Fed's Favorite Inflation Gauge Falls To 2.5%, Lowest Since February 2021, But Core Remains Sticky: 10 ETFs To Monitor Thursday

The latest Fed’s favorite inflation report, unveiled Friday by the Bureau of Economic Analysis, showed mixed results for market participants.

What Happened: The headline Personal Consumption Expenditure (PCE) price index fell to 2.5% year-on-year in June, as expected.

The core component remained steady at 2.6%, countering expectations of a drop to 2.5%.

The headline index’s decline to 2.5% marks the lowest point since February 2021, a level also seen in January and February 2024.

This data kept market-based probabilities for a September rate cut largely unaffected, with fed futures continuing to indicate a 100% chance of rate reductions, according to CME Group’s FedWatch tool.

The Bureau of Economic Analysis also reported lower-than-expected monthly increases in both personal spending and personal income last month.

• Personal income rose 0.2% in June, down from 0.4% in May and below the expected 0.4%.
• Personal spending increased 0.3%, also down from 0.4% in May and missing the forecasted 0.3%.

Market reactions and pre-market ETF performances

U.S. equity futures maintained strong gains during premarket trading, despite a slight dip in large-cap index futures following the PCE report.

The U.S. dollar index remained broadly unchanged, while Treasury yields inched slightly lower, boosting bond-related exchange-traded funds (ETFs) in pre-market trading.

Interest-rate sensitive sectors, such as real estate, miners, and small caps, rose. Technology stocks also sharply rallied following declines in the previous two sessions.

Investors and traders are closely monitoring these exchange-traded funds, which showed notable pre-market gains:

1. iShares Semiconductor ETF SOXX up 2.3%
2. ARK Innovation ETF ARKK up 1.8%
3. Technology Select Sector SPDR Fund XLK up 1.6%
4. Invesco Solar ETF TAN up 1.5%
5. iShares Russell 2000 ETF IWM up 1.3%
6. Communication Services Select Sector SPDR Fund XLC up 1.2%
7. US Global JETS ETF JETS up 1.2%
8. VanEck Gold Miners ETF GDX up 1.1%
9. Vanguard Real Estate ETF VNQ up 0.9%
10. iShares 20+ Year Treasury Bond ETF TLT up 0.5%

Now Read:

• Investors Go All In On Small Caps, Pour Over $6 Billion Into Russell 2000 ETF This Month: They ‘Will Return To Larger-Cap Alternatives,’ Veteran Analyst Says

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