Dow climbs more than 100 points after soft inflation data, Disney shares gain: Live updates

Thursday’s rally has lost some of its steam in late-morning trading.

The Dow traded around 130 points higher, or 0.4% shortly before noon ET. At session highs seen earlier, the index added more than 450 points, which equates to around 1.3%.

The S&P 500 and Nasdaq Composite were both up 0.4%. The S&P 500 gained 1.3% at its session high, while the Nasdaq Composite climbed as high as 1.6%.

— Alex Harring

As a whole, the index was up about 0.5%. All of the 30 stocks within the blue-chip average traded higher besides Caterpillar, which slipped 0.8%.

— Alex Harring

Truist isn’t sure that Penn Entertainment’s deal with Disney’s ESPN is a winner.

The firm downgraded the stock on Wednesday, asserting that Wall Street needed more time to “digest” the partnership.

“PENN’s upside from ESPN Bet could be material, though we see sizable execution risks that may not resolve soon – while land based trends just look stable. With even mgmt admitting they’re a show-me story, we advise waiting before adding to positions,” Truist analyst Barry Jonas said.

CNBC Pro subscribers can read the full story here.

— Brian Evans

Wall Street is still optimistic on Disney’s outlook after a mixed third-quarter.

The company showed some weakness in its direct-to-consumer segment as Disney+ subscriptions slumped 7.6%. Analysts, however, highlighted strength in Disney’s parks division.

“While we are cautious on the media landscape overall due to streaming losses, linear sub declines, and advertising headwinds, Disney is our favorite name among the group due to the company’s strong asset mix and what we expect to be a rapid decline in streaming losses in the next year,” JPMorgan’s Philip Cusick said.

CNBC Pro subscribers can read the full story here.

— Brian Evans

Initial jobless claims rose totaled a seasonally adjusted 248,000 for the week ended Aug. 5, an increase of 21,000 and above the Dow Jones estimate for 230,000, the Labor Department reported Thursday.

Continuing claims, which run a week behind, edged lower to 1.684 million, below the FactSet estimate for just over 1.7 million.

Claims numbers tend to be more volatile during the summer as auto plans close and seasonal hiring is in flux. Unadjusted claims totaled 225,581, which was an increase of more than 20,000.

—Jeff Cox

The latest inflation reading should mean good news, but there’s more on the horizon that needs to be accounted for, market participants say.

First, there’s Federal Reserve Chair Jerome Powell’s speech at Jackson Hole later this month. David Russell, vice president of market intelligence at TradeStation, said those remarks could help set expectations into the end of the year.

“Today’s inflation report is good news for a market that’s seen profit taking and worries about summer volatility,” Russell said. “This report takes pressure off the Fed but there’s still some division between hawks and doves” within the Federal Open Market Committee.

And because there’s no Fed policy meeting in August, there’s more data to come before the next gathering in September.

“The importance of this report is slightly diluted as we will get one final set of inflation data in September, the week before the next FOMC meeting,” said Jamie Dutta, market analyst at Vantage.”

— Alex Harring

The three major indexes were higher as trading kicked off.

The Dow and S&P 500 were up 0.7% shortly after 9:30 a.m. ET. The Nasdaq Composite climbed 0.9%.

— Alex Harring

Investors parsed the consumer price index reading that dropped at 8:30 a.m. ET for insights into the path of inflation and clues into future monetary policy decisions.

Here’s how the three major futures indexes moved from 30 minutes before the release through 30 minutes after:

The consumer price index reading contains reasons to be optimistic, according to George Mateyo, chief investment officer at Key Private Bank.

“Today’s inflation report was reminiscent of the good old days,” Mateyo said. “With both ‘headline’ and ‘core’ inflation rising 0.2% month/month, one could surmise that the post-pandemic inflationary impulse has faded. Said another way, in 2019, the average monthly increase in inflation was 0.2%, and that’s what we’ve experienced in the past two months in 2023.”

Mateyo said the reading can also be a positive for the Federal Reserve and allow it to not raise interest rates at the September meeting. But while he said a pause is probable, a cut to interest rates in the near future is not.

— Alex Harring

The consumer price index rose 3.2% last month on a year-over-year basis. Economists polled by Dow Jones expected a 3.3% increase from the year-earlier period. Month over month, the inflation gauge advanced 0.2%, matching expectations.

— Fred Imbert

Check out the companies making headlines before the bell:

• Capri, Tapestry — Capri soared more than 57%, while Tapestry slid 3.2% in premarket trading. The moves come after luxury company Tapestry, which is behind the brands Coach and Kate Spade, announced Thursday it would acquire Capri Holdings in a roughly $8.5 billion deal. Capri owns the Versace, Jimmy Choo and Michael Kors brands. 
• AppLovin — AppLovin shares popped 25.8% in early morning trading after the company posted strong second-quarter results and optimistic third-quarter revenue guidance. The game developer said it expects $780 million to $800 million in revenue for the third quarter, exceeding the $741 million expected by analysts. AppLovin reported earnings of 22 cents per share for the second quarter, while analysts expected 7 cents, according to Refinitiv.
• Walt Disney — Shares of the media giant gained about 2% in premarket trading after the company said it would raise the price on its ad-free streaming tier in October and that it would crack down on password sharing. Disney reported a 7.4% decline in subscriber count last quarter, however. It also recorded $2.65 billion in one-time charges and impairments, dragging the company to a rare quarterly net loss.

Read the full list here.

— Sarah Min

Apparel company Tapestry struck a deal to buy Versace-parent Capri Holdings, the firms announced on Thursday. The deal will have an enterprise value of roughly $8.5 billion.

Kate Spade-parent Tapestry will pay $57 per share in cash for Capri, which is more than 60% above where the stock closed on Wednesday. The deal is expected to close in 2024, according to a press release.

Shares of Capri jumped 57% in premarket trading. Tapestry’s stock fell 4.7%.

— Jesse Pound

Data compiled by JPMorgan showed retail traders sold about $345 million worth of Apple in the past week, with the lion’s share of the selling coming after the tech giant posted its latest quarterly results. Overall, traders sold more than $1 billion in single stocks during that period.

On the other hand, traders bought more than $160 million in Nvidia.

— Fred Imbert, Michael Bloom

Alibaba jumped 4.7% in premarket trading after the company reported better-than-expected earnings and the best annualized revenue growth since 2021.

The company beat analyst expectations on both revenue and net income attributable to ordinary shareholders, per Refinitiv data. Its year-over-year revenue growth of 14% in the quarter was the largest since 2021.

Alibaba shares are up nearly 8% this year.

— Alex Harring, Evelyn Chang and Arjun Kharpal

Six Flags shares slipped 3.5% in premarket trading after reporting worse-than-expected earnings for the second quarter.

The amusement park operator reported 25 cents earned per share in the quarter, a large miss compared with the 78 cents expected per share by analysts surveyed by Refinitiv. Six Flags said the poor performance could largely be attributed to the increase in self-insurance reserves.

Revenue came in at $444 million, below the $459 million consensus estimate.

Six Flags stock has underperformed the broader market this year, with shares down about 1.7% since 2023 began.

— Alex Harring

Traders at JPMorgan broke down several scenarios on how the market could react to the latest consumer price index report. Here are two possible outcomes:

• 45% probability — CPI rises by the consensus 0.2% estimate: Traders at JPMorgan think this is the most likely outcome, predicting the S&P 500 will add 0.25% to 0.5%. “While this would be positive, it may be a move that is faded as the market shifts its focus to Jackson Hole (Aug 24-26) where it seeks to gain confirmation of the Fed’s rate hike intentions,” traders at the firm said.

• 25% probability — CPI increases 0.1% to 0.2%:  “A ‘mission accomplished’ outcome would mean earlier than expected rate cuts,” JPMorgan traders said. The S&P 500 would climb 1%-1.5% under this outcome.

— Brian Evans, Michael Bloom

European stocks opened slightly higher on Thursday.

The pan-European Stoxx 600 index rose by 0.4% in early trade, with insurance adding 1.3% to lead gains while mining stocks fell 0.7%.

– Elliot Smith

Siemens on Thursday missed third-quarter profit forecasts citing a “normalisation in demand,” particularly in China.

The German conglomerate posted a 4% fall in industrial profit to 2.75 billion euros ($3.02 billion) for the three months to the end of June, below a company-compiled consensus forecast of 2.9 billion euros.

Siemens also reduced its growth projection for its digital industries business to a range of 13% to 15% from a previous target of 17% to 20%.

Orders grew on a nominal basis by 10% year-on-year to 24.2 billion, driven by “sharply higher volume from large orders in Mobility,” while revenue rose 6% annually to 18.9 billion euros.

– Elliot Smith

Novo Nordisk, which makes the weight-loss drug Wegovy, raised its outlook for 2023 Thursday, as it reported soaring sales.

The Danish pharmaceutical company reported a 30% increase in sales (at constant exchange rates) for the first half of this year, while operating profit also rose 32%.

Its diabetes and obesity division performed particularly well, bolstered by interest in its blockbuster injections Wegovy and Ozempic.

Read the full story here.

– Hannah Ward-Glenton

India’s central bank has held its policy repurchase rate for the third straight meeting in a row at 6.5%, in line with expectations from economists polled by Reuters.

The Reserve Bank of India explained that headline inflation is expected to surge in July and August, led by vegetable prices after a rebound to 4.81% in June.

The RBI said that the vegetable shock may reverse quickly, but possible El Niño weather conditions along with global food prices need to be watched closely.

The central bank said it was prepared to act, “should the situation so warrant.” It also reiterated its goal of bringing inflation down to its 4% target, as well as to anchor inflation expectations.

— Lim Hui Jie

The Philippines gross domestic product expanded 4.3% year-on-year in the second quarter, surprising expectations from economists polled by Reuters, who expected a 6% expansion.

On a quarter on quarter basis, GDP fell 0.9%, a reversal from the 0.5% rise forecast by the Reuters poll.

The country’s statistics authority said the main contributors to the second quarter growth were wholesale and retail trade, financial and insurance activities as well as transportation and storage.

— Lim Hui Jie

Japan’s wholesale inflation rate slowed for a seventh straight month to 3.6%, down from June’s revised figure of 4.3%.

Wholesale inflation is measured by the corporate goods price index, which tracks the price companies charge each other for goods and services.

Prices of ceramic, stone and clay products saw the largest increase in July with a 15.2% year on year increase, while prices of lumber and wood products fell the most, recording a 23.1% drop year-on-year.

— Lim Hui Jie

Tech stocks are losing their luster, but energy stocks could be a good play as commodities break out, according to Jonathan Krinsky, chief market technician at BTIG.

He noted that the Bloomberg Commodity Index is up about 10% from its late May lows, and after testing its 200-day moving average in late July, it’s coming back to do so once more. On Wednesday, West Texas Intermediate futures also hit their highest level since November 2022.

“All of this is to say we continue to like Energy equities here (XLE, XOP, OIH),” Krinsky wrote, highlighting three big energy ETFs. “We would reiterate Occidental Petroleum (OXY, Not Rated) as an actionable idea here as it comes out of a long base.”

Meanwhile, the firm sees downside risk for the tech sector, describing it as “unfavorable.” Indeed, the Nasdaq Composite is now the laggard of the three major averages in August, off by about 4.4%.

–Darla Mercado

Households have been burning through their pandemic-related excess savings and credit card balances have topped $1 trillion, but another pot of cash is on the scene for consumers in need of a lifeline.

It’s their untapped home equity, according to a recent analysis from Wells Fargo.

“Strong home price appreciation in the years following the pandemic may be an underappreciated tailwind for the household sector,” wrote senior economist Tim Quinlan. “An interesting dynamic in the single-family housing market is that while the value of homes has shot higher over the past decade or so, the total amount owed on mortgages has not.”

Indeed, some homeowners are starting to tap this latest source of cash. Home equity revolving credit balances grew for the fourth straight quarter in the first quarter of this year, the report noted.

Of course, borrowing from home equity comes at a cost. For instance, defaulting on a home equity loan or line of credit could put your house at risk. Home equity lines of credit also come with adjustable interest rates, which also means your monthly payment may go up.

— Darla Mercado

Disney shares added about 3% after posting mixed quarterly results and announcing plans to raise its commercial-free streaming options.

The entertainment company posted adjusted earnings of $1.03 a share, ahead of the 95 cents expected by analysts polled by Refinitiv. Revenue came in at $22.33 billion, behind the $22.5 billion expected.

Disney also reported softer-than-expected subscriber numbers, and a 7% decline from the previous period. The company reported 146.1 million subscribers, versus the 151.1 million expected.

Management also announced plans to hike prices on its ad-free Disney+ offering to $13.99 starting Oct.12. It will also increase the cost of its Hulu offering without ads.

— Samantha Subin, Sarah Whitten

Bullish opinion outweighed bearish sentiment, 52.2% to 19.4%, for a 35th straight week in the latest survey of financial newsletter editors and advisors by Investors Intelligence, “another confirmation of the market uptrend.”

Last week, when bulls outnumbered bears 57.1% to 18.6%, optimism was the highest since November, 2021. Investors Intelligence reminded readers that “sentiment signals for tops may occur much earlier in the cycle then sentiment signals of bottoms!,” meaning the recent rally in stock prices may have further to run.

Contrarians who look to run counter to the herd also scan Investors Intelligence for the spread between the bulls and bears. The latest week’s bull-bear spread narrowed to +32.8 points from last week’s two-year high of +38.5. Risk is rising in the stock market whenever the spread rises above +30 points, and the wider the positive spread, “the higher the risk. The last strong warning was during summer 2021, with spreads of +40.5 and +45.9,” II said.

As recently as early May, the spread was less than +21 points.

— Scott Schnipper

These are some of the companies making the biggest moves in extended trading:

• Wynn Resorts — The casino stock rose about 2% on second-quarter results that topped expectations on the top and bottom lines. Wynn Resorts reported adjusted earnings of 91 cents per share on revenue of $1.6 billion.
• AppLovin — AppLovin shares surged 23% on strong second-quarter results and optimistic third-quarter revenue guidance.
• Illumina — The DNA sequencing company shed more than 4% after the bell on weaker-than-expected guidance. Illumina topped Wall Street’s expectations for the second quarter, but said it anticipates some weakness in the second half.

Read the full list of stocks moving after the bell here.

— Samantha Subin