The market closed at another record high today before the economic data really starts to be released. The May Consumer Price Index (CPI) report will be released tomorrow. In addition, if the US-China trade negotiations – now in their third day – continue to give us hope, we may see a catalyst for increased market participation.
Eventually, the height of current valuations will start to be felt these days. The S&P 500 is currently at its highest level since February 20th – when the index was moving rapidly in the opposite direction. But at the close today, the indices surged to near intraday highs. The Dow Jones rose +105 points, or 0.25%, the S&P 500 rose +32 points, or 0.55%, and the Nasdaq – Intel INTC +8% today, Tesla TSLA +10% in the past two days – closed +123 points, up
The indices are now up 10-15% from their April lows and close to their all-time highs set in late 2024. That’s all well and good — as long as you don’t expect the Fed to cut rates anytime soon — but at some point, we need more than a few pep talks about an impending trade deal. That’s pretty much all there is to it so far.
GME: Q1 Earnings Season Is Coming to an End
Formerly popular “meme stock” GameStop GME reported mixed results after the close today, with earnings of +$0.09 per share, beating the Zacks Consensus Estimate by 1 cent, but revenues of $732.4 million, down 17% year over year, well below expectations. The quarter was good in the U.S., but not in Canada, Australia, and Europe. Shares fell 5% in late trading on the news.
But that’s still better than PetMed Express PETS, which announced it will delay reporting fiscal fourth-quarter results this afternoon. Losses per share are expected to be narrower than a year ago, but quarterly revenues will be down 27.5% from last year’s fiscal fourth quarter. The earnings report and subsequent conference call are scheduled for Monday. Shares fell 8% on the news.
Stock Market Outlook for Wednesday
Monthly CPI data, including the latest inflation rate, will be released before the market opens tomorrow. The May CPI is expected to rise 10 basis points (bps) to +2.4%, but remain near a four-year low. Inflation rose to +9.1% in June 2022, the highest level in 40 years. Now, inflation has fallen back to the level of early 2021.
The overall US economy has shown a resilience that many experts had not expected. Analysts did not expect a full-scale collapse in the economy last month. Even so, it is difficult to imagine any surprises in the inflation rate tomorrow. We will pay close attention to the year-on-year increase in the core CPI, which reached +2.9% last month, but is still nearly a percentage point higher than the best inflation level predicted by the Federal Reserve.
