In a positive turn for the US benchmark equity indexes, Wednesday's trading session ended on a high note as investors carefully dissected a report indicating consumer inflation metrics rose as anticipated during July. More notably, on an annual basis, the pace of price increase showed an unexpected deceleration, raising optimism in the market.
According to data released by the Bureau of Labor Statistics, the US consumer price index recorded an uptick of 0.2% last month following a slight decline of 0.1% in June. This latest metric aligns closely with expectations compiled in a Bloomberg survey. On an annual timeline, inflation eased to 2.9% in July, marking the most modest growth observed since March 2021.
Analysts had predicted that the annualized figure would remain stable at a growth rate of 3%, underscoring the deviation observed. The prevailing sentiment in the market suggests that with evident cooling in the labor market and diminishing inflationary pressures, the Federal Reserve is well-positioned to consider reducing its policy rates in the upcoming September meeting.
This projection was echoed in a note from TD issued to clients, illustrating confidence in the Fed's potential actions. Furthermore, the Mortgage Bankers Association revealed a substantial surge of 16.8% in mortgage applications during the week ending August 9, an impressive follow-up to a 6.9% gain reported in the preceding week.
This rise represents the highest level of mortgage applications seen since January 2023. Notably, the refinance activity reached its zenith since May 2022, while the uptick in new home applications indicates renewed interest from prospective homebuyers eager to re-enter the housing market. In the commodities sector, September West Texas Intermediate crude oil experienced a decrease of $1.37, closing at $76.98 per barrel.
Meanwhile, the global benchmark, October Brent crude, likewise fell by $1.00, settling at $79.69, as reports indicated an unexpected increase of 1.4 million barrels in U.S. oil inventories last week, conflicting with anticipated projections of a two-million barrel reduction. In corporate developments, Kellanova, denoted as $K, has agreed to an acquisition by the renowned confectionery and pet food titan, Mars, in a significant all-cash deal valued at $35.9 billion, encompassing assumed net leverage.
Following the news, the stock of the packaged food manufacturer surged by 7.8%. Conversely, Alphabet's shares, identified as ($GOOGL) for both class A and C, witnessed a decline exceeding 2.5% amidst burgeoning regulatory scrutiny. The US Department of Justice is contemplating potential measures, including a possible bid to dismantle Alphabet's Google division, in light of a recent court decision uncovering monopolistic practices within the online search domain, as reported by Bloomberg News, citing informal sources.
This unfolding landscape continues to shape investor sentiments as market dynamics evolve..