BREAKING: Stocks Open Higher After PPI Surprise
The Dow Jones Industrial Average closed higher on Wednesday as stocks rose across the board. The major indexes all held gains of well over 1% after July CPI data showed a modest downturn in inflation. All ended the session near intraday highs.
The S&P 500 and Nasdaq composite are gaining ground for the fourth week in a row but rapidly approaching resistance at their 200-day lines, the next major hurdle before the rally can continue.
Early Wednesday, the Bureau of Labor Statistics’ consumer price index showed an 8.5% year-over-year increase during the month of July. This was lower than economist estimates for an 8.7% increase, and also down from the prior month’s 40-year high of 9.1%. This broad measure of inflation was also unchanged on a month-over-month basis.
The Dow Jones was trading 1.4% higher at the close while the S&P 500 advanced 1.8%. Small caps and the Nasdaq composite posted the highest gains, at 2.8% and 2.7%, respectively.
Volume traded 3% lower on the Nasdaq but nearly 10% higher on the NYSE vs. the close on Tuesday, according to preliminary data.
Looking at S&P sectors, consumer discretionary stocks led the upside out of 11 components while utilities and energy stocks lagged. Still, all sectors rose.
The tech sector also outperformed, with the Technology Select Sector SPDR (XLK) gaining 2.7%. Major tech stocks posted strong numbers, with Facebook-parent Meta Platforms (META) up 5.8%, Amazon (AMZN) rising 3.6% and Netflix (NFLX) gaining 6%.
In the Dow Jones, Salesforce.com (CRM) was a top performer, advancing 3.6%. Apple (AAPL) also led, up 2.5% at the close.
AAPL shares recently reclaimed their 200-day moving average for the first time since April, a bullish sign. The relative strength line is also hitting new highs.
Disney (DIS) led the upside among Dow Jones stocks, up 3.8% ahead of its Q3 earnings due after the close. Analysts expect the media giant to report EPS of 99 cents a share on revenue of $21 billion.
Investors will be focused on Disney’s streaming strategy, looking for solid subscriber numbers at Disney+, Hulu and ESPN+. Wall Street expects net subscriber additions of around 10 million, which is a stretch, given Netflix’s recent loss of a million subscribers in its latest quarter.
This would also push Disney’s total global customers for Disney+ to about 147 million, according to FactSet.
Shares of Disney have recently reclaimed their 50-day and 21-day moving averages but remain below resistance at the 200-day line.
SunPower (SPWR) was among stocks breaking out, and it rose 7.6% in strong volume on Wednesday, taking out a 25.34 cup-based entry. Shares closed just below the upper edge of the 5% buy zone, which tops out at 26.60.
The solar energy industry group currently ranks No. 1 out of IBD’s 197 groups and has exhibited serious strength in recent weeks.
Elsewhere, paper products firm Graphic Packaging (GPK) rose 1% after paring earlier gains. Shares closed just within the lower edge of a 5% buy zone of a 23.09 cup-with-handle buy point. Shares mounted support at the 5% buy zone last week and are up roughly 6% so far this week.
The stock’s relative strength line also reached new highs along with this week’s breakout.
Follow Rachel Fox on Twitter at @IBD_RFox for more Dow Jones and stock market commentary.
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Notice: Information contained herein is not and should not be construed as an offer, solicitation, or recommendation to buy or sell securities. The information has been obtained from sources we believe to be reliable; however no guarantee is made or implied with respect to its accuracy, timeliness, or completeness. Authors may own the stocks they discuss. The information and content are subject to change without notice.
*Real-time prices by Nasdaq Last Sale. Realtime quote and/or trade prices are not sourced from all markets.
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