Here are five things you must know for Wednesday, July 14:
1. -- Stock Futures Rise After Inflation Spike
Stock futures traded mixed Wednesday as Wall Street weighed the highest inflation since 2008 and awaited testimony from Federal Reserve Chairman Jerome Powell on whether the central bank still believes rising price pressures will be transitory.
Investors also were assessing reports from Bank of America (BAC) - Get Bank of America Corp Report, Citigroup (C) - Get Citigroup Inc. Report and Wells Fargo (WFC) - Get Wells Fargo & Company Report after mixed reports from JPMorgan Chase (JPM) - Get JPMorgan Chase & Co. (JPM) Report and Goldman Sachs (GS) - Get Goldman Sachs Group, Inc. (GS) Report a day earlier.
Contracts linked to the Dow Jones Industrial Average rose 20 points, S&P 500 futures gained 6 points and Nasdaq futures rose 66 points.
Stocks declined Wednesday after consumer inflation in June jumped by the most in 13 years.
Consumers have been looking to spend as the economy makes its way out of the pandemic but their enthusiasm has been met with widespread supply shortages that have increased the costs of things such as used cars and clothing.
Fed Chairman Powell has insisted that the inflation hike will be temporary and prices will normalize once supply chain bottlenecks get resolved and the economy gets back on track.
Robert Frick, corporate economist with Navy Federal Credit Union in Vienna, Virginia, said that while the inflation number in June "looked scary" it was "mainly temporary price increases that pumped up the figures.
"Overall, this report is consistent with inflation cooling off later this year," he added.
The yield on the benchmark 10-year Treasury retreated to below 1.4% early Wednesday.
2. -- Wednesday's Calendar: Jerome Powell Testimony, Bank of America and Wells Fargo Earnings
The economic calendar in the U.S. on Wednesday includes Federal Reserve Chairman Jerome Powell's semi-annual report on the U.S. economy to the U.S. House Committee on Financial Services at 12 p.m. ET. On Thursday, he will appear before the Senate Committee on Banking, Housing and Urban Affairs.
The calendar Wednesday also includes the Producer Price Index (final demand) for June at 8:30 a.m. and Oil Inventories for the week ended July 9 at 10:30 a.m.
Bank of America earned $1.03 a share in the second quarter, beating analysts' estimates of 77 cents.
Wells Fargo posted second-quarter earnings of $1.38 a share vs. expectations of 98 cents.
3. -- Apple Reportedly Seeks 20% Boost in New iPhone Output in 2021
Apple (AAPL) - Get Apple Inc. (AAPL) Report has asked suppliers to build as many as 90 million next-generation iPhones this year, a 20% increase from its 2020 iPhone shipments, Bloomberg reported, citing people with knowledge of the matter.
Apple has maintained a consistent level in recent years of roughly 75 million units for
its launch period, which runs from September-October to the end of the year, Bloomberg noted.
The upgraded forecast for 2021 would suggest the tech giant
anticipates its first iPhone launch since the rollout of COVID-19 vaccines will unlock additional demand. The next iPhones will be Apple’s second with 5G.
Bloomberg reported that the iPhone update for 2021 will be more incremental than last year’s iPhone 12, emphasizing processor, camera and display
Apple shares rose 1.52% in premarket trading to $147.86 after closing at a record high on Tuesday.
4. -- Jim Cramer: Tech Is Immune to Inflation
Speaking of Apple, TheStreet's Jim Cramer told his "Mad Money" viewers Tuesday evening that the iPhone maker, as well as tech companies such as Alphabet (GOOGL) - Get Alphabet Inc. Class A Report and Microsoft (MSFT) - Get Microsoft Corporation (MSFT) Report, are immune to the effects of rising inflation.
Google parent Alphabet doesn't have exposure to rising oil and gas prices, it doesn't have to worry about the prices of plastics or packaging or freight costs. Cramer called Google a "banana of non-inflation," which makes it the perfect stock in a rising interest rate environment.
The same thing can be applied to all of the tech sector, Cramer said. Microsoft isn't prone to inflation, and neither is Apple, which offsets manufacturing costs with services like the AppleCard, which only continues to gain in popularity.
Apple, Alphabet and Microsoft each closed at record highs on Tuesday despite declines in the broader market.
5. -- Broadcom's Talks to Buy SAS Have Ended
Broadcom's (AVGO) - Get Broadcom Inc. Report talks to acquire SAS Institute ended after the founders of the closely held software company changed their minds about a sale, The Wall Street Journal reported, citing people familiar with the matter.
The Journal reported Monday the companies were discussing a deal that would value SAS in the range of $15 billion to $20 billion, including any debt. Following the report, Jim Goodnight and John Sall, who co-founded SAS decades ago and still run the company, decided they didn't want to sell to Broadcom.
Broadcom, a semiconductor powerhouse built largely through acquisitions, has been on the hunt for more deals since former President Donald Trump blocked its quest to buy rival Qualcomm (QCOM) - Get QUALCOMM Incorporated Report in 2018, citing security risks.
Many Wall Street analysts saw a merger of the two companies as a complementary strategic fit.
The Journal noted it wasn't clear whether another suitor for SAS could emerge.