Stocks jumped out of the gate Friday and never looked back. Boosting market sentiment was an encouraging reading on inflation – which hit just ahead of next week's Fed meeting – and a round of well-received earnings reports.
Starting with the inflation data. Ahead of the open, the Bureau of Economic Analysis said the Personal Consumption and Expenditures (PCE) Price Index rose 0.3% from May to June. The annual increase slowed to 2.5% from 2.6% the month prior. Meanwhile, core PCE, which excludes volatile food and energy prices, was up 0.2% month-to-month and 2.6% year-over-year.
The data also show that personal income rose at a slower-than-expected 0.2% monthly rate in June, while spending increased 0.3%.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
What today's PCE report "signifies for the market is that the Fed is getting closer to cutting rates," says Anthony Denier, president and U.S. CEO of Webull. This could give a boost to stocks, but it's pretty well priced in, he adds.
And Greg Wilensky, head of U.S. fixed income at Janus Henderson Investors, says that there's "still a lot of data to be seen between now and the September meeting including two Consumer Price Index (CPI) prints, so a September cut is far from a certainty."
As for now, CME Group's FedWatch Tool shows futures traders are pricing in an 88% chance the Fed will cut rates by a quarter-percentage point in September.
Lower inflation could help boost M&A activity
In addition to lifting rate-cut expectations, tamer inflation data could spark a rebound in merger-and-acquisition (M&A) activity.
"In fact, activity on Datasite, which facilitates nearly 15,000 new deals annually, shows volumes are returning," says Mark Williams, chief revenue officer at Datasite Americas. Indeed, "global sell-side kickoffs on Datasite are up 17% [in the first six months of 2024] compared to the same period a year ago, while global buy-side deal kickoffs are even more robust, increasing 21%."
These deals are at their inception, so it gives a good indication of what's to come on the M&A front over the next nine or so months, Williams adds.
Dexcom spirals on top-line miss, dreary forecast
In single-stock news, Dexcom (DXCM) stock plunged 40.7% after the company, which makes continuous glucose monitoring devices, missed revenue estimates for its second quarter and lowered its full-year revenue forecast.
Still, Jefferies analyst Matthew Taylor (Buy) says the issues related to DXCM's top-line woes – including reorganization of its sales team – "are mostly execution based and 'fixable' over time."
Deckers pops after beat-and-raise quarter
Deckers Outdoor (DECK) stock soared 6.4% after the parent company of Ugg and Hoka topped revenue and earnings estimates for its fiscal first quarter and raised its full-year profit forecast.
"DECK once again delivered a strong quarter, beating sales and earnings per share expectations by wide margins, with both core brands showing continued momentum," says Wedbush analyst Tom Nikic (Buy). He adds that he remains a buyer of Deckers, given the company's "conservative" full fiscal-year guidance, which leaves the door open for upward revisions.
3M has its best day on record after earnings
3M (MMM) was arguably the most notable name on the earnings calendar, after the Post-it maker beat top- and bottom-line expectations for its second quarter and raised the low end of its full-year profit forecast.
The results indicate " significant traction on spending discipline, productivity enhancements, and restructuring efforts," says CFRA Research analyst Jonathan Sakraida, who maintained a Buy rating on MMM.
Not only was 3M easily the top-performing Dow Jones stock today, but its 22.9% surge marked its biggest one-day gain since FactSet began tracking the data in January 1972, according to MarketWatch.
Unsurprisingly, the Dow Jones Industrial Average handily outperformed, adding 1.6% to 40,589. The S&P 500 rose 1.1% to 5,459 and the Nasdaq Composite gained 1% to 17,357.
Related content
- Why This Economist Thinks the Fed Is Already Late to Cut Rates
- Astronomical AI Spending Is Causing Jitters on Wall Street
- Paris Olympics: 5 Sports-Related Stocks Going for Gold
-
Reasons to Consider Taking Another Look at GoldThe cycle of excessive borrowing to finance government expenditures, grants and aid of all kinds beyond taxable GDP and productivity might not end well.
-
How Trump’s Tariffs Could Impact Your Grocery BillTariffs at the checkout: Preparing for higher grocery bills and how to manage them.
-
Six Steps to Simplify Your Estate for Your HeirsA simplified estate strategy will expedite the settlement of your estate after you're gone, lower audit risk, reduce costs and cut your beneficiaries' stress.
-
Three Actions to Protect Wealth Transfer Amid Tax UncertaintyHow should families plan to pass on their wealth amid ongoing uncertainty over estate taxes? Even if TCJA provisions are extended, they might still be temporary.
-
Business Owners: How to Calculate Your Wealth Gap in Five MinutesHow much would you need from the sale of your business to retire without sacrificing your lifestyle? This simple calculation will give you an idea.
-
Stock Market Today: Dow Adds 485 Points After Trump's Tariff DelayThe White House said it will postpone tariffs on automotive imports from Canada and Mexico for one month.
-
10 Ways to Refine Your Financial Plan for a More Secure FutureSignificant benefits throughout the rest of the year can be had if you take some time now to revisit your financial plan and adjust accordingly.
-
The Most Important Number for a Business Owner Considering a SaleCompany owners hoping to sell and stop working won't know whether an offer on their business is good enough unless they know their 'wealth gap.'Evan
-
Stock Market Today: Dow Drops 670 Points on Trade War EffectA prodigious rally by the battered leader of the AI revolution typified an increasingly volatile picture for investors, traders and speculators.
-
Dividing an Estate? Five Ways to Create TransparencyLetting your children know your intentions while you're still around to explain your reasoning, and while you can make adjustments, can limit discontent later.
