S&P 500 Pares Gains as Treasury Yields Move Off Lows Despite Easing Inflation

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By Yasin Ebrahim

AiVIF.com -- The S&P 500 pared some gains Thursday, as Treasury yields bounced off session lows, but remained supported by further signs of easing inflation and a jump in energy stocks.

The S&P 500 rose 0.1%, the Dow Jones Industrial Average gained 0.2 %, or 75 points, the Nasdaq was down 0.38%.

The U.S. producer price index, a measure of wholesale inflation, declined by 0.5% in July after rising 1% in June, driven by a large decline in energy prices.

It was the first monthly decline in more than two years, and – following Wednesday’s softer consumer inflation report - added to expectations that inflation is nearing a peak.

“I think inflation will continue to look better and will give the Fed more of a reason toward the end of the year to potentially signal a pause,” Jimmy Lee, the founder and CEO of The Wealth Consulting Group, told AiVIF.com in an interview on Thursday.

Fresh signs of easing inflation come just as the labor market continued to show strength as jobless claims of 262,000 in the week ended July 30 fell short of economists’ estimates.

“The modest pickup in claims suggests that turnover may be increasing in weaker firms that are struggling with slowing growth,” Jefferies said in a note.

The data continued to support bets that the Federal Reserve isn’t likely to dramatically step up the pace of monetary policy, with odds of a 75 basis point hike in September falling to 19% from 34% a day earlier, according to AiVIF.com’s Fed Rate Monitor Tool.

Tech, meanwhile, struggled to hold gains as Treasury yields rebounded from session lows forcing Google-parent Alphabet (NASDAQ:GOOGL), Meta (NASDAQ:META), Apple (NASDAQ:AAPL), and Microsoft (NASDAQ:MSFT) to pare some gains.

Energy stocks, however, supported the broader market, rising 2% on strength in oil prices on demand optimism after the International Energy Agency lifted its oil demand growth estimate for this year.

The IEA boosted its outlook on oil demand for this year by 380,000 barrels per day, with demand now seen rising by 2.1 million bpd to a total of 99.7 million bpd in 2022.

The earnings front offered a mixed picture.

Walt Disney Company (NYSE:DIS) was the standout performer, rising more than 5% after its quarterly results topped estimates. The company also said it would hike the subscription price of its streaming service Disney+ and launch an ad-supported version of the service on Dec. 8.

The price hikes provide a “path to profitability for [Disney’s streaming business],” Credit Suisse said, but “streaming losses will be higher than expected in F4Q22/FY23…tough still peak in FY22 and hit profitability during FY24.”

Bumble Inc (NASDAQ:BMBL), however, fell more than 9% after the dating service operator slashed its full-year revenue guidance after delivering mixed quarterly results as losses came in wider than expected in the second quarter. Its shares fell more than 7%.

Six Flags Entertainment New (NYSE:SIX), meanwhile, fell more than 20% after reporting second-quarter earnings that fell short of expectations, weighed down by a 22% drop in theme park visitors.