Stocks edge higher as key inflation report matches expectations

US stocks edged mostly higher Wednesday as Wall Street digested a key signal on consumer prices that is set to help shape the near-term future of interest-rate policy. The S&P 500 (^GSPC) rose 0.1, while the tech-heavy Nasdaq Composite (^IXIC) lost 0.2%. The Dow Jones Industrial Average (^DJI) gained 0.2%

The Consumer Price Index (CPI) showed price increases held largely steady in July. Consumer prices rose 2.9% year-over-year in July, the first time headline inflation has dipped below 3% since 2021. On a “core” basis, stripping out costs of food and energy, prices rose 3.2% year over year. Both numbers largely met Wall Street forecasts.

Wall Street rallied Tuesday on the back of positive inflation data that could foreshadow a similar direction in consumer prices. The Producer Price Index, which measures wholesale inflation in the US economy, rose just 2.2% year-over-year in July, nearly in line with the Federal Reserve’s 2% target.

Together, the inflation signals could get the Fed closer to a rate cut. Even the most hawkish members of the Fed are signaling they need just a bit more good data to be ready to support an interest rate cut. More signs of cooling inflation, combined with a cooling job market, would likely leave the Fed positioned for a rate cut at its September meeting.

According to the CME FedWatch tool, traders are aligned on a Fed cut next month — the question is by how much. Just over half of bets are on a bigger, 50 basis point cut, while the rest remain on a 25-point cut.

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Wed, August 14, 2024 at 4:00 PM GMT+1

Google shares fall after US considers breaking up the search giant

Following reports that the US Justice Department is considering a proposal to break up Google’s businesses, shares of its parent company Alphabet fell more than 3% Wednesday morning.

The discussions followed a pivotal ruling last week, when a judge found Google’s search and ad businesses violated antitrust law. The ruling sided with the US Justice Department and a group of states in a set of cases alleging the tech giant abused its dominance in online search.

While Google has said it will appeal the decision, the judge presiding over the case has asked the parties to submit their proposals on how to remedy the anticompetitiveness.

Potential business unites that Google would have to divest if a break up plan moves forward include the Android operating system and the web browser Chrome, according to Bloomberg.

The scrutiny aimed at Google is part of a wide-ranging effort by the Biden administration to rein in what it views as anticompetitive behavior across a number of industries, from healthcare to groceries to tech.
Wed, August 14, 2024 at 3:21 PM GMT+1

Mars to buy Pringles parent Kellanova sending shares higher

In the biggest deal in the packaged food industry, the family-owned food giant Mars said Wednesday it will buy the maker of Pringles, Kellanova (K), for nearly $36 billion.

Mars, which is home to brands like Skittles, M&M’s and Twix, will pay $83.50 per share for Kellanova representing about a premium of more than 30% from earlier this month, when Reuters first reported that the company was discussing a deal.

Shares of Kellanova, which makes Pop-Tarts and Eggo, rose by nearly 8% during morning trading.

When the deal closes Kellanova will become part of Mars Snacking. The combined companies expect to double its snacking business.

“The Kellanova brands significantly expand our Snacking platform, allowing us to even more effectively meet consumer needs and drive profitable business growth,” said Andrew Clarke, global president of Mars Snacking, in a statement.
Wed, August 14, 2024 at 2:33 PM GMT+1

Stocks open higher as inflation data bolsters rate cut policy

Inflation data that largely met Wall Street forecasts and showed continued progress in combatting price pressures served as the latest signal that the Fed will likely cut interest rates next month.

Investors reacted by pushing stocks slightly higher. The S&P 500 (^GSPC) and the tech-heavy Nasdaq Composite (^IXIC) were up around 0.2%. The Dow Jones Industrial Average (^DJI) hovered near the flatline.
Wed, August 14, 2024 at 1:35 PM GMT+1

Inflation falls more than expected in July

Consumer prices increased less than expected in July as investors continued to look for signs that the Federal Reserve could begin to cut interest rates.

The July Consumer Price Index (CPI) showed prices ticked up slightly at 0.2% over last month, an increase from the 0.1% decline in June. Prices rose 2.9% over the prior year, a decrease from the 3% seen in June. The report marked the first time that overall inflation, on a year-over-year basis, has come in below 3% since March of 2021.

Economists had expected prices to increase 0.2% month over month and rise 3% year over year, according to Bloomberg data.

When removing the volatile food and energy categories, “core” inflation fell to an annual rate of 3.2% from 3.3% the month prior. Economists surveyed by Bloomberg had expected core inflation of 3.2%. On a monthly basis, core inflation was 0.2%, up slightly from the 0.1% the month prior.