⚡️ Big stocks fall

and inflation turns friendly

In partnership with

Good morning, investors! The NASDAQ and S&P 500 made new all-time highs again, but not everyone went home happy.

Today we cover:

  • Inflation coming under control

  • Big names fall

  • Getting rid of debt – last part

📊 Economy and News 

Inflation falls 0.1% in June from prior month, helping case for lower rates

The monthly inflation rate fell in June for the first time in over four years, offering the Federal Reserve more justification to begin lowering interest rates later this year.

The consumer price index (CPI), which measures the costs of goods and services across the U.S. economy, dropped 0.1% from May. This brings the 12-month rate down to 3%, the lowest in more than three years, from 3.3% in May, when it was unchanged on a monthly basis. This marks the first monthly decrease since May 2020.

Excluding volatile food and energy costs, the core CPI rose 0.1% monthly and 3.3% year-over-year, compared to forecasts of 0.2% and 3.4%, respectively. This annual increase for the core rate is the smallest since April 2021.

A 3.8% decrease in gasoline prices helped curb inflation for the month, counteracting 0.2% increases in both food and shelter prices. Housing-related costs, a significant and persistent component of inflation, showed a slower rate of increase, which is a positive development since they account for about one-third of the CPI's weighting.

The CPI had peaked above 9% in June 2022, leading the Fed to implement a series of interest rate hikes, which concluded in July 2023. Since then, the central bank has maintained its benchmark borrowing rate between 5.25% and 5.50%, even as inflation has significantly declined.

Following this report, traders in the fed funds futures market increased their expectations that the central bank would start lowering rates in September.

Global hits:

Shining again: Gold surged by $52 to $2,424, nearing its all-time high closing level. With May's intraday record of $2,450 in sight, the increase is driven by rumors of rate cuts and global uncertainties.

📈 Stocks

S&P 500 5,584.54 (-0.88%)
DJIA 39,753.75 (+0.082%)
NASDAQ 18,283.41 (-1.95%)
BRENT CRUDE 86.01 (+0.71%)
* Prices as of Jul 12th, 12:20 AM UTC

Big names fall

The S&P 500 pulled back from a record high as investors shifted away from the year's big technology winners, including Nvidia and Meta Platforms, down -5.57 and -4.11% respectively.

This move was triggered by the lowest consumer price index reading in over three years, which led to lower rates and a rotation into small-cap and housing-related stocks.

One of the biggest losers was Tesla that went down about -8% after Elon Musk pushed back Tesla's Robotaxi event from August to October, ending the company’s 13-day winning streak.

On the other hand, the small-cap benchmark Russell 2000 Index rose about 3.6% as investors anticipated a Federal Reserve rate cut in September and a potential economic soft landing following the inflation data.

Housing-related stocks like Home Depot and D.R. Horton surged on the expectation that lower rates would revive the slowing housing market. Industrial stocks, such as Caterpillar, also saw gains. Treasury yields fell after the CPI data, as traders increased their bets on upcoming interest rate cuts.

Odds of a September rate cut rose to about 93% based on fed funds futures trading following the CPI data, according to the CME FedWatch Tool. Traders still see the Fed standing pat at its meeting later this month.

More electric vehicles? The White House on Thursday said it would hand out $1.7 billion to help convert closed-down or at-risk auto manufacturing and assembly facilities to make electric and hybrid vehicles.

The funding comes as growth in new electric vehicle sales has slowed, even as the Biden administration wants to keep US EV manufacturers competitive with a surging Chinese industry. Just earlier this year President Joe Biden quadrupled tariffs on electric vehicles from China.

Olympics costing money? Delta said the Paris Olympics will translate to a $100 million revenue hit because travelers are heading to other destinations.

Delta has the most service of any U.S. airline to Paris and holds a joint venture with Air France. European travel demand has been robust this summer, and Delta executives expect strong bookings to the region through the start of November.

The company fell down -3.99% after missing estimates.

This doesn’t come as a surprise to our Pro members as we had warned of a ‘low’ quarter:

Become a PRO member today so you do not miss out on these predictions. We’ll cover top TRAVEL stocks in Sunday’s issue and more.

Sponsored by KeeperTax

Optimize your taxes year-round with AI

  • Scan your accounts to find missed deductions

  • Get notified of every new potential deduction

  • Save an extra $1,249/yr in taxes on average

💵 Personal Finance

Get rid of debt step 4: Increase payment and reduce expenses

Whenever possible, double the amount of payments you make to your debt, especially for high-interest debt. Paying more than the minimum can speed up the time it takes to get out of debt.

By increasing your payment amount, you will be increasing the overall rate at which your debt declines and reducing the total interest you pay.

Cutting back on unnecessary expenses is a key part of getting out of debt. Review your regular expenses and identify which are necessary, such as food, housing, and utilities, and which are unnecessary, such as entertainment or new clothing.

Reducing your unnecessary expenses can give you extra money to put toward getting out of debt.

Pro tip: If you are still struggling to pay your debt with your income, you can take other measures. If you are behind on your payments, you can try debt settlement with the help of a reputable debt relief company.

With this strategy, you negotiate with lenders to reduce the amount of debt you owe in exchange for agreeing to pay a portion of your balance. However, one drawback to turning to debt settlement is that it can negatively affect your credit score for several years.

💰 Be a Better Investor

“If you would be wealthy, think of saving, as well as of getting. Away, then, with your expensive follies, and you will not have then so much reason to complain of hard times.”

Benjamin Franklin

Resources:

What did you think of today's newsletter?

Login or Subscribe to participate in polls.

👩🏽‍⚖️ Legal Stuff
Nothing in this newsletter is financial advice. Always do your own research and think for yourself.