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China’s Consumer Inflation Rises in August as Producer Price Deflation Deepens, Driven by Weather Disruptions

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China’s consumer inflation rose in August to its highest rate in six months, primarily driven by rising food costs due to extreme weather conditions, including floods and heatwaves, rather than a recovery in domestic demand. The consumer price index (CPI) increased by 0.6% year-on-year in August, slightly up from July’s 0.5%, but fell short of economists’ forecasts of 0.7%. The spike in food prices, which surged 2.8% from the previous year, was attributed to weather-related disruptions affecting 1.46 million hectares of crops, according to the National Bureau of Statistics (NBS). Despite the increase in CPI, core inflation, which excludes volatile food and fuel prices, dropped to its lowest level in nearly three and a half years, signaling underlying deflationary concerns. The producer price index (PPI), a key gauge of industrial profitability, fell by 1.8% in August, marking the largest decline in four months and exacerbating concerns about deflationary pressures. Economists attribute this to a persistent production surplus and weak demand. China’s yuan weakened and stock markets fell as economic worries intensified. Calls for further fiscal and monetary easing are growing, as analysts warn that existing policies, including a $41 billion national campaign to boost consumer confidence, have so far been insufficient to stimulate demand.

Dell and Palantir to Join S&P 500; Shares Surge

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Dell and Palantir both saw their shares jump about 7% in after-hours trading on Friday following the announcement from S&P Global that they will be added to the S&P 500 index. Palantir will replace American Airlines, while Dell will take the place of Etsy in the benchmark index.

This move marks Dell’s return to the S&P 500, having been a member from 1996 to 2013 before going private and rejoining the public market in 2018. For Palantir, which went public in 2020 after over 15 years as a venture-backed startup, this inclusion highlights its recent profitability and growing revenue. The company reported a net income of $135.6 million for the second quarter, a significant increase from the previous year.

The inclusion of these companies reflects their high market capitalizations—Palantir’s exceeds $67 billion, while Dell’s is over $72 billion—matching the median market cap of S&P 500 companies at approximately $33.5 billion. The addition often leads to a rally in stock prices as index-tracking funds adjust their portfolios to include the new members.

Dell’s stock had already surged 90% in 2023, driven by strong demand for AI servers. Meanwhile, Palantir, known for its data analytics and work with government and military agencies, has seen accelerated revenue growth and posted its first profits in late 2022.

The S&P 500 additions are intended to better represent U.S. stocks with high market caps. The inclusion of these companies follows recent changes, such as the addition of cybersecurity firm CrowdStrike in June. Shares of software maker Workday fell 2% in after-hours trading, despite earlier speculation about its potential inclusion in the index.

Dollar General Shares Drop 20% as Financial Struggles of Core Customers Trigger Downgraded Outlook

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Dollar General’s shares plummeted by 20% on Thursday after the company significantly reduced its sales and profit expectations for the full year, citing growing financial pressures on its core lower-income customer base. The retailer, known for serving rural areas, now anticipates same-store sales growth of only 1.0% to 1.6% for fiscal 2024, down from the previously expected range of 2% to 2.7%. Earnings per share projections were also slashed to a range of $5.50 to $6.20, a sharp decline from the earlier forecast of $6.80 to $7.55.

The earnings report for the latest quarter also fell short of Wall Street’s expectations, with Dollar General reporting earnings per share of $1.70, missing the consensus estimate of $1.79. Revenue came in at $10.21 billion, lower than the anticipated $10.37 billion.

CEO Todd Vasos attributed the disappointing performance to “financially constrained” core customers, while emphasizing the importance of controlling the aspects of the business within the company’s reach. The steep drop in Dollar General’s stock had a ripple effect on its competitor, Dollar Tree, which saw a 6% decline in early trading as investors reacted to the news.

The downturn highlights the continued challenges faced by discount retailers, as inflation and economic uncertainty weigh heavily on lower-income consumers, leading to weaker sales performance across the sector.