US futures pop after CPI, while Fed looms

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• Wednesday, June 12, 2024 at 5:54 AM MST

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  Risk in the markets increases after the CPI print

  Stock futures shot higher following cooler-than-expected consumer price data for May.

  S&P 500 futures (ES=F) built on a record 27th year-to-date close, rising 0.7%. Futures on the tech-heavy Nasdaq 100 (NQ=F) rose nearly 0.9%, also pointing to gains after a record close for the index. Dow Jones Industrial Average futures (YM=F) rose 0.6%.

  Interest-sensitive parts of the market in particular made the biggest gains. Futures tied to the Russell 2000 (RT=F) rose about 2.3%.

  This came as investors quickly recalibrated their expectations for rate cuts this year. After the data release, markets estimated a roughly 69% chance that the Federal Reserve will cut rates before its September meeting, according to data from the CME FedWatch Tool. That’s an increase from about a 53% chance the day before.

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  Wednesday, June 12, 2024 at 5:32 AM MST

  Inflationary pressures are easing more than expected

  U.S. consumer price increases cooled during the month of May, according to the latest Bureau of Labor Statistics data released Wednesday morning.

  The Consumer Price Index (CPI) was flat last month, reaching 3.3% in May from the previous year, a slowdown from 3.4% in April, and down from the 3.4% year-over-year change that economists had expected.

  The monthly increase in May was lower than economists expected of an increase of 0.1%.

  On a core basis, which excludes the more volatile costs of food and gas, prices rose 0.2% in May from the previous month and 3.4% from last year – cooler than April data. Both measures were lower than economists’ expectations.

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  Wednesday, June 12, 2024 at 4:24 AM MST

  Nvidia as the sun…

  A tip of the veil to Torsten Slok, chief economist at Apollo, for this ‘vibe check’ on the S&P 500.

  Clearly, Nvidia (NVDA) is the sun around which 499 other companies revolve.

  Note: Apollo is the parent company of Yahoo Finance.

  

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  Wednesday, June 12, 2024 at 3:35 AM MST

  JP Morgan is weighing in on the vote on Musk’s pay package

  The Tesla (TSLA) shareholder vote on Elon Musk’s $56 billion pay package is in jeopardy.

  Ahead of Thursday’s vote, Tesla just dropped this post on Musk-owned X, detailing the CEO’s performance (note that this is strange to see from an X corporate account, but hey, this is Musk where we are talking about here).

  A new poll from Yahoo Finance currently shows that 96% of people who voted don’t think Musk’s pay package should be approved.

  Meanwhile, JP Morgan analyst Ryan Brinkman is weighing a comment this morning:

  “While both ISS and Glass Lewis, as well as several prominent institutional and private shareholders, have opposed the 2024 ratification of Mr. Musk’s 2018 compensation plan, we are more likely to suspect it will pass, albeit with a lower approval rating than in 2018 and perhaps by a smaller margin than is often thought. We base this expectation on anecdotal evidence of strong retail shareholder support and on our conversations with institutional investors whose reasoning appears broadly similar to that when they were asked to vote in favor of the Solar City acquisition. Investors we spoke to at the time were largely unsupportive of the Solar City acquisition, but were concerned that there would be a more negative share price reaction if the deal were voted down, given the perception of a vote of no confidence.”

  Brinkman reiterated an underweight (sell equivalent) rating on Tesla shares and a $115 price target, which assumes a decline of about 32% from current price levels.

  Read more about the Musk vote and the top votes on the pay package for Yahoo Finance CEO senior legal reporter Alexis Keenan here.

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  Wednesday, June 12, 2024 at 3:20 AM MST

  Confirm he’s still on the way after the big Apple deal

  Affirm (AFRM) remains one of the most popular tickers on the Yahoo Finance platform after news of an integration into Apple (AAPL) Pay emerged on Tuesday. Shares are up 1.5% pre-market, after rising 11% yesterday.

  I spoke with Affirm’s founder and CEO Max Levchin last night for a new recording of my “Opening Bid” podcast. The full episode (which delves into Levchin’s views on AI and the political atmosphere in Silicon Valley) will be released Friday morning on Yahoo Finance and major podcast platforms.

  But I’ve posted a snippet of Levchin’s commentary on the connection below so you can check it out.

  Levchin wouldn’t say how this deal will impact Affirm financially (could be big considering the 1.4 billion iPhones running wild worldwide), but hinted that over time it could be a strong contributor to both the top as the profit.

  He did acknowledge that the deal “validates” the buy-now-pay-later space – which has been under fire from regulators and others almost since its inception.