Stock Market Shows Signs of Recovery After Steep Sell-Off; CPI Data and Oracle Earnings in Focus
The U.S. stock market experienced its worst day in a year on Tuesday followed by a volatile session, but several indicators suggest potential recovery ahead. Key factors include upcoming CPI inflation data expected to show above 4% annualized rates and Oracle's earnings report, along with bullish options positioning in interest-rate-sensitive sectors and declining oil prices. The market's ability to sustain gains may depend on whether sector rotation away from big tech continues and how Oracle's earnings impact investor sentiment.
Following a significant market sell-off on Tuesday—the worst day in a year—traders are finding reasons for optimism as the market prepares for Wednesday's CPI inflation data release and Oracle's earnings announcement. Despite economists expecting annualized CPI to exceed 4% for the first time in three years, interest-rate-sensitive sectors including regional banks, homebuilders, and small-caps performed well on Tuesday, with bonds also firming. Options market data shows bullish positioning, particularly in homebuilding ETFs and regional bank funds where call options significantly outnumbered puts. Crude oil's decline below $86 per barrel—the lowest since mid-April—may provide tailwinds for the inflation report. Oracle, a $600 billion software giant, is expected to see a 12% stock move following earnings, the largest implied move since March 2020, with options traders showing a notably bullish bias with twice as many calls as puts traded.
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- CNBCCenter
Two reasons for optimism after Tuesday's whipsaw market sell-off
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