Daily Stock Market Report: Inflation Data Cools Markets, Tech Stocks Rally
Daily Stock Market Report: July 12, 2024
Top Stock Market News
- Inflation Data Cools, Markets Rally
The stock market received a much-needed boost on Wednesday as the latest inflation data came in cooler than expected. The Consumer Price Index (CPI) for June rose 3.1% year-over-year, lower than the 3.3% forecast by economists. This eased concerns about the Federal Reserve's aggressive rate hike campaign and fueled hopes that the central bank might soon pause its tightening cycle.
- Tech Sector Leads the Charge
The tech-heavy Nasdaq Composite Index led the market rally, closing at a record high of 18,072.22, up 1.6% on the day. Investors piled into big tech names like Apple, Microsoft, and Amazon, which have been battered by rising interest rates and economic slowdown fears. The S&P 500 also closed at a new record high of 5,532.12, gaining 0.9%.
- Banks Kick Off Earnings Season
Major banks kicked off the second-quarter earnings season, with JPMorgan Chase, Citigroup, and Wells Fargo reporting their results. While the numbers were mixed, they generally beat Wall Street's expectations, providing further relief to investors. The financial sector is closely watched as a barometer of the broader economy's health.
- Yield Curve Inversion Persists
Despite the positive inflation data, the yield curve remains inverted, with the 2-year Treasury yield higher than the 10-year yield. This inversion has historically been a reliable predictor of recessions, causing concerns about the economic outlook. However, some analysts argue that the inversion may be less reliable this time due to the unique circumstances surrounding the COVID-19 pandemic.
- Geopolitical Tensions Linger
While the domestic economic news provided a boost, geopolitical tensions continued to simmer in the background. The ongoing Russia-Ukraine conflict and the strained relations between the U.S. and China over Taiwan remained sources of uncertainty for global markets.
Top Stocks to Watch
- Domino's Pizza (DPZ)
Domino's Pizza was the standout performer on the S&P 500, surging 8.2% after announcing a partnership with food delivery apps like Uber Eats. This move is expected to boost the company's delivery capabilities and reach a wider customer base, especially in the growing food delivery market.
- Uber Technologies (UBER)
Uber Technologies, the parent company of Uber Eats, also saw its shares rise 3.1% on the news of the Domino's partnership. The ride-hailing and food delivery giant has been expanding its delivery services, and the Domino's deal further solidifies its position in the food delivery space.
- Crescent Energy Company (CRGY)
Crescent Energy Company, an oil and gas exploration and production company, is a Zacks Rank #1 (Strong Buy) stock. With energy prices remaining elevated, Crescent Energy is well-positioned to benefit from the current market conditions.
- United States Antimony Corporation (USAC)
United States Antimony Corporation, a producer of antimony and precious metals, has also been added to the Zacks Rank #1 (Strong Buy) List. The company's products are used in various industries, including batteries, fireretardants, and plastics, making it an attractive investment opportunity.
- Nokia Oyj (NHYDY)
Nokia Oyj, the Finnish telecommunications company, is another Zacks Rank #1 (Strong Buy) stock. With the growing demand for 5G technology and network infrastructure, Nokia's position as a leading player in the industry makes it a compelling investment choice.
Stock Market Expected Movement
Based on the positive inflation data and the strong start to the earnings season, analysts expect the stock market to maintain its upward momentum in the short term. However, concerns about a potential economic slowdown or recession could cap gains and lead to increased volatility.
The tech sector is likely to continue its rally, with investors seeking growth opportunities in the face of slowing economic conditions. Companies with strong balance sheets, robust cash flows, and innovative products or services are expected to outperform.
Energy stocks may also remain in focus as long as oil and gas prices remain elevated. However, any signs of a global economic slowdown could weigh on energy demand and prices, impacting the sector's performance.
Overall, investors are advised to remain cautious and diversified, as the market continues to navigate various challenges, including geopolitical tensions, supply chain disruptions, and the lingering effects of the pandemic.
