Jumbo Fed Cut Now On Table As New Data Clinches Another Record Day…

Show me the $$$...

What. A. Day, friends. The Dow ripped faces off with a 617 point raid to a record 46,108. And the S&P 500 and the Nasdaq tagged fresh all-time highs too. Of course, I don’t have to tell you why (as I’m sure you’re well aware by now), but after today's price action and CPI print… it’s d*mn near certain that J-Poww is about to give us all that rate cut juice. 

(Source: Giphy) 

In short, the August CPI report came in hotter than expected on a monthly basis… up 0.4% vs. 0.3% expected, but annualized, the headline stayed on target at 2.9%. Translation: inflation is still annoying, but not annoying enough to stop the Fed from chopping a quarter point off rates next week. Additionally, Core CPI hit 0.3% on the month and 3.1% YoY, exactly in line. Combine that with yesterday’s wholesale prices actually falling 0.1% and jobless claims spiking to the highest level since 2021, and suddenly a jumbo cut isn’t off the table either. 

As for the street's take on the matter, Jay Woods over at Freedom Capital Markets summed it up: “A quarter-point cut is a layup… and the jobless data keeps a half-point on the table.” In other words, Powell just called a timeout he didn’t have. 

(Source: Giphy) 

Meanwhile, the tape was pure chaos. For starters, Opendoor experienced its biggest one-day gain ever (+79%) after Shopify exec Kaz Nejatian got the CEO job. Keith Rabois is sliding into the chairman seat, which means meme stonk twitter will be insufferable for at least a week. Not to be outdone, Figure Technologies, the crypto lender IPO’d at $25, opened at $36, and touched $38 intraday for a +44% close. The valuation is now sitting at $7.6B… a.k.a, just another  day for blockchain “home equity lines of credit.”

On the media side, Warner Bros Discovery popped +29% after the WSJ reported that Paramount-Skydance (+15.55) is prepping a cash bid for the whole enchilada. Hollywood consolidation speedrun continues. Micron also went full-send up +7.5% after Citi hit the buy button again, citing stronger datacenter demand… while Revolution Medicines dropped some positive Phase 2 cancer trial data, setting up for a Phase 3 run later this year. Shares boomed +14%. 

(Source: New Memes Trending Daily) 

Furthermore, Centene hit a +9% rally after the health insurance firm reaffirmed guidance and said its Medicare plans didn’t blow up. Elsewhere, Delta dropped -2% for simply being an airline stock LOL. Oh, and Oracle gave back some gains (-6%) after yesterday’s $100B-in-a-day Larry Ellison coronation. Friendly reminder: Oracle is still standing on business with nearly half a trillion in backlog.

So in the end, what does this all mean for us? Well, the market is betting Powell finally folds and cuts rates. Bond traders have it at 100% for a quarter-point, and whispers of 50 bips are starting to sound more like reality and less like my dreams of playing in the NFL despite being a 5 '7 white dude who tore his hamstring playing slow-pitch softball. Meaning, that’s rocket fuel for equities in the short-term, especially anything tied to AI, chips, and cloud.

Of course, inflation is still technically still warm, and unemployment is quietly rising. But the Fed is officially cornered… and stocks just set fresh highs. Translation: if you’re short, you’re either brave, crazy, or both. Until next time, friends… 

If you read all of this, congrats for having a 10 second attention span (better than me). As always, here’s our heatmap for today.

At the time of publishing, Stocks.News does not hold positions in companies mentioned in the article.