Dow futures jump 400 points after lighter-than-expected inflation report

Shortly before the CPI report, futures have been based on their morning gains.

Dow Jones Industrial Average futures were up 101 points, or 0.3%. S&P 500 futures were up 0.4% and Nasdaq 100 futures were up 0.5%.

-Jesse Pound

Galaxy Digital CEO Michael Novogratz said on “Squawk Box” that he was watching the Treasury yield curve as a key indicator of what could happen next for the markets.

“The most fascinating thing is the steepness from 2 to 10,” Novogratz said. “The curve has flattened to a negative 50 basis points between 2 and 10. Come back [50] years, only once in the ’70s did it top that. At one point, that’s going to recede, and I think that’s going to be the big turning point.”

One basis point is equal to 0.01 percentage point.

When the 2-year Treasury yield trades above the 10-year yield, many on Wall Street see it as a strong indicator of a recession. On Wednesday, the 2-year yield was trading at 3.278%, while the 10-year yield was at 2.803%.

Novogratz said he thinks investors are too confident in a future Fed pivot, which could be one of the reasons long-term rates are trading below short-term rates.

—Jesse Libra

Goldman Sachs cut its gold forecast, saying it overestimated how much recession fears would boost prices.

The firm now sees gold averaging $1,850/tonne over the next three months, before rising slightly to $1,950/tonne for the rest of the year.

The new forecasts are below the previous 12-month forecast of $2,500/tza. The firm said it reached that target after looking at how gold has traded over the past 20 years, noting that recession risks around tightening cycles were previously a bigger factor than real rates.

“While we expected nominal rates to rise on the back of Fed hikes, we did not expect inflation expectations to fall as much after the failure of the transitory narrative and persistently high inflation surprises,” Goldman wrote in a note to clients. .

“The main takeaway is that in the current environment of tightening policy and lingering recession concerns, gold’s tactical direction will be determined by shifts in the Fed’s priority role between fighting inflation and supporting growth.” added the signature.

US gold futures traded at $1,811.40/oz on Wednesday.

—Pippa Stevens

The recent market rally could put stocks at risk of a pullback from Wednesday’s CPI reading, according to BTIG technical strategist Jonathan Krinsky.

The strategist said in a note to clients late Tuesday that stocks have made some mixed moves after this year’s CPI reports, and positioning ahead of the report appears to be a key factor in the market’s reaction.

“At the end of the day, no one knows what the number will be or how the market will react to that number, but from our perspective things are getting overbought, which leaves room for the market to move lower after the number.” Krinsky wrote. .

—Jesse Libra

Elon Musk sold Tesla shares worth approximately $6.88 billion – even though he said earlier this year that he “has no more TSLA sales planned.”

The Tesla CEO sold 7.92 million shares of the electric vehicle company, according to a succession of financial documents late Tuesday. SEC filings showed the transactions occurred between Aug. 2. 5 and 9. Tesla held its annual meeting of shareholders on August 2. four

Earlier this year, Musk took to social media to say that he does not plan to sell Tesla stock after April 28. The billionaire investor is currently embroiled in a legal battle with Twitter, which he has agreed to buy for around $44 billion.

Tesla shares rose 2% in premarket trading on Wednesday; Twitter is up 4%.

—Sarah Min

European markets were mixed on Wednesday morning as global investors awaited the key US inflation figure.

the pan-european Stoxx 600 it was flat about late in the morning. Travel and leisure stocks rose 1.3%, while healthcare stocks fell 0.8%.

On the data front in Europe, German consumer price inflation at the end of July was 7.5% y/y and 0.9% m/m, official figures revealed on Wednesday, roughly in line with The expectations.

Earnings remain a key driver of individual stock price movement in Europe. Ahold Delhaize, ABN AMRO, E.On, TUI Group, Metro, Deliveroo, Prudential and Aviva were among the top companies reporting before the bell on Wednesday.

-Elliot Smith

China’s consumer price index in July hit a two-year high as pork prices rebounded, according to official data released on Wednesday.

Pork prices rose 20.2% in July from a year earlier, marking the first increase since September 2020, according to data from Wind Information.

Additionally, pork prices saw their biggest monthly increase on record – up 25.6%. Nanhua Futures produce analyst Bian Shuyang said in a statement that farmers’ reluctance to sell, hoping for higher prices in the future, contributed to the rise in hog prices.

Bian added that live hog producers are now operating at a profit, indicating more supply to come. Two upcoming Chinese holidays in September and October will help support consumer demand for pork, he said.

nevertheless, Wednesday inflation data continued to reflect lackluster demand from the Chinese economy.

The consumer price index rose 2.7% in July, below expectations for a 2.9% increase, according to analysts polled by Reuters. Furthermore, despite the summer holidays, the tourism price component increased by only 0.5% in July from a year earlier.

— Lee Ying Shan and Evelyn Cheng

Market watchers are keeping an eye on the July inflation report, due later today, for clues as to what the Fed will do next at its September meeting.

Before the publication of the report, CNBC Pro reviewed the Wall Street investigation to identify what investment banks are watching for signs of consumer weakness and their advice on how investors should position themselves in this environment.

Learn more about the consumer-related stocks that analysts at Goldman Sachs, Bank of America and Barclays love.

—Zavier Ong

In addition to Wednesday’s consumer price index report, markets will also take in Fedspeak from two regional bank presidents. They can give more insight into the central bank’s direction and the size of future rate hikes, especially at the September meeting.

Charles Evans, president of the Federal Reserve Bank of Chicago, will speak Wednesday at 11:00 a.m. ET at Drake University in Des Moines, Iowa.

Later in the day, Minneapolis Fed President Neel Kashkari will speak at a panel on stagflation at the Aspen Economic Strategy Group.

—Carmen Reinicke

july inflation report can show that prices have cooled – at least, that is what economists and investors hope.

Economists’ estimate for the July report is that the consumer price index rose just 0.2%, less than the 1.3% jump it jumped in June, according to Dow Jones. That would bring the year-over-year pace of consumer inflation in July to 8.7%, down from the 9.1% seen in June.

If the reading is lower than last month, it may show that we have passed the peak of inflation and are beginning to trend in the right direction. That will inform how aggressively the Federal Reserve will raise rates going forward.

—Carmen Reinicke

Shares of Coinbase and Roblox are making some of the biggest moves after hours on Tuesday after reporting earnings that fell short of Wall Street expectations.

Coinbase fell more than 5% after earnings reports showing a larger-than-expected loss for the quarter, and the company missed revenue estimates.

Roblox plunged more than 16% after missing out on earnings and income. Additionally, the company also reported just 52.2 million average daily active users, down from the 54.1 million it reported in the previous quarter.

—Carmen Reinicke