Joey Solitro
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
-
Kohl’s to Close 27 Stores in March 2025 — Is Your Location on the List?Kohl’s is closing 27 stores this Saturday as part of its 2025 restructuring plan. Find out which locations are affected and why they’re closing.
-
Stock Market Today: It's Going to Stay Choppy for StocksAuto-focus can show us a lot about uncertainty on the ground and in the stock market.
-
Stock Market Today: It's Going to Stay Choppy for StocksAuto-focus can show us a lot about uncertainty on the ground and in the stock market.
-
Revocable Living Trusts: The Good, the Bad and the UglyPeople are conditioned to believe they should avoid probate at all costs, but when compared with living trusts, probate could be a smart choice for some folks.
-
How to Plan for Retirement When Your Child Has Special NeedsWhen your child has special needs, your retirement plan should include a plan for when you'll no longer be able to care for them yourself. A five-step guide.
-
Stock Market Today: Auto Tariffs Send Stocks LowerThe main indexes snapped their win streaks after the White House confirmed President Trump will talk about auto tariffs after the close.
-
Tax Advantages of Oil and Gas Investments: What You Need to KnowTax incentives allow for deductions and potential tax-free earnings — benefits accessible only to accredited investors in small producer projects.
-
Charitable Contributions: Five Frequently Asked QuestionsMake the most of your good intentions by understanding the ins and outs of charitable giving. A good starting point is knowing what's deductible and what isn't.
-
Financial Leverage, Part Two: Don't Say We Didn't Warn YouA lesson in how highly leveraged investments can benefit the first movers and crush the next round of buyers.
-
Taxes in Retirement: What ESOP Participants Need to KnowMost Employee Stock Ownership Plans (ESOP) participants transfer company stock to an IRA starting around age 55, so taxes on that money have been deferred.
