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Positive CPI Reports Raise Hopes for a Monetary Policy Shift
June’s CPI reports raise hopes about the near end of the U.S. Federal Reserve’s continuous tightening of monetary policy. Consumer indexes in June show a cooling in inflation growth speed, which is in turn an indicator of a market rally.
For the month of June, the U.S. consumer price index rose by 0.2%, beating market expectations of 0.3%. yet slightly higher than the previous month’s 0.1%.
Markers call this a big win for the economy and business. In the last 18 months, the highly strict and tightening monetary policy has affected the U.S. economic cycle, which has raised feelings of pessimism among the public, investors, and corporate figures.
Wall Street, in turn, was boosted by the positive news; all main indexes scored higher gains in today’s session.
The S&P 500 benchmark was up by 0.62%, the same as yesterday’s session. Nasdaq had the same increasing percentage of an average of 0.68% to 13,854.33 basis points. The Dow jumped by 0.4%, totaling a 140 basis point increase on its total benchmark market points.
Still, inflation remains higher than the targeted level of 2–3%, which added to the market’s worries. Based on that
Investors and economists closely watch producer prices as they can provide early signals of potential inflation. Rising producer prices may suggest that businesses are facing higher costs, which could eventually be passed on to consumers. This can have implications for the overall economy, including monetary policy decisions made by central banks such as the Federal Reserve.
Meanwhile, the individual stock market is occupied by Microsoft’s acquisition of Activision Blizzard. The company’s stock saw a 1.9% increase after a federal judge cleared the path for its acquisition of Activision Blizzard, potentially allowing the deal to close as early as next week. The acquisition had faced opposition from federal competition regulators on antitrust grounds.
As for the commodity market, U.S. West Texas Intermediate Crude oil prices experienced a modest increase, rising by 0.98% to reach $75.50 per barrel. Similarly, Brent oil saw a jump of 0.62%, reaching $79 per barrel. These price movements indicate a slight upward trend in the oil market.
Plus, The highest gain in four weeks was seen in U.S. crude oil stocks, which increased significantly. This increase coincides with what appears to be a peak in the demand for motor fuels throughout the early summer. Heavy processing activities have resulted from refiners’ strenuous efforts to ensure sufficient supply to fulfill market needs.
According to the agency responsible for national energy data, the U.S. crude inventory balance shows a significant increase estimated at 5.946 million barrels during the weekend of July 7. Compared to the inventory balance for the weekend of June 30, there were a total of 4,438 increases. The unexpected increase in inventories during the Fourth of July holiday week is considered unusual and “almost unheard of” by Phil Flynn, an analyst at Price Futures Group.
As for gasoline inventories, the level remained at the same level of 219.5 million barrels.
