A shopper walks through a grocery store on July 12, 2023 in Miami, Florida. The U.S. Consumer Price Index report showed that the annual rate of inflation fell to its lowest level in more than two years in June. (Photo by Joe Raeder/Getty Images)
Joe Raeder | Getty Images News | Getty Images
This report is from today’s edition of CNBC’s Open Daily, our new international markets newsletter. The CNBC Daily Open keeps investors up-to-date with everything they need to know, no matter where they are. Like what you see?you can subscribe here.
what you need to know today
Deflation is underway
US headline inflation in June It was up just 0.2% from May and just 3% from a year earlier, the lowest level since March 2021. Both CPI figures were 0.1 percentage point below the Dow Jones estimate. After excluding food and energy prices, the core CPI rose 0.2% month-on-month and 4.8% year-on-year.
Highest closing price this year
U.S. stocks rose on Wednesday, with the S&P 500 and Nasdaq Composite closing at their highest levels since April 2022 after a weaker-than-expected inflation report. European markets were also higher. The benchmark Stoxx 600 index rose 1.5 percent, led by a 3.7 percent gain in the mining sector.
X, meet xAI
Elon Musk is already the CEO of Tesla and SpaceX and the owner of Twitter. Now, he’s adding a new title to that list: leader of xAI, an artificial intelligence company that aims to “understand the true nature of the universe.” xAI appears to be positioned as a competitor to OpenAI, Google and Anthropic.Musk will share more about the company at the event Twitter space chat Friday.
Stay longer in the Magic Kingdom
Bob Iger told CNBC in February that he has no intention of staying on as Disney CEO for more than two years, which would see his term end in 2024. But the company just extended Iger’s contract for another two years, keeping him on as Disney’s CEO. CEO term until 2026. Disney may be worried about succession planning — the sudden ouster of Iger’s supposed successor, Bob Chapek.
(PRO) Come on Barbie, let’s pick stocks
Greta Gerwig’s summer 2023 film “Barbie” opens in theaters July 21. In addition to filling movie theaters, the movie could boost the retailer’s stock price by as much as 13%, according to investment bank Roth MKM.
the bottom line
Yesterday’s CPI report, read alongside Friday’s jobs report, suggests it’s time to update a piece of economic orthodoxy.
The Philips curve is an economic concept that states that inflation will only fall if unemployment rises. That appears to support the Fed’s economic forecasts.To tame inflation by raising interest rates, Fed expects unemployment to fall It will rise to 4.1% by the end of the year.
Let’s look at the actual employment and inflation data.
The unemployment rate was 3.6% in June and has hovered between 3.4% (a 53-year low) and 3.7% since March 2022. Meanwhile, headline inflation ran at an annualized 3% in June, the lowest level in two years and one-third of its June peak in 2022.
The numbers seem to suggest that inflation can continue to fall without causing unemployment to soar. So, can we achieve the “dream scenario of monetary policy leading to lower inflation…without a recession”? Interactive Brokers chief strategist Steve Sosnick thinks so. “At least so far, it’s hard to stem the market’s enthusiasm.”
The market is also very enthusiastic.this S&P 500 Index up 0.74% Dow Jones Industrial Average Add 0.25% and Nasdaq Composite Index Soared 1.15%. The S&P and Nasdaq both hit fresh 52-week highs, buoyed by traders’ optimism that there is only one rate hike left.
Traders are betting on an 81.9 percent chance the central bank will keep rates steady after this month’s meeting, according to Fed data. CME Group Fed Watch Tool. As recently as Tuesday, that figure was around 72%.
If the producer price index due later today shows further price declines, then we could indeed see the end of the Fed rate hike cycle soon.