Equities fluctuated between profits and losses in early New York trading after the S&P 500 posted its best four-day performance since 2024. Treasury yields edged slightly higher. Swap traders expected the Fed to decrease interest rates by roughly 40 basis points in September, with a total rate reduction of more than 105 basis points this year. The dollar hovered near a four-month low.
Consumer Price Index
The so-called core consumer price index, which includes food and energy expenditures, rose 3.2% in July from a year ago, the weakest pace since early 2021. The monthly measure increased by 0.2%, a tiny improvement from June’s shockingly low level, according to Bureau of Labor Statistics data released Wednesday. CPI numbers for July were in line with or somewhat lower than economists expected. Absent a surprise increase in today’s inflation report, the path appears clear for a September drop.
Decrease In Interest Rates
With fairly consistent outcomes, investors should be more confidence in a September rate cut. However, the question is no more if or when the Fed would decrease interest rates, but rather whether it will do so by 25 or 50 basis points. Real estate and industries have been the best-performing industries this month, buoyed by recent speculation about lower interest rates. Today’s news boosts confidence in lower interest rates and might serve as a bullish stimulus for these sectors and equities in general.
UBS Group AG reported a higher-than-expected earnings in the second quarter, with investment banking revenue and progress in integrating Credit Suisse supporting Chief Executive Officer Sergio Ermotti’s efforts to return money to shareholders. Southwest Airlines Co. said it was still confidence in its existing leadership team after Elliott Investment Management recommended removing the majority of directors on the troubled airline’s board in a forthcoming proxy fight.
Merger Of Alaska Air Group Inc. and Hawaiian Holdings Inc.
Alaska Air Group Inc. and Hawaiian Holdings Inc. announced they will postpone the conclusion of their proposed $1.9 billion merger to give US antitrust regulators more time to consider a potential settlement. Mars Inc. has agreed to buy Kellanova for roughly $36 billion, joining together two major food businesses in one of the year’s biggest transactions. According to sources familiar with the subject, Blackstone Inc. is in advanced talks to acquire health-care consulting firm Chartis Group from a private equity company Audax Group.
