U.S. Benchmark Indexes Flatlined After Inflation Eased to 2.9%

Barry Adams
14 Aug, 2024
New York City

U.S. stocks were unchanged after the release of the consumer price inflation report. 

The S&P 500 index and the Nasdaq Composite edged lower in active trading as closely watched consumer price inflation eased in July. 

Consumer price inflation eased to 2.9% in July from 3.0% in June, and the measure of price increase dropped to the lowest level since March 2021, the Bureau of Labor Statistics reported Wednesday. 

Core inflation, which excludes food and energy prices, slowed for the fourth month in a row to 3.2%. 

On a monthly basis, CPI increased by 0.2%, and core inflation increased by 0.2% from 0.1% in the previous month. 

A softer inflation report followed the softer producer price inflation report on Tuesday, raising hopes that the Federal Reserve is more likely to lower rates after the September policy meeting. 

Investors are looking forward to the release of retail sales data on Thursday. 

Despite the cooling of inflation, prices are still rising from a higher base, and the price of homes, automobiles, food, consumer services, and energy products is still higher by between 50% and 100% from the pre-pandemic levels in 2019. 

Most consumers are still feeling stretched because wage gains have lagged inflation significantly over the last five years. 

The Federal Reserve's premature rate reduction will only fan inflationary forces and revive price increases at a faster pace in the fourth quarter and beyond, which could stoke another round of the inflation cycle. 

 

U.S. Indexes and Treasury Yields

The S&P 500 index fell 0.1% to 5,428.96, the Nasdaq Composite decreased 0.4% to 17,128.35, and the Russell 2000 index increased 0.1% to 2,096.66. 

The yield on 2-year Treasury notes edged lower to 3.96%, 10-year Treasury notes decreased to 3.83%, and 30-year Treasury bonds inched lower to 4.13%.

WTI crude oil decreased $0.01 to $78.36 a barrel, and natural gas prices edged up 9 cents to $2.24 a thermal unit.

Gold decreased by $6.74 to $2,457.35 an ounce, and silver decreased by $0.10 to $27.72. 

The dollar index, which weighs the US currency against a basket of foreign currencies, edged lower to 102.38.

 

U.S. Stock Movers

Kellanova surged 7.8% to $80.35 after the snack maker agreed to be acquired by Mars for $83.50 per share in cash, or a total consideration of $35.9 billion, including debt. 

The purchase price represents a premium of approximately 44% to Kellanova’s unaffected 30-trading day volume weighted average price and a premium of approximately 33% to Kellanova’s unaffected 52-week high as of August 2, 2024. 

The total consideration represents an acquisition multiple of 16.4 of adjusted operating earnings as of June 29.

Brinker International decreased 13.4% to $60.97, and the parent company of Chili's restaurant chain reported weaker-than-expected fiscal fourth quarter earnings. The company's annual guidance fell short of market expectations. 

Revenue in the quarter ending on June 26 increased to $1.2 billion from $1.1 billion, net income edged up to $57.3 million from $54.2 million, and diluted earnings per share expanded to $1.24 from $1.19 a year ago. 

Comparable restaurant sales increased by 13.5%, driven by a 14.8% increase at Chili's and a 2.5% increase at Maggiano's restaurant chains. 

Alphabet Class A declined 3.6% to $158.19 after a Bloomberg New report suggested that U.S. regulators are considering a break-up of mega-cap tech companies.