Dow jumps 100 points after lighter-than-expected inflation report: Live updates – CNBC

Deutsche Bank is placing its bets on Charles Schwab ahead of second-quarter earnings, viewing it as one of the most oversold names within its subsector.

“We see SCHW in the online brokers as next best positioned, with cash sorting continuing to ease and mgmt. suggesting [Federal Home Loan Banks] paydown could start sooner if balance sheet client deposit levels stabilize,” wrote analyst Brian Bedell. “This creates greater visibility for EPS to begin a rebound in 3Q, which should drive at least mild positive revisions to Consensus estimates for 3Q23 and beyond.”

Shares are down 30% since the start of 2023 after recent bank closures rattled the broader sector. The firm’s $70 price target implies nearly 22% upside from Tuesday’s close.

— Samantha Subin

The energy sector jumped 4% week to date as of Wednesday afternoon, making it the best-performing sector for the week and month. However, energy stocks are still the second-worst performing sector year-to-date, with the Energy Sector Select Fund still down 4.8% in 2023.

The recent rally “is less about fundamentals, [and] more about neutralizing a lot of the bearish positioning over the last two months by commodity-trading advisors and speculators,” Joe Terranova, senior managing director for Virtus Investment Partners, told CNBC’s “Halftime Report” on Wednesday.

“We’re seeing a little bit of an unwind — we’ll see how far prices take that momentum and possibly extend towards $80. But I don’t see anything fundamentally in the near term. That’s representative of being a catalyst,” Terranova said.

— Hakyung Kim

The consumer price index showing lower inflation growth than analysts anticipated in June can bolster the hopes of investors anticipating the market could move higher, according to Rhys Williams, chief strategist at Spouting Rock Asset Management. That’s because it can signal to the Federal Reserve that past interest rate hikes are cooling the economy enough

“The bulls get their wish,” he said in reaction to the June reading.

His focus now? If the Fed can be content with an annual inflation rate between 2% and 3%. While he said the central bank will likely raise rates at its July meeting, the question is now if the Fed will continue to raise rates after, which could in turn mean “the soft landing turns into something harder.”

“Ultimately, given a chronic shortage of labor, lack of immigrants and a lot of Inflation Reduction Act money to stimulate new factories and Capex projects, we are skeptical that inflation can really go back to 2%,” Williams said. “Ultimately, the Federal Reserve will have to decide whether an inflation rate under 3% is good enough.”

“But for today, the bulls have the wind at their back, and certainly, the Fed could take the position that just keeping rates at current levels will push inflation lower,” he added. “The Fed appears to be winning.”

— Alex Harring

A recent slew of economic data, including Wednesday’s cooler-than-expected inflation numbers, gives “support [that] the Federal Reserve is more likely toward the end of its rate hike cycle,” said AXS Investment’s CEO Greg Bassuk.

“We do still anticipate at least one more Fed rate hike, but if we continue to see data pointing to prices being under control, that could definitely put the Fed on a different trajectory,” said Bassuk.

Bassuk added that upcoming earnings results and economic data in the coming weeks could also help in bringing the Fed “to a more dovish sentiment.” The CEO is also positive on the second-quarter earnings season.

“We’re cautiously optimistic that we’ll see some relatively good earnings in the most recent quarter. And frankly, we’re constructive on the likelihood we’re going to see it across sectors,” said Bassuk.

— Hakyung Kim

Steve Sosnick, chief strategist at Interactive Brokers, said the stock market’s ideal outcome from the Federal Reserve’s rate-hiking campaign is playing out — based on Wednesday’s inflation report.

The consumer price index rose less than expected in June, sparking a broad rally on Wall Street.

“The final outcome remains to be seen, but at least where we sit today, it’s hard to argue with the notion that we’re getting this dream scenario of monetary policy inducing lower inflation … without a recession,” Sosnick told CNBC. “We’ll see if the other economic numbers ratify this, but at least as of now, it’s hard to dissuade the market from being enthusiastic.”

The Dow was up more than 250 points in late-morning trading. The S&P 500 climbed about 1%, and the Nasdaq climbed 1.2%.

— Fred Imbert

Sports betting stock DraftKings popped more than 7% after Bank of America upgraded shares to a buy rating.

“While DKNG has outperformed in 2023, we think market share gains can drive both Q2 ’23 and near-term top line revisions (though likely anticipated) while cost leverage will likely drive bigger revisions in Adj. EBITDA and margins than anticipated,” wrote analyst Shaun Kelley, citing improving margins and profitability.

The stock’s surged nearly 172% this year.

Read more on the call here.

— Samantha Subin

The latest inflation report is more good news for Wall Street bulls, according to UBS Financial Services director of floor operations Art Cashin.

“With the economy looking like it’s not moving toward a recession, you may get some very vey high pressure for big jumps,” Cashin told CNBC’s Squawk on the Street. “For today, the biggest risk to the bulls is that they run out of champagne.”

Consumer prices increased 0.2% in June and are up 3% year-over-year.

— Brian Evans

Raymond James analyst Pavel Molchanov upgraded SunPower to strong buy form outperform, saying investors should buy the recent weakness. The stock is down more than 45% this year.

However, Molchanov’s own price target of $21 is more than 120% above from where shares closed Tuesday. The stock popped 9% Wednesday morning.

JPMorgan and Visa were the two Dow components reaching fresh highs Wednesday. They were among the 56 names in the S&P 500 hitting new 52-week highs.

Here are some of the other names.

In contrast, Elevance Health was the only name falling to a new 52-week low, trading at levels not seen since December 2021.

— Sarah Min, Chris Hayes

Bank of America said this automaker can “weather the storm” as it, along with other European Union automakers, navigate the electric vehicle transition to meet the region’s Fit for 55 climate requirements. There’s also a possible auto worker strike in September.

Even so, this firm has several advantages, including significant exposure to North America — which benefits from the Inflation Reduction Act — as well as low exposure to China.

CNBC Pro subscribers can read about the stock here.

— Sarah Min

UBS analyst John Hodulik hiked his price target on Netflix ahead of its second-quarter results next week, saying he expects accelerating growth in the second half.

“We are raising estimates following positive data on paid sharing. Checks on engagement, downloads & search interest were all constructive for the newly launched paid sharing markets,” Hodulik wrote on Tuesday. “Along with better FX, we expect 2Q to beat mgmt’s guide (UBSe 5% rev/4% OI growth; prior 4%/2%) and still expect accelerating 2H growth.”

Netflix shares are higher by 0.3% in the premarket.

Shares of Domino’s Pizza jumped 10.1% Wednesday morning after the company announced it had reached an agreement with Uber.

The deal will allow customers to order Domino’s menu items through Uber Eats and Postmates in the U.S., U.K. and Canada. The partnership is set to begin in four markets in the U.S. this fall, before expanding nationwide by the end of 2023.

The price of bitcoin got a 1% boost after the consumer price index showed June U.S. inflation fell to its lowest annual rate in more than two years in. Bitcoin is off its highs but climbed as high as about $30,900 after the data was released, according to Coin Metrics.

“The market likes a lower CPI print and is behaving as if the this is a trend downward, rather a reversion to the mean,” said Valkyrie Investments’ chief investment officer Steve McClurg. “Risk assets like bitcoin likely rally into the belief that the Fed will tighten little from here.”

“Though the velocity of CPI has come down, CPI is still high and we expect higher CPI through the end of the year due to oil supply and demand issues,” he added.

Bitcoin traded in line with stocks for nearly all of 2022 as the Fed increased interest rates. As of late its correlation with stocks is at its lowest levels since 2021.

The dollar index fell Wednesday after the consumer price index’s increase came in lighter than expected and at its lowest level since March 2021.

The dollar hit a session low of 101.049. That’s the lowest level since May 8, when the index hit a low of 101.041. The dollar index measures the greenback against a basket of six currencies.

— Gina Francolla, Michelle Fox

The consumer price index rose 0.2% in June and 3% from a year ago, the Labor Department said Wednesday. Economists polled by Dow Jones had expected a monthly increase of 0.3% and 3.1% on an annualized basis.

 Core CPI, which excludes volatile food and energy prices, also increased less than anticipated.

— Samantha Subin

Check out some of the companies making headlines in premarket trading.

Beyond Meat — The plant based meat alternative added 2% on Wednesday morning. The company said Tuesday that its steak product would expand to be now be sold at roughly 14,000 stores across the U.S., including Whole Foods and Wegmans. Beyond Meat shares popped 4% in the previous session.

SunPower — The solar power company soared nearly 6% in premarket trading after an upgrade from Raymond James, which said the stock’s recent weakness is “excessive.”

Carvana — The car retailer climbed roughly 2% after an upgrade from JMP to outperform Wednesday morning, with analyst Nicholas Jones noting the company could be on the cusp of a return to growth thanks to “durable positive” EBITDA.

Read the full list here.

— Brian Evans

It’s time to step to the sidelines on Coinbase after its recent rally, according to Atlantic Equities.

Analyst Simon Clinch downgraded Coinbase to neutral, but raised his price target, following the crypto exchange operator’s run-up.

“While the tenets of our recent upgrade remain in place, the risk/ reward looks less attractive at this level given continued regulatory challenges ahead and the surprisingly weak volume backdrop,” Clinch wrote on Wednesday. “We are raising our target price to $80, reflecting the impact of higher crypto prices, but downgrading the shares to Neutral given the limited upside.”

To read more about his downgrade, click here.

The highly anticipated consumer price index report is slated for release at 8:30 a.m. ET, and JPMorgan thinks a dovish reading is more likely than a hawkish one, “with the upside risk that we see a strong enough fall in inflation to end the Fed’s hiking cycle.”

“While the bull case does not require a pause/skip at the July Fed meeting, it would certainly magnify the upside potential,” the traders said in a note. “[We] think this print pushes the market closer to Goldilocks where we have economic growth, earnings growth, and normalized inflation.”

— Fred Imbert, Michael Bloom