Stock prices fluctuate as inflation data draws attention

U.S. stocks opened higher on Monday, poised to build on a series of gains as attention turns to an upcoming inflation report that looks like it could lead to a rate cut.

The S&P 500 (^GSPC) hovered around the flatline, while the tech-heavy Nasdaq Composite Index (^IXIC) rose about 0.2%. The Dow Jones Industrial Average (^DJI) was flat, ending the best week of the year for the blue-chip index.

Stocks returned to strength in May on the back of better-than-expected earnings and renewed optimism about the Federal Reserve's monetary easing. On Friday, the Dow Jones Industrial Average recorded an eight-day winning streak, but the lack of economic announcements likely played a role.

Markets are becoming more cautious after recent hot inflation data, with investors increasingly pricing in a “no-landing” in which prices rise below the Fed's target but the economy continues to grow.

This week will feature a slew of economic announcements, with Wednesday's Consumer Price Index update taking center stage as a potential catalyst. The April CPI update will weigh on whether inflation will persist into the second quarter, with Wall Street betting the report points to a sharper decline and sets the stage for multiple rate cuts this year. It will shed light on.

read more: How does the labor market affect inflation?

Among individual stocks, GameStop (GME) stock rose as much as 80%, fueling the gaming retailer's recent rally as meme stocks once again hit the headlines. The rise was due to Roaring Kitty, the social media star credited with kickstarting the meme stock craze of 2021, returning from a three-year hiatus.

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Monday, May 13, 2024, 8:40 a.m. (Pacific Daylight Time)

GameStop stock soars, costing short sellers $1.3 billion in May

GameStop stock soared as much as 110% on Monday, inflicting heavy losses on short sellers.

“Including today's loss, GME short's May-to-date loss is down $1.34 billion, bringing the year to $952 million,” Ihor Dusaniowski, managing partner at S3 Partners, told Yahoo Finance on Monday. It has decreased,” he said.

Short interest on the video game retailer's stock is relatively high, hovering just north of 24% of its free float.

Along with GameStop, other meme stocks rose on Monday after the social media star “Roaring Kitty,” seen as the kickstarter for the January 2021 GME short squeeze, posted online for the first time in nearly three years.

Shares of theater operator AMC (AMC) rose 20% during the session, while Trump Media & Technology Group (DJT) rose 8%.

“Short sellers could have some ups and downs with these stocks,” Dusaniwski said.
Monday, May 13, 2024, 8:35 a.m. (Pacific Daylight Time)

Cocoa futures prices rose 18% on Monday, down sharply from April's all-time high

Cocoa (CC=F) futures fell as much as 18% on Monday, the biggest single-day decline since 1960.

The instrument was trading below the $7,400 level during the session.

Cocoa has fallen sharply from its record high of more than $12,000 a tonne last month.
Monday, May 13, 2024 8:09 a.m. (Pacific Daylight Time)

Federal Reserve's Mr. Jefferson calls for interest rates to remain unchanged until inflation cools further

Yahoo Finance's Jennifer Schonberger reports:

Federal Reserve Vice Chairman Philip Jefferson on Monday became the latest central bank official to call for interest rates to remain at current levels until there are signs of further cooling in inflation.

“We continue to look for further evidence that inflation will return to our 2% target,” Jefferson said during a question and answer session at the Cleveland Fed.

“Until that happens, I think it's appropriate to keep policy rates in a restricted area.”

Mr. Jefferson said he changed his view after the first quarter's better-than-expected inflation numbers.

On May 1, the Federal Reserve decided to keep interest rates in the range of 5.25% to 5.50%, the highest level in 23 years. The next policy meeting is scheduled for June 12, and the central bank is expected to leave interest rates on hold again.

Please see here for the detail.
Monday, May 13, 2024 7:21 PDT

GameStop soars 70% after social media star 'Roaring Kitty' post

GameStop (GME) stock soared as much as 80% on Monday, despite a temporary trading halt in the wake of “Rolling Kitty,” which was seen as the catalyst for the meme frenzy during the pandemic. Posted First time since 2021.

X's Sunday Post It includes a meme of a video gamer leaning forward, indicating that things are getting serious.

Monday's rise came amid a recent rally in meme stocks. GameStop stock is up 90% since the beginning of the year. Short interest on the stock is about 24% of its free float.

Roaring Kitty, identified in 2021 as Keith Gill, has become a prominent figure on the WallStreetBets forums and on YouTube for his bullish stance on GameStop.

He posted a video about why GameStop is going up. In February 2021, he testified before Congress as lawmakers were investigating a massive short squeeze caused by an army of retail traders.

Melvin Capital, the hedge fund at the center of a massive bet that GameStop stock would fall, lost billions of dollars in the meme frenzy. The phenomenon has captivated millions of retail traders and prompted increased scrutiny of payments for order flow, which is how some trading platforms make money.
Monday, May 13, 2024 06:31 PDT

Stocks rise heading into CPI-focused week, Dow aiming for 9th straight win

Stocks opened higher on Monday as investors focused on how the Federal Reserve will proceed with interest rate policy this year, with the latest monthly inflation report to be released this week.

The S&P 500 (^GSPC) rose about 0.2%, and the tech-heavy Nasdaq Composite Index (^IXIC) rose about 0.3%. The Dow Jones Industrial Average (^DJI) also rose about 0.3%, looking for its ninth straight day of wins. On Friday, the blue-chip index posted its best week of the year.

Investors will find out whether the firmer-than-expected inflation trend will continue into the second quarter with April's consumer price index (CPI) released on Wednesday.

On the retail spending front, Home Depot (HD)'s (HD) quarterly results on Tuesday and Walmart (WMT)'s quarterly results on Thursday may provide insight into the health of U.S. consumers.
Monday, May 13, 2024, 3:40 a.m. (Pacific Daylight Time)

Netflix stock rises ahead of upfront event

Here are some interesting facts about Netflix (NFLX) that you probably weren't aware of.

The company's stock has risen 12% since May 1 and is currently trading at the level it was before the company's disappointing earnings report in late April.

In a new note this morning, JPMorgan analyst Doug Anmuth said the rebound was due to 1) 2024 reported revenue guidance and NFLX's decision to stop reporting subscriber numbers starting in 2025; 2) an increased sense of security about both decisions made by the NFL, and 2) the recognition that NFLX will not be affected by heavy AI. – The intensity of capital spending like Meta, Alphabet, Amazon, and he 3) Excitement for his Upfront presentation on May 16th.

The annual Upfront presentation is where television networks and streaming services pitch their programming and advertising products to advertisers and agencies.

Ammuth believes Netflix will make some bullish statements at the event, which could trigger a rise in the stock price.

“Upfront expects to see an update with more than 23 million monthly active users (MAUs) in its ad tier, and based on our conversations, investors are excited to see more than 23 million monthly active users (MAUs) in the ad tier, including , seems to be seeking more than 35 million to 40 million MAUs in the advertising tier, as well as the latest information on future content plans and NFLX's sports strategy. Finally, the games could get a boost as NFLX has hinted it could host two NFL games on Christmas Day later this year, giving the NFL massive global distribution. Investors in the division are looking forward to the announcement of the 3P demand-side platform, which will impact NFLX's advertising tier and allow the company to aggressively promote its upcoming content.”
Monday, May 13, 2024, 3:30 a.m. (Pacific Daylight Time)

In a bullish trade, Walmart captures revenue from EvercoreISI

Walmart (WMT) stock has lagged the S&P 500 over the last month as inflation statistics persist and cast doubt on the purchasing power of U.S. consumers.

When Walmart announced its earnings results this Thursday morning, there was a lot of talk about the company's extremely conservative leadership.

But Greg Merrick, a retail analyst at Evercore ISI, is putting those concerns aside and adding Walmart to his list of strategic acquisitions.

Mehlich said this morning.

“We believe we are performing at a high level as we pursue initiatives such as digital advertising, Walmart Plus, and automation. In addition to gaining market share among high-income consumers, the company has a fairly steady stream of positive traffic to low- to middle-income consumers. It is thought that Walmart intends to distort constructive comments throughout the year for the reason of gaining market share. Normally, Walmart does not increase EPS for the full year, but a similar sales forecast for the first quarter has been given. This could be especially evident in the international business, where positive industry commentary continues to result in double-digit sales growth. Yes, Wal-Mart's continued stock gains are likely undervalued by investors.
Monday, May 13, 2024 03:20 PDT

See revenue growth

Interesting dynamics in the market are starting to form.

After several years of explosive earnings-per-share growth with the Magnificent 7 moniker, the sector is headed for a slowdown this year and next (see chart at left by RBC Strategist Lori Carbasina) ). Similarly, EPS growth is expected to accelerate this year and next for the other 493 stocks in the S&P 500, after years of stagnation.

The immediate question is: Do the other 493 companies in the S&P 500 represent better value than the Magnificent 7, as their earnings growth is likely to accelerate again in 2025?

Does it make sense to nibble on the other 493 stocks in the S&P 500? (red blood cells)
Monday, May 13, 2024 3:10 a.m. (Pacific Daylight Time)

Save the date: May 20th, JPMorgan Investor Day

The company's stock price rose 8.7% last month on expectations for longer-term interest rates, and all eyes are on JPMorgan's (JPM) investor day on May 20th.

Jefferies analyst Ken Usdin released a note this morning, keeping his rating on the stock a “buy” heading into the investor day, but raising his price target from $215 to $227. He expects JPM executives to “focus on market share growth, investment spending, and efficiency.”

“While the net interest income guidance appears to be conservative given the rise in long-term interest rates, we believe JPM continues to delay updating its guide,” Usdin added.
Monday, May 13, 2024 3:00 AM PDT

Goldman doesn't expect inflation to slow significantly

Persistent inflation is likely to continue into 2024.

Ahead of this week's major CPI index report, Goldman Sachs is warning of the potential for disinflation in several key categories as the year progresses. Still, Goldman's macro team expects inflation to remain above the Fed's desired 2% target.

Jan Hatzius, Goldman's top economist, said:

“We see further disinflation in 2024 due to auto, home rental and labor market rebalancing, but we expect this to be offset by continued catch-up inflation in health care, auto insurance and housing. We expect year-over-year core CPI inflation to be 3.5% and core PCE inflation to be 2.7%.”