U.S. stocks opened higher on Tuesday as Wall Street digested lower-than-expected inflation data and awaited an update on consumer prices. The S&P 500 (^GSPC) rose about 0.7%, while the tech-heavy Nasdaq Composite (^IXIC) gained about 1%. The Dow Jones Industrial Average (^DJI) rose about 0.4%.
US producer prices, which are often an indicator of consumer price trends, rose by just 0.1 percent in July from the previous month, falling short of economists’ forecasts. Year-on-year, the producer price index (PPI) rose by 2.2 percent, almost at the level of the Federal Reserve’s inflation target of 2 percent.
The release of the producer price index serves as a preview of Wednesday’s consumer price numbers. Retail sales for July, a key indicator of the health of the U.S. consumer, are expected to be released on Thursday.
After more than a week of volatility, Wall Street has had an unusually dull day. The S&P 500 and Nasdaq on Monday slowly climbed back to the highs the indexes had reached before a three-day sell-off erased much of the year-to-date gains.
Home Depot (HD) was the biggest name on earnings Tuesday. The home improvement retailer’s shares fell after it cut its forecast for comparable store sales for the rest of the year.
Elsewhere, Starbucks (SBUX) stock rose over 15% following the surprise announcement that its CEO will be replaced by Chipotle boss Brian Niccol. Chipotle (CMG) shares plunged nearly 10%.
Meanwhile, Nvidia (NVDA) rose over 3% in early trading, extending its 4% gain on Monday after Bank of America analysts named the company one of the top “recovery” stocks.
Live4 updates
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Stock prices open higher after cooler inflation data
U.S. stocks opened higher on Tuesday as Wall Street digested lower-than-expected inflation data and awaited Wednesday’s consumer price update.
Shortly after the market opened, the S&P 500 (^GSPC) rose about 0.7%, while the tech-heavy Nasdaq Composite (^IXIC) gained about 1%. The Dow Jones Industrial Average (^DJI) gained about 0.4%.
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Chipotle shares plunge 8% after CEO moves to Starbucks
Chipotle (CMG) shares fell as much as 8% in premarket trading after the company announced the resignation of its CEO Brian Niccol, who will assume the same role at Starbucks (SBUX) starting next month.
Niccol has been CEO of Chipotle since 2018. Scott Boatwright, COO, will serve as the company’s interim CEO.
Niccol has been instrumental in Chipotle’s recovery in recent years as the company recovered from an E. coli crisis that began in 2015 and weighed on the stock for years.
In the year before Niccol joined the company, Chipotle’s annual revenue was about $4.5 billion; by 2023, revenue had more than doubled, totaling $9.9 billion. Over the past five years, the stock has risen more than 240%, while the S&P 500 has gained just 85%.
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Ugly Quarter from Home Depot
There is not much to be happy about at Home Depot (HD) this quarter.
A checklist before the quarterly earnings conference call:
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Sales in like-for-like stores fell by 3.3%.
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Sales in like-for-like stores fell short of the consensus estimate of 2.1%.
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Transaction trends have deteriorated since the first quarter.
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The sales forecast for the full year was cut to the midpoint.
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The profit forecast for the full year was cut to the average.
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This morning’s chart comes courtesy of BofA
Bank of America’s fund manager survey for August is out and it is clear that investors are concerned about the growth outlook.
The chart below shows a collapse in global growth expectations, following a steady stream of negative economic surprises this month (especially in the US).
Growth expectations are falling. (Bank of America)
