Wednesday’s Triple Threat: CPI Relief, GM's $6 Billion Buyback, and Pre-Market Frenzy

It’s Wednesday, and it seems to be all sunshine and rainbows this morning as the Index Futures popped on the backs of the latest CPI data. Obviously, heading into this morning's trading session this kind of opportunistic aura is one that could bring quite the excitement in investors' portfolios. But like mentioned in previous articles, this is only the beginning. This bull train of a rally seems to have plenty of gas in the tank, and for those in the know, opportunities are popping up in every corner of the market.

Which is why in today’s issue we will be highlighting the numerous effects of the latest CPI relief in the market…

General Motors massive $6 Billion Share Buyback Shock…

And today’s Top 10 Pre-Market Stocks. 

As always, there’s a lot to uncover this morning…

So here we go! 

May CPI Data Fuels Optimism for a Market Rally

It’s no secret that Inflation has been the roaring head of the economy as consistent rate hikes have skyrocketed most American’s cost of living. But with the latest Consumer Price Index (CPI) data from the Bureau of Labor Statistics a light at the end of the tunnel has emerged. The report, released this morning, showed that consumer price increases cooled during the month of May, providing a glimmer of hope for those looking for relief from rising costs.

According to the data, the CPI remained unchanged over the previous month and rose 3.3% over the prior year in May. This marks a deceleration from April's 0.3% month-over-month increase and 3.4% annual gain in prices. Both measures came in better than economists' expectations, which is always a pleasant surprise.

Energy prices, particularly a drop in gas prices, played a significant role in easing the pressure on headline CPI. When looking at "core" inflation, which excludes the more volatile costs of food and gas, prices in May climbed 0.2% over the prior month and 3.4% over last year. Once again, these figures were cooler than April's data and surpassed economists' predictions.

The news of slowing inflation was well-received by the markets, with the 10-year Treasury yield falling about 12 basis points to trade around 4.29%. This reaction comes just ahead of the Federal Reserve's policy decision, which is set to be announced later in the day.

Despite the positive news, it's important to note that inflation remains above the Federal Reserve's 2% target on an annual basis. The Fed's preferred inflation gauge, the core PCE price index, has been particularly stubborn, holding steady at 2.8% for the month of April, matching March's figure.

Shelter prices continue to be a sticky point, rising 5.4% on an unadjusted, annual basis. However, this is a slight slowdown from April's numbers. Energy prices, on the other hand, fell in May, driven by a significant drop in gas prices.

Other notable changes include increases in medical care, used cars and trucks, and education indexes, while airline fares, new vehicles, communication, recreation, and apparel indexes decreased over the month.

As a result of this data, investors are now anticipating a range of one to two 25-basis-point cuts in 2024, a shift from the six cuts expected at the start of the year. Markets are pricing in a roughly 69% chance that the Federal Reserve will begin to cut rates at its September meeting, up from about a 53% chance the day prior.

While the path to the Fed's 2% inflation target remains "bumpy," the latest CPI report offers some encouragement that the economy is heading in the right direction towards rate cuts. And once those begin happening, the market won’t stop rallying for no one. 

The $6 Billion Buyback Igniting a Market Frenzy

As the latest CPI data proves to be today’s main bullish news driver, General Motors (GM) has also played its hand In a bold move that has sent ripples through the automotive industry, General Motors (GM) has just announced a new $6 billion share buyback program, signaling its unwavering confidence in the company's future prospects. The news comes on the heels of an impressive performance by the automaker, which now expects to produce up to 250,000 electric vehicles (EVs) this year.

GM CFO Paul Jacobson, speaking from the Deutsche Bank Global Auto Industry Conference in New York City, emphasized the company's commitment to its capital allocation strategy. "As the business has continued to perform, we've seen stable pricing, disciplined incentives from our team, and a vehicle portfolio that customers just love," Jacobson stated. "All that spells a lot of success."

The new share buyback program, approved by GM's board, is in addition to the $10 billion accelerated share repurchase (ASR) program introduced at the end of last year. This move coincided with the company's decision to increase its dividend by 33% starting in January. The announcement sent GM shares soaring, with the stock rallying nearly 2% to its highest level in over two years.

While GM has slightly adjusted its EV production expectations for the year, lowering the range from 200,000-300,000 to 200,000-250,000, Jacobson remains optimistic about the company's EV business. He stated that GM expects its EVs to be "variable profit positive" by the end of the year, meaning that the company can sell them for more than the cost of materials and begin to offset fixed costs. EBIT (earnings before interest, expense, and taxes) profitability for the EV segment is expected to come in 2025.

GM's EV market share is also on the rise, with the company selling over 9,500 EVs in North America last month. The Chevrolet Blazer and Cadillac LYRIQ EV have seen strong gains, and Jacobson anticipates continued momentum with the entry-level Equinox EV, which boasts the lowest price for a 300-mile-range EV in the market. Impressively, GM's EV growth rate is reportedly outpacing that of its competitors.

Looking at GM's overall financial outlook for 2024, Jacobson confirmed that the company is maintaining its full-year adjusted EBIT forecast of $12.5 billion to $14.5 billion, which was boosted following strong Q1 results. He also hinted that Q2 earnings will surpass Q1's adjusted EBIT of $3.9 billion.

The main thing here is that while GM continues to navigate the rapidly evolving automotive landscape, its focus on capital allocation, EV growth, and autonomous technology positions the company for long-term success. This buyback program is destined to have a major impact on its share price. With a buyback this large, General Motors is sucking the supply of its shares out of the market, and when it comes to the laws of supply and demand, the effect could be huge. General Motors is obviously optimistic on its future to even consider a share buyback of this magnitude, so with less shares available to trade, and a lot of demand behind the stock, General Motors is definitely an “old school” stock that could end up moving like a meme stock in the near future.  

Sify's 49% Surge and Golden Heaven's 47% Gain: Pre-Market Movers on Fire

As we take a closer look at the pre-market stock movers for Wednesday, it's clear that there's a lot of activity happening on both the gainers and losers front. Leading the pack are SIFYR and THMO, but there are plenty of other notable movements to explore.

Starting things off, we have Sify Technologies Limited – Rights (NASDAQ:SIFYR) who is making a strong showing, up more than 49% ahead of their delisting next week. 

Golden Heaven (NASDAQ:GDHG) stock is also performing well, soaring over 47% with heavy pre-market trading.

Wang & Lee (NASDAQ:WLGS) shares are seeing a significant surge, rising close to 40% with strong early morning trading.

Singing Machine (NASDAQ:MICS) stock is also making moves, gaining more than 29% on acquisition news.

Castellum (NYSEMKT:CTM) shares are increasing nearly 25% this morning.

Beamr Imaging (NASDAQ:BMR) stock is rising over 23% after adding its new breakthrough product to a new marketplace. 

Molecular Partners (NASDAQ:MOLN) shares are climbing more than 16% as they continue to rise on positive preclinical data.

Surf Air Mobility (NYSE:SRFM) stock is jumping over 15% on Wednesday morning.0

Ocean Biomedical (NASDAQ:OCEA) shares are heading 15% higher as well. 

NovaBay Pharmaceuticals (NYSEMKT:NBY) stock rounds out the top gainers, up more than 12% today.

As we look at the bigger picture, it's evident that the pre-market stock movers are reflecting the positive news of the overall CPI data that has come out this morning. But it doesn’t stop here. With a diverse range of other influences causing a stir in the market this morning, opportunities will be showing their faces all throughout today. So make sure you keep a close eye and stay informed to ensure your portfolio doesn’t get left behind. 

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