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Good morning investors!

If this is your first time reading, welcome to The Investor’s Edge — a thriving community of more than 16,000 subscribers striving to be better investors with an edge in the market.

Every Wednesday we publish “The Mid-Week Wrap-Up” — your ticket to being well informed and staying ahead in the investment game!

This report is designed to help investors of all skill levels break down important stories/topics within the stock market. And best of all, we cut through all of the BS and give you exactly what you need to know in easy to digest, bite sized pieces of content.

This article is designed to truly give you that EDGE in the day ahead!

Grab your afternoon pick me up and let’s dive in.

Market Talk

The major indexes surged after the CPI report, with the S&P 500 and Nasdaq making new all-time highs.

3 Stories Moving the Market

These are some of the biggest stories so far this week that are having an influence on market action.

The Fed keeps interest rates steady for the seventh meeting in a row

The Federal Reserve kept its key interest rate unchanged and indicated only one cut is expected before year-end.

After a two-day meeting, the Federal Open Market Committee (FOMC) removed two of the three rate cuts previously anticipated in March and signaled a higher long-term interest rate than earlier forecasted. 

The Fed noted that inflation has eased but remains elevated, with slight progress towards its 2% goal in recent months. New projections show only modest optimism about inflation returning to the Fed’s 2% target, suggesting some policy easing later this year. 

The FOMC actually raised the 2024 inflation outlook to 2.6%, or 2.8% excluding food and energy, both up by 0.2 percentage points from March. The Fed's preferred inflation measure, the personal consumption expenditures price index, showed April readings of 2.7% and 2.8%. The SEP indicates inflation will return to the 2% target by 2026.

Powell reiterated this stance in his press conference, saying the Fed needs to “see more good data to bolster our confidence that inflation is moving sustainably toward 2%” and that the Fed “will likely keep interest rates elevated as it seeks sustainable progress towards its inflation target.”

Inflation slows in May, with consumer prices up 3.3% from a year ago

In May, the U.S. consumer price index (CPI) showed no monthly increase, indicating a slight easing of inflation.Annually, the CPI rose by 3.3%. Economists had predicted a 0.1% monthly increase and a 3.4% annual rise.

Core CPI, excluding food and energy, increased by 0.2% monthly and 3.4% annually, which was also below expectations.

Shelter costs, however, rose by 0.4% monthly and 5.4% annually, reflecting ongoing issues in the housing sector. Energy prices fell by 2%, with gas prices dropping 3.6%, while food prices increased by only 0.1%. Motor vehicle insurance costs declined by 0.1% monthly but remained significantly higher year-over-year.

Although the Federal Reserve primarily uses a different inflation measure, the CPI still influences their policy decisions.

📚 EDGE-UCATION: What is the CPI report?

The Consumer Price Index (CPI) report is a monthly publication by the U.S. Bureau of Labor Statistics (BLS) that measures the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. The CPI is a critical economic indicator used to assess inflation and the cost of living.

Key components of the CPI report include:

1. Overall CPI (Headline Inflation): This measures the total change in prices for all goods and services in the CPI basket.

2. Core CPI: This excludes volatile items like food and energy to provide a clearer view of long-term inflation trends.

3. Category Breakdown: The report details price changes across various categories, such as housing, transportation, medical care, and education.

4. Monthly and Annual Changes: It provides data on how prices have changed month-over-month and year-over-year.

5. Impact on Economic Policy: The CPI is used by policymakers, including the Federal Reserve, to make decisions about interest rates and other economic policies.

The CPI report is widely watched by economists, investors, and policymakers as it provides essential insights into inflationary pressures in the economy.

Apple WWDC recap: Tim Cook reveals 'Apple Intelligence' AI system and ChatGPT partnership

Apple held its annual Worldwide Developers Conference keynote, announcing significant advancements in artificial intelligence with its new Apple Intelligence. This includes the integration of OpenAI’s ChatGPT with Siri.

Apple Intelligence will be available across iOS, iPadOS, and macOS, offering features such as context-driven notifications, systemwide proofreading and style improvements, generative photo creation, and cross-application tasking.

The AI will focus on personal context and privacy, leveraging Apple Silicon for secure data processing. CEO Tim Cook emphasized the importance of privacy and personalization in this new AI approach. 

Siri will now be able to use ChatGPT for enhanced responses and creative tasks, integrated into systemwide tools and available without needing an account. These updates will come with iOS 18, iPadOS 18, and macOS Sequoia.

Siri will also gain real-time text correction, better integration into the operating system, and enhanced functionality across apps, including third-party ones.

Apple’s shares are up 10.5% this week, adding over $350 billion to its market cap and pushing the company to once again become the most valuable company in the U.S.

The Second Half

The major reports for the week are behind us, but the second half of the week still has a handful of key economic reports, including the PPI report, jobless claims and consumer sentiment. We also get earnings from two companies we cover here at the Edge.

Earnings Reports

There are only two earnings report left this week that we here at The Investor’s Edge we will be watching: Broadcom and Adobe:

Here is the calendar of earnings releases scheduled for the rest of the week:

Economic Reports

Here is the calendar of events scheduled for the remainder of the week:

The major market moving reports occurred earlier in the week, so those should carry the momentum into week end. But there will also be another inflation report (PPI), jobless claims data, as well as consumer sentiment that will add to the market’s price action.

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Thank you for reading this edition of the Mid-Week Wrap-Up.

Until next time investors!

Mark & Chris

The Investor’s Edge

Disclosure

This is not investing advice. It is very important that you do your own research and make investments based on your own personal circumstances, preferences, goals and risk tolerance.