Investing
- Today’s wholesale inflation report contradicted Tuesday’s good news of slowing retail inflation.
- Bond prices are rising, and stock prices are falling.
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10:03 am
Baird analyst Michael Ha upgraded CVS Health (NYSE: CVS) stock to outperform this morning, with a $82 price target. In an acronym-laden update, the analyst also warned of downside risk in leading healthcare stock (and like CVS, an S&P 500 component stock) UnitedHealth Group (NYSE: UNH).
UnitedHealth stock is down 0.5%. CVS is up 1.1%.
9:36 am
Department store operator Dillard’s (NYSE: DDS) — not an S&P 500 component — absolutely crushed on earnings this morning, delivering $4.66 per share in Q2 profit versus the $3.51 analysts had expected. Revenue for the quarter squeaked past forecasts at $1.51 billion.
Dillard’s stock is nonetheless down nearly 2% in the first few minutes of trading. The Voo is off 0.25%.
This article will be updated throughout the day, so check back often for more daily updates.
Two days ago, news that US retail consumer inflation rose only 2.7% in July (that’s 0.1% less than expected) sent the stock market flying, and helped the Vanguard S&P 500 ETF (NYSEMKT: VOO) gain nearly a full percentage point in a single day. Two days later, however, the U.S. Bureau of Labor Statistics is reporting that the producer price index (which you can think of as wholesale price inflation, a bit farther up the supply chain) rose 0.9% in July.
The increase was “the biggest 12-month move since February,” according to CNBC, far more than the 0.2% increase Wall Street had expected, and pushed the annualized PPI inflation rate up to 3.3%.
Or put another way: PPI inflation is increasing so fast, the chance the Federal Reserve will lower interest rates in September just got knocked flat.
In a double-whammy for the stock market, short-term bond rates are rising in response to today’s news, with the 2-year Treasury note up 0.6 basis points to 3.695%, and the 1-year note up three times that at 3.882%.
And as interest on bonds gets more attractive, investing in riskier stocks becomes relatively less attractive. No surprise then, that the Vanguard S&P 500 ETF is trading lower premarket — down 0.3%.
Earnings
Turning now to S&P 500 component company earnings:
Tech giant Cisco Systems (Nasdaq: CSCO) beat earnings by a penny last night, reporting a $0.99 per share profit for its fiscal Q4 2025. Sales were $14.67 billion, or $50 million more than Wall Street had predicted. Nevertheless, Cisco stock is trading down about 1.5% premarket today.
Machines-maker Deere & Company (NYSE: DE) beat earnings by 17 cents this morning, reporting a $4.75 per share fiscal Q3 profit on sales of $10.6 billion — also above estimates. On the other hand, Deere lowered its net income forecast for the full year slightly, and its stock is down more than 6% premarket.
Outside the S&P 500, Advance Auto Parts (NYSE: AAP) beat earnings by 16 cents with a $0.69 per share profit on sales of $2 billion, slightly ahead of expectations. Management laid out a very wide forecast for 2025 earnings, however, saying it could earn anywhere from $1.20 per share to $2.20 per share, and really doesn’t know which. Advance Auto stock is down more than 2%.
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