✅ Written by Austin DeNoce, Markets Reporter, Walk-On Holdings

✅ Edited by Casimir Stone, Creative Director Walk-On Holdings

This Week in US Markets: Powell's Remarks and Positive Inflation Data Boosted Stocks

This week in U.S. markets, all three major indexes registered record highs on the back of positive inflation data and reassuring remarks from Federal Reserve Chairman Jerome Powell.

Chair Powell took to Capitol Hill on Tuesday to speak in front of the Senate Banking Committee, where he voiced concern over holding rates too high for too long. He added that the economy is still strong, and inflation is cooling. Powell went on to say inflation is not the only risk to watch, and reducing policy restraint too late could unnecessarily weaken the economy or labor market. The following day, Powell concluded his two-day meeting on Capitol Hill with the House Financial Services Committee, where he reiterated the fight against inflation wasn’t over but that the Fed will need to be more cautious toward softening in the labor market.

As alluded to, it was also a big week for inflation news. June’s CPI report actually showed deflation of 0.1% from the previous month. This was the first negative monthly move in more than four years. On an annual basis, headline CPI slowed to 3%. Excluding food and energy, prices rose 0.1% for the month and 3.3% annually, which marked the smallest annual increase since April 2021. After the report, the U.S. 10-year yield fell below 4.2%, while market predictions for a September rate cut increased to more than 90%, according to CME’s FedWatch Tool. However, we closed out the week with slightly mixed signals when the producer price index for June rose more than expected at 0.2%.

In other economic news for the week, unemployment claims fell more than expected, hitting a five-week low. June consumer inflation expectations for the year ahead also declined to 3%. Elsewhere, the NFIB small business optimism index for June hit its highest level of 2024. However, it was still the 30th month below the index’s long-term average, with small business owners citing inflation as their biggest concern. Finally, the University of Michigan reported a statistically insignificant change in consumer sentiment in July, but nearly half of respondents voiced concerns over high prices.

In company news for the week, Big bank stocks pushed higher after Reuters reported the Federal Reserve is considering revising a surcharge that could lower their capital requirements. However, later in the week, three of the big banks struggled despite reporting earnings and revenue above expectations. JPMorgan warned of future risks potentially leading to higher inflation and interest rates while reporting a larger-than-expected provision for credit losses. Citigroup and Wells Fargo also saw their shares fall, with the latter reporting a 9% annual decline in interest income.

In tech news, Bloomberg reported Apple was targeting roughly 10% growth in iPhone shipments due to projected demand for its new Apple Intelligence features coming in the fall. The maker of Apple’s iPhone glass, Corning, also raised its second-quarter forecast, citing strong demand for its new optical connectivity products for Generative AI. Elsewhere, the Taiwanese chipmaker TSMC reported a 40% year-over-year increase in sales. Meanwhile, Reuters reported Intel is targeting $1 billion in software revenue by the end of 2027. Lastly, the payment automation company UiPath announced plans to lay off 10% of its workforce.

In the aviation sector, Boeing accepted a plea deal to a criminal fraud case that included a $244 million fine. The case was related to two 737 Max crashes in 2018 and 2019. Meanwhile, Delta Air Lines saw record second-quarter revenue, but its stock still took a nosedive after reporting a near-30% decline in net income. Other airlines, including American and Southwest, also saw their stocks fall after the news.

In the EV sector, Tesla broke its 10-day winning streak after Bloomberg reported it was delaying the launch of its Robotaxi from August to October. Meanwhile, competitor Lucid saw its stock soar after its CEO and CTO said the Saudi Arabia Public Investment Fund was the “perfect long-term partner” for scaling its production.

In merger and acquisition news, Paramount Global and Skydance Media finally agreed to merge after months of negotiations in a deal valued at approximately $8 billion. Chipmaker AMD agreed to acquire Finish-based Silo AI for roughly $665 million. Finally, Drugmaker Eli Lilly agreed to buy the gut-drug maker Morphic Holding for roughly $3.2 billion.

Other notable news came from Pfizer, which announced it would advance its once-daily weight-loss pill to a mid-stage study following positive Phase 1 results. TurboTax-owner Intuit announced restructuring plans that included closing facilities in Canada and Boise, Idaho, to focus on AI-powered tax preparation. Shares of LegalZoom tumbled after cutting its sales outlook and announcing the immediate resignation of CEO Dan Wernikoff. Finally, Costco shared plans to increase its membership fee for the first time since 2017.