In this weekly recap, we delve into the evolving landscape of US inflation and its sweeping impact across various sectors. From stock market responses to oil price shifts and the dollar's performance, we uncover how inflation trends mold market behaviors and federal policies.
Curious about the details? Dive in to discover more!
US inflation edges up to 3.2% in July
US headline inflation for July saw a minor rise from June, supporting arguments for the Federal Reserve to maintain interest rates in its September meeting. The Bureau of Labor Statistics indicated the consumer price index (CPI) increased by 0.2 percentage points, mirroring June's figures, taking the annual rate to 3.2% from June's 3%. This slight increase doesn't suggest a notable surge in inflation. Core inflation, omitting food and energy, also rose 0.2% for July.
Following this data, future market traders projected a 91% chance the Fed would hold interest rates stable in September.
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Stocks see modest uptick; Disney shares boosted by streaming price update
Stocks rose slightly on Thursday following new inflation data, revealing an annual increase for the first time in over a year, though disinflationary trends remained favorable. The Dow Jones closed up by 0.2%, the S&P 500 remained approximately unchanged, and the Nasdaq Composite increased by 0.1%. These indices reduced their earlier gains by the end of the session. As the earnings season approaches its end, Alibaba ($BABA) and Ralph Lauren ($RL) announced their quarterly results. Additionally, Disney ($DIS) shares surged nearly 5% after the announcement of a price hike for its ad-free streaming plans.
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Oil settles lower as US rate hike fears subside
Oil prices declined on Thursday as concerns over another US interest rate hike waned, with Brent Crude nearing January highs. Despite a rally since June, Brent dropped 1.3% to $86.40 a barrel, and WTI decreased 1.9% to $82.82. The recent rise in oil prices was influenced by extended output cuts from Saudi Arabia and Russia and potential disruptions to Russian oil shipments due to tensions with Ukraine.
However, deflationary trends in China's consumer sector and declining factory gate prices in July raised alarms about fuel demand in the world's second-largest economy.
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US Dollar nears 103.00 amid rising yields despite Fed's optimism on inflation
The US Dollar Index (DXY) experienced significant fluctuations, initially dropping to a weekly low, but ultimately closing positively. Despite a quiet start during the early Asian session, the index is trending upwards, hovering around 102.65. This upward momentum comes in spite of the Fed's confidence in managing inflation, and as market participants await more data.
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This concludes our weekly recap. Have a great weekend and see you next week! 👋
