The Buzz on Business for August 14th, 2024 

The headline Consumer Price Index numbers came in precisely as expected on Wednesday morning. We’ll get into those numbers in just a minute but the long and short of it is that, while we’ll have one more set of inflation reports before the Fed’s meeting next month, the path is clear for a change in Fed policy and a reduction in interest rates. 

And the market reacted with more of what we’ve come to expect of late. A meandering, uninspired day. The major indexes finished mixed, breadth narrowed and all of it came on very low volume.  

It wasn’t long ago that even a hint of lower rates would send stocks skyward. That was not the case yesterday and hasn’t been the case in recent weeks. So, what’s up? Why aren’t possible, likely interest rate cuts motivating buyers and sending sellers to the exits as we might have expected. 

Well, first of all and as we’ve said, it’s summer and we’re in the summer doldrums. The people who might push stocks one way or the other are all on vacation. 

Possibility number two is that we’ve had a bit of a selloff recently and markets are in a consolidation phase, which will take some time to resolve itself. 

Another possibility that we hadn’t considered until recently is that rates have already come down. The Fed Funds Rate remains high, and that impacts rates up and down the curve but consider that on the first of May, the yield on the 2-year treasury was above 5%. It’s below 4% now and has been as low as 3.6% in the last couple of weeks. 

When and if the Fed acts, rates will surely come down farther but maybe, that has been baked into the cake and stocks will need another catalyst to move higher. Maybe, now, rate cuts are necessary, but not sufficient for a continuation of the rally that is now ten months old. 

Stock Market Report 

Stocks opened higher off the inflation figures but drifted lower throughout the day to finish mixed on below average volume. 

• The Dow Jones Industrials had a good enough day, we guess. They were up 243 points, that’s .060% and closed back above 40,000 at 40,008. 

• The S&P 500 managed a 0.40% gain. That’s 21 points and it closed at 17,170. 

• The NASDAQ Composite was down all day long but managed to crawl back into positive territory at the close. It was up a minuscule 5 points, basically flat and starts the day today at 17,193. 

• Not so much the small caps. The Russell 2000 was off a bit over one-half of one percent. That’s 11 points and it closed at 2,084. 

Bond Market Report 

Interest rates also finished mixed on an uninspiring day in the bond market. 

• The yield on the 2-year treasury was up three basis points and closed at 3.962%. 

• The 20-year was off two ticks, and it now yields 4.217% 

Oil, Gold, and Bitcoin 

• Oil gave back more of its recent gains. It was off another $1.26, and a barrel will now set you back $77.09. 

• Likewise, Gold was off $21.40, and a troy ounce will now set you back $2,485.50. 

• And Bitcoin was down $1,939.97 and at 4:00 PM ET stood at $58,963.45. 

Market Reaction to Inflation Data 

The Month over Month Consumer Price Index and the Core Consumer Price Index increased exactly as expected. Prices went up by 0.20% in July. While a 2.4% annual rate is above the Fed’s target and is too doggone high but, the report clearly set the table for interest rate cuts when the Fed next meets on September 9th and 10th, four weeks hence. 

A relatively sparse economic calendar gives way to a busy day today. Initial and continuing Jobless Claims Reports are released later this morning. 

We also get numbers from Manufacturing, Retail Sales, Industrial Production and the Atlanta Fed’s GDP Now report looking at economic growth thus far in the third quarter.  

Most of these numbers are released before this morning’s opening bell. Any and all of them could move the markets. We will do what we do so that you so all you have to do is keep it right here on the Buzz.