Mid-Week Market Minute 8.14.24

Stocks Rebounding; No Surprises in CPI Report 

Global stocks were on the move higher this week, led by the mega-cap growth names in the U.S. As of mid-week, the S&P 500 was higher by more than 2%, while international and small cap stocks were higher by about 1%. We’ve seen a notable decline in both realized and expected volatility, with the VIX index back trading around 17, well below the 20-25 range from last week. In bonds, we’ve seen interest rates continue to decline with the yield on the 2-year and 10-year Treasury notes currently trading around 3.98% and 3.86%, respectively. Notably, we’ve seen 30-year mortgage rates fall below 6.5% for the first time in more than a year. 

On the data front, Wednesday morning brought the widely followed CPI inflation report. Overall, the report came in at consensus with little surprise. Headline CPI rose 0.2% for the month, and 2.9% on a year-over-year basis. Core CPI, which excludes food and energy, rose 0.2% for the month, and 3.2% on a year-over-year basis. This should pave the way for a 25-basis-point rate cut at the next Fed meeting in September, with the possibility of a 50-basis-point cut still on the table. Looking ahead, Thursday will bring the retail sales report, which will give the markets a glimpse into the health of the so-far resilient U.S. consumer. Retail sales are expected to show a 0.4% increase for July, well above the prior months flat reading.

Source: GSAM, CNBC, JPMorgan, FactSet

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