Stock futures rise after report shows inflation fell in December

Find out how major futures indices reacted to the latest inflation data

Major futures indexes were skewed as investors reacted to December CPI data, which was in line with economists’ expectations. See how each of the three futures indices moved in the 30 minutes before and after the data release at 8:30 a.m. ET:

Fed won’t keep up with CPI report

The slight decline in consumer prices in December will not change the Federal Reserve’s trajectory as it meets to raise rates on January 31 and February 1.

The CPI fell 0.01%, as expected by economists, and rose 6.5% from a year ago. Core CPI rose 0.03%, also as expected.

“The Fed has made it clear that even though markets push back on the Goldilocks scenario in the jobs report, the Fed has doubled down on its pledge to derail inflation because it sees this as a marathon, not a sprint” , said Diane Swonk, chief economist of KPMG. .

Equity futures were higher after the report while Treasury yields fell. Yields move opposite the price.

“It was exactly in line. They took the S&P 500 up 50 points yesterday, everyone hoping for a weak number. It was as expected. It doesn’t change anything,” said Peter Boockvar, chief investment officer at Bleakley. Financial. “They’re almost done raising rates. Higher for longer is what people should be focusing on.”

Swonk and other economists expect the Fed to hike rates by half a percentage point on Feb. 1. The futures market, however, priced a quarter-point rise.

–Patti Domm

December consumer price index matches expectations

The consumer price index fell 0.1% in December, matching a Dow Jones estimate. This is the biggest monthly decline since April 2020. The so-called core CPI, which excludes volatility in food and energy prices, also met expectations with 0.3%. Gain.

On an annual basis, the index rose 6.5%, still well above the Fed’s 2% inflation target.

—Fred Imbert

Disney and American Airlines among stocks making biggest pre-market moves

Bed Bath & Beyond could see a short squeeze, says S3 Partners

The big move Bed bath and beyond Wednesday may not have been rushed yet, but it could be coming soon, according to Ihor Dusaniwsky of S3 Partners.

The stock jumped more than 68% to $3.49 per share on Wednesday. It continued to climb in extended trading, surpassing $4 per share.

“We could see some short-term short sellers exit their positions and start pocketing (taking) the profits they made in 2022,” Dusaniwsky said.

Bed Bath & Beyond threatened to rise again on Thursday.

Bed Bath & Beyond has a short stake of around 52%, according to S3. While those who started this trade last month may be sitting on losses, the stock traded as high as $30 per share in August, meaning others may be comfortably able to ride out a process that can end in bankruptcy.

“The crucial difference between BBBY and other crowded shorts is that there is a certain threat of bankruptcy, which could encourage shorts to hold positions, take temporary losses and wait for that rally in anticipation of a price. of the $0.00 bankrupt stock,” Dusaniwsky said.

—Jesse Pound

Netflix surges after Jefferies upgrade

Upgraded Jefferies netflix buy pending, citing a potential increase in revenue as the streaming giant cracks down on password sharing. The stock gained 1.3% in premarket trading.

“We upgrade Netflix to buy based on our belief that a well-executed launch strategy [advertising-based video on demand] with the password sharing changes will result in revenue and adjusted EBTIDA well above Street estimates, driving margins up and valuation up towards historical averages,” Jefferies said.

American Airlines raises forecast, stocks gain

American airlines shares rose 3% pre-market after the airline raised its fourth-quarter profit forecast. The company now expects earnings for the quarter to be between $1.12 and $1.17 per share, down from a previous range of 50 cents to 70 cents.

—Fred Imbert

Morgan Stanley modernizes Cleveland-Cliffs

Cleveland Cliffs shares rose more than 2% in the pre-market after Morgan Stanley upgraded the steel producer to overweight it from equal weight, citing an increase in annual fixed-price contracts from the higher steel.

“We believe that the recently announced increase in annual fixed-price steel contracts (see here) should allow CLF to weather the decline in expected steel spot prices and generate strong FCF returns in the coming years, as the company has no major capital expenditures planned,” said analyst Carlos. De Alba wrote in a note.

—Carmen Reinicke

European markets push higher

European markets were higher on Thursday as global investors braced for December’s reading of U.S. consumer prices.

The pan-European Stoxx 600 the index rose 0.5% in early trading, with telecoms adding 0.9% to the gains at the top as all sectors and major exchanges moved into positive territory.

Disney up 1.5% after Mark Parker named Nike president

Shares of disney rose 1.5% in after-hours trading after the media giant announced it had named Mark Parker, Nike’s executive chairman, its next chairman of the board.

Disney also said it opposed activist investor Nelson Peltz’s attempt to join the board. Nearly two months ago, Peltz’s Trian Fund Management took a roughly $800 million stake in the company and began seeking a seat on the board.

—Yun Li

Too early to celebrate falling inflation?

It may be too early to welcome early signs of slowing inflation, as services inflation could keep price pressures high, according to Andrew Patterson, senior economist at Vanguard.

“The main upside risk to underlying inflation comes from the ex-shelter service components,” Patterson said in a note. “Persistent wage growth could keep services inflation high in 2023. The recent slowdown in wages, while welcome, does not yet suggest a broader slowdown in the labor market.”

While property deflation is a welcome sign, we would still need two more ingredients to call inflation peak – a slowing labor market and a persistent cooling in housing inflation, Patterson said.

—Yun Li

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