BOB LANG: Good morning, Action Alerts Plus subscribers. It's Wednesday, August 10, 2022. And this morning, we got the latest read on inflation in the CPI report for July. And we were expecting a pretty hot number, and it actually came in fairly mild. And 8.5% year-over-year. Expected of about 8.7%.
But the month-over-month was the startling number. Came in at 0. We were expecting it about a 0.3. So that's a positive. We're a little bit hot on the core number, which came in at about 5.9%. So ex-food and energy, the numbers are still pretty hot, and it's not really going to push the Fed off of rate hikes.
However, the Fed funds futures this morning, which have basically flip flopped. Yesterday, they were portraying about a 70% chance of a 75 basis point rate hike and a 30% chance of a 50 basis point rate hike at the next meeting in September. That has flip flopped again to a 70% chance of a 50 basis point rate hike and 30% chance of a 75 basis point rate hike.
So what does that mean for the markets? It means that the markets are taking it in stride and believing that the Fed is going to ease up a little bit sooner than promised. We see the equity futures up strong today. The NASDAQ up more than 2%. The S&P 500 up nearly 2% today on some pretty strong volume. We've seen some good call volume action this morning as well, too. It's been brisk.
The breadth is strong, and has been strong, actually, for the past 2 and 1/2, 3 weeks. So if you're a bull, you like strong breadth as well, too. We've been seeing some sideways action, though, lately. And the reason for that is because there's been a little bit of tepidness from investors and traders leading into these numbers.
You have to ask yourself, did I really want to be heavily long coming into the CPI number, which could have gone either way? And, again, this is one of the things that you have to wait for the number to come out. Now speaking of waiting for numbers to come out, we do have the PPI number, which comes out tomorrow morning. And, again, if we get some more positive news on this report, the markets could jump on that as well, too, and make a run towards some higher levels.
On the SP 500, we're seeing about 4,200 as the resistance level here. But if we bust through that, 4,300 is the next level up. And that is the big monster right now that's in front of the bulls.
And that is, really, basically, where the downtrend line comes in, which is the start of the bear market here. So it's like Godzilla versus King Kong here, with Godzilla being the price action, which has been moving upwards at a really sharp trajectory lately, versus that strong downtrend line that's been in place for about nine months. So we'll see how that battle resolves over the next couple of days.
So that's a wrap for today. Thanks very much for joining me, everybody. And we'll see you guys all on Thursday morning. Have a great day.