders are nearing the final stage of voting on Elon Musk’s $56 billion compensation package.

    Ahead of Thursday’s vote, Tesla posted this on Musk-owned account X, detailing the CEO’s performance (it’s weird to see this from company X’s account, but hey, we’re talking about Musk here):

    A new poll from Yahoo Finance now shows that 96% of voters believe Musk’s compensation package should not be approved.

    Meanwhile, JPMorgan analyst Ryan Brinkman made the following comments this morning:

    “Although ISS and Glass Lewis, as well as several prominent institutional and individual shareholders, have voiced opposition to the 2024 approval of Musk’s 2018 compensation plan, we instead expect it to pass, although the approval rate will be lower than in 2018, perhaps by a smaller margin than commonly assumed. This expectation is based on anecdotal evidence of strong individual shareholder support, as well as conversations with institutional investors whose reasons appear to be broadly similar to those they gave when asked to vote in favor of the SolarCity acquisition. The investors we spoke to at the time were largely unsupportive of the SolarCity acquisition, but were concerned that the stock price would react more negatively if the deal was rejected because it would be viewed as a vote of no confidence.”

    Brinkman reiterated his underweight rating (equivalent to sell) on Tesla shares and his $115 price target, which implies a downside of about 32% from current levels.

    You can read more about Musk’s vote and the vote on the major CEO compensation package in this article by Yahoo Finance senior legal reporter Alexis Keenan.

  • Affirm keeps moving after big Apple deal

    Affirm (AFRM) remains one of the hottest stocks on the Yahoo Finance platform since news of its integration into Apple (AAPL) Pay broke on Tuesday, with shares up 1.5% in pre-market trading following yesterday’s 11% surge.

    Last night I met with Max Levchin, founder and CEO of Affirm, to record a new episode of my “Opening Bid” podcast. The full episode (featuring Levchin’s views on AI and the political atmosphere in Silicon Valley) will be available on Yahoo Finance and major podcast platforms on Friday morning.

    But below is a clip of Levchin’s comments about the tie-up, so be sure to check it out.

    Levchin didn’t say what the financial impact of the acquisition would be for Affirm (which could be significant, given that there are 1.4 billion iPhones in circulation worldwide), but he suggested it could be a big contributor to revenue and profits in the long term.

    He acknowledged that the deal “legitimizes” the “buy now, pay later” sector, which has been under attack from regulators and other stakeholders almost since its inception.



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