U.S. Consumer Price Index (CPI) inflation decelerated beyond predictions in June, impacting the investor outlook on the Federal Reserve's potential policy changes.
By The Numbers: The annual inflation rate in the U.S. dropped from 4% in May to 3% in June, making it the lowest reading since March 2021. The dip is just below the average economist prediction of 3.1%, marking 12 consecutive months of declining inflation.
Key highlights of June's inflation report showed energy prices rising 0.6% after a 3.6% monthly drop in May and core inflation, which excludes volatile food and energy goods, increased 4.8% year-on-year.
The figures come well below May's 5.3% reading and missed the 5% expectation.
Markets reacted strongly to the data.
Trader estimates for the Fed's July meeting are unchanged, with a 0.25% rate hike remaining at a 92% likelihood. Treasury yields sharply declined and S&P 500 (NYSE: SPY) futures rose 1%, with Nasdaq 100 (NASDAQ: NDX) futures increasing by 1.2%.
A number of stocks reacted in the premarket session, including the following:
Schrodinger Inc (NASDAQ: SDGR) was up 6.52%. Opendoor Technologies Inc (NASDAQ: OPEN) gained 5.5%. Redfin Corp (NASDAQ: RDFN) rose by 5.24%.
PubMatic Inc (NYSE: PUBM), Pagaya Technologies Ltd (NASDAQ: PGY), and Microvision Inc (NASDAQ: MVIS) saw gains of 4.44%, 4.29% and 4.15% respectively.
Upstart Holdings Inc (NYSE: UPST) shares gained 4.07%, while ORIC Pharmaceuticals Inc (NASDAQ: ORIC) and Lilium NV (NYSE: LILM) rose by 3.69% and 3.67%, respectively.
Coherent Corp (NASDAQ: COHR) also saw a price jump, with a rise of 3.55%.