U.S. stocks rose on Wednesday as investors digested the latest consumer inflation data amid expectations that the Federal Reserve will ease its monetary policy stance next month.
CPI Data Expected to Support Rate Cut Expectations
U.S. consumer prices rose less than estimated on an annual basis in July, with the consumer price index increasing by 2.9%, slightly slowing from June’s 3.0%. Market analysts had expected the figure to remain at the June rate.
On a month-to-month basis, the reading rose by 0.2% after falling by 0.1% in the previous month, which matched estimates.
Excluding more volatile items such as food and gasoline, the core figure rose by 3.2% in the twelve months to July, slightly below estimates of 3.3%. On a monthly basis, core price growth increased by 0.2% after a 0.1% rise in June.
Although this release confirmed generally benign inflation pressures, following Tuesday’s cooler-than-expected July producer price index, expectations for a more substantial rate cut have increased.
The Federal Reserve is expected to officially cut its interest rate in September from the 5.25%-5.50% range it has maintained for more than a year, although uncertainty remains regarding the size of the reduction.
Traders are currently divided between expecting a 25 to 50 basis point cut in September, according to CME’s FedWatch tool.
Intel Sells Its Shares in Arm
In the corporate sector, Intel (INTC) sold its 1.18 million-share stake in U.K. chip firm Arm Holdings (ARM) in the second quarter, according to a regulatory filing released Tuesday.
The chipmaker mentioned earlier this month that it would cut more than 15% of its workforce and suspend its dividend amid a pullback in spending on traditional data center semiconductors and a shift toward AI chips.
Chocolate maker Mars Inc. wants to pay $83.50 per share for packaged food producer Kellanova (NYSE
), representing a 12% premium over Tuesday’s close and valuing the company at more than $30 billion, according to The Wall Street Journal.
Oil Prices Rise After U.S. Inventory Drawdown
Oil prices rose on Wednesday, supported by industry data that indicated a larger-than-expected drawdown in U.S. inventories.
Data from the American Petroleum Institute showed that U.S. crude inventories fell by 5.2 million barrels in the week ended August 10, much more than the estimate of a near 2 million barrel drawdown.
If confirmed by official inventory data later in the week, this reading suggests that demand continues to be strong in the world’s largest fuel consumer, even as the generally travel-heavy summer season begins to wind down.
