Market analysis for Oct. 10th, 2024

Welcome to Thursday and CPI day. We've got two days of inflation data coming at us. Yesterday was a mixed bag for me. The perfect run might be coming to an end. They all do. We made money yesterday but my net liq ended down -$1,800 yesterday and we've got both our SPX calls rolled to today. CPI will, of course, be the driver today. Check out our results below:

Let's take a look at the markets:
​Bullish bias remains.

SPY and DIA pushing to new ATH's

​December S&P 500 E-Mini futures (ESZ24) are down -0.15%, and December Nasdaq 100 E-Mini futures (NQZ24) are down -0.23% this morning as investors refrained from making any big bets ahead of a key U.S. inflation report that could offer clues on the Federal Reserve’s policy path.
The minutes of the Federal Open Market Committee’s September 17-18 meeting, released Wednesday, showed that some officials favored a smaller, quarter-point cut. “Some participants observed that they would have preferred a 25-basis-point reduction of the target range at this meeting, and a few others indicated that they could have supported such a decision,” according to the FOMC minutes. Despite the debate, the minutes noted a “substantial majority” supported the outsized half-point rate cut. Also, nearly all participants agreed that the upside risks to inflation have diminished, while downside risks to employment have increased. In addition, Fed officials aimed to communicate to the public that their policy “recalibration” should not be “interpreted as evidence of a less favorable economic outlook or as a signal that the pace of policy easing would be more rapid than participants’ assessments of the appropriate path.”
“Fed minutes were pretty ‘ho-hum,’ which could actually be a good thing for stock investors,” said David Russell at TradeStation. “Policymakers agree inflation is fading and they see potential weakness in job growth. That keeps rate cuts on the table if needed. The bottom line is that Powell might have the market’s back headed into the year-end.”
In yesterday’s trading session, Wall Street’s major indices closed higher, with the benchmark S&P 500 notching a new record high, the blue-chip Dow posting a 1-1/2 week high, and the tech-heavy Nasdaq 100 climbing to a 2-3/4 month high. Norwegian Cruise Line (NCLH) surged nearly +11% and was the top percentage gainer on the S&P 500 after Citigroup upgraded the stock to Buy from Neutral with a price target of $30. Also, Pfizer (PFE) rose more than +3% after the Financial Times reported that the company’s CEO, Albert Bourla, is expected to meet with activist investor Starboard Value next week. In addition, Arcadium Lithium (ALTM) soared over +30% after Rio Tinto agreed to acquire the company for $6.7 billion. On the bearish side, Boeing (BA) slid more than -3% and was the top percentage loser on the Dow after withdrawing its offer to around 33,000 striking machinists and halting negotiations with their union. Also, Alphabet (GOOGL) fell over -1% on news that the U.S. Justice Department is weighing a breakup of Google.
Dallas Fed President Lorie Logan stated on Wednesday that she backed last month’s unusually large interest rate cut but favors smaller reductions ahead, citing “still real” upside risks to inflation and “meaningful uncertainties” about the economic outlook. “Following last month’s half-percentage-point cut in the fed funds rate, a more gradual path back to a normal policy stance will likely be appropriate from here to best balance the risks to our dual-mandate goals,” Logan said. Also, San Francisco Fed President Mary Daly stated she anticipates the U.S. central bank will keep reducing interest rates this year to protect the labor market. “I think that two more cuts this year, or one more cut this year, really spans the range of what is likely in my mind, given my projection for the economy,” Daly said.
Meanwhile, U.S. rate futures have priced in an 83.7% chance of a 25 basis point rate cut and a 16.3% chance of no rate change at the next central bank meeting in November.
Today, all eyes are focused on the U.S. consumer inflation report, which is set to be released in a couple of hours. Economists, on average, forecast that the U.S. September CPI will come in at +0.1% m/m and +2.3% y/y, compared to the previous numbers of +0.2% m/m and +2.5% y/y.
The U.S. Core CPI will also be closely watched today. Economists anticipate the core CPI to be +0.2% m/m and +3.2% y/y in September, compared to the previous figures of +0.3% m/m and +3.2% y/y.
A survey conducted by 22V Research showed that 42% of investors anticipate a “mixed/negligible” market reaction to the consumer inflation report, 32% predict a “risk-off” response, and only 25% expect it to be “risk-on.”
U.S. Initial Jobless Claims data will be reported today as well. Economists estimate this figure to be 231K, compared to last week’s number of 225K.
In addition, market participants will be anticipating speeches from Fed Governor Lisa Cook, New York Fed President John Williams, and Richmond Fed President Tom Barkin.
Third-quarter corporate earnings season begins in earnest on Friday, with major banks such as JPMorgan Chase (JPM) and Wells Fargo (WFC) set to report their quarterly results. The S&P 500’s estimated earnings growth rate is 5%, based on estimates from LSEG.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.080%, up +0.33%.

Trade docket for today:
/6A, /6B, /MNQ,QQQ scalping, /ZN?, DAL, DPZ, IWM?, QQQ/SPY, 0DTE's

No bias or levels today or tomorrow on CPI/PPI days.
​See you in the trading room!