Wall Street Weighs Inflation, Tech Companies Immune to Price Pressures

Strategic Insights -

Wall Street is anxiously watching the inflation numbers as consumer prices in June jumped by the most in 13 years. Despite the rise, tech companies like Apple, Alphabet, and Microsoft are seen as immune to the effects of inflation. Federal Reserve Chairman Jerome Powell is set to testify before Congress, and several major banks, including Bank of America and Wells Fargo, are releasing their earnings reports.

Key Takeaways:

  • The inflation rate in June increased to 13-year highs, with consumers facing widespread supply shortages and increased costs for used cars and clothing.
  • Federal Reserve Chairman Jerome Powell has stated that the inflation hike will be temporary, with prices normalizing once supply chain bottlenecks are resolved.
  • Tech companies like Apple, Alphabet, and Microsoft are seen as immune to inflation due to their diversified revenue streams and lack of exposure to rising oil and gas prices.
  • Bank of America, Wells Fargo, and Citigroup are releasing their earnings reports, with investors eagerly waiting for insights into the banks' financial performance.
  • The Producer Price Index (PPI) for June is set to be released at 8:30 a.m., followed by Oil Inventories for the week ended July 9 at 10:30 a.m.
  • Broadcom's talks to acquire SAS Institute have ended after the company's founders changed their minds about a sale, following a potential deal worth $15 billion to $20 billion.
  • Jim Cramer, TheStreet's analyst, believes that tech companies are immune to inflation, with Alphabet, Microsoft, and Apple being prime examples.

Statistics:

  • Inflation rate in June: 5.4% (highest in 13 years)
  • Stock futures traded mixed, with Dow Jones Industrial Average futures falling 29 points, S&P 500 futures slipping 2 points, and Nasdaq futures rising 32 points
  • Clemson University corporate economist Robert Frick: "Overall, this report is consistent with inflation cooling off later this year"
  • Apple has asked suppliers to build as many as 90 million next-generation iPhones this year, a 20% increase from its 2020 iPhone shipments
  • Broadcom's potential acquisition of SAS Institute was discussed at a value of $15 billion to $20 billion

Sources:

  • [TheStreet.com, "Stock Market Today: Dow Jones Banks Earnings Inflation July 13, 2021"]
  • [Bloomberg.com, "Apple Asks Suppliers to Build up to 90 Million Next-Generation iPhones This Year"]
  • [TheStreet.com, "Cramer: The News About Apple Is All Wrong"]
  • [TheStreet.com, "Cramer's Mad Money Recap: Google, Microsoft, Apple"]
  • [The Wall Street Journal, "Broadcom's Talks to Buy SAS Have Ended"]
  • [TheStreet.com, "Broadcom (AVGO) Stock Is a Buy After Talks to Acquire SAS Institute End"]