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Investing.com — The Dow gave up gains but ended higher Wednesday, as data showing inflation rose by the slowest pace in more than two years pushed Treasury yields lower and tech higher amid optimism that a widely expected rate increase later this month could prove to be the final hike.
The rose 0.25%, or 86 points, and the was up 1.2%, and the rose 0.74%.
Fed: One final hike in July?
The rose 0.2% last month after edging up 0.1% in May, with also slowing to a 3% pace from 4%, marking the slowest pace of price pressures since March 2021.
While many still expect the Fed to resume rate hikes later this month, rate hikes beyond July will likely be thrown into further doubt should upcoming economic data signal a further slowdown in inflation.
If economic data in the months ahead including the Employment Cost Index on July 28, and the employment and inflation data that is released in August, slow at the pace that we have seen in the CPI data of the past couple of months, then “the July hike may prove to be the final move of the cycle,” Jefferies said in a note.
Tech rallies as Treasury yields drop
Big tech shook off its recent malaise, led by Google (NASDAQ:), Microsoft (NASDAQ:) and Meta Platforms Inc (NASDAQ:) as Treasury yields fell sharply on bets that the Fed rate hikes are nearing an end.
Microsoft added more than 1% as the tech giant took another major step forward toward closing its $69 billion acquisition of Call of Duty maker Activision Blizzard Inc (NASDAQ:) after a Federal judge rejected the Federal Trade Commission’s request to delay the acquisition, citing a lack of evidence that the deal would lessen competition.
“With the injunction denied, Microsoft has a green light to close the deal before July 18,” Wedbush said in a note. Should the deal extend beyond July 18, then under the terms of the deal, Microsoft would have been on the hook to pay Activision $3B and be required to negotiate a new deal, Wedbush added.
NVIDIA (NASDAQ:), meanwhile, also closed higher, up more than 3.5% on reports that the chipmaker is in talks to be an anchor investor in ARM as the latter looks to move ahead with plans for an initial public offering that could happen in September, Reuters reported, citing unnamed sources.
PepsiCo and Delta set to get earnings season underway
PepsiCo and Delta, which both ended lower on the day, report quarterly results on Thursday, lifting the curtain on the quarterly earnings season.
PepsiCo Inc (NASDAQ:), which reports before the opening bell on Thursday is expected to deliver strong results, RBC says, driven by ongoing momentum in Frito Lay. “We think PEP will be able to raise EPS to cover current consensus,” RBC added, noting that annual EPS of $7.27 is below current consensus.
Delta Air Lines (NYSE:), which also reports before the opening bell Thursday, hit a fresh 52-week high before giving up gains. The airline is up nearly 50% year to date after recently upgrading its full-year earnings forecast amid ongoing demand and lower fuel prices.
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