S&P Futures Tick Lower Ahead of Key U.S. Inflation Data

June S&P 500 futures (ESM23) are trending down -0.33% this morning after three major U.S. benchmark indices rallied on Thursday as technology stocks continued to shine, while investors braced for a reading on the Federal Reserve’s preferred inflation gauge.

In Thursday’s trading session, the tech-heavy Nasdaq 100 logged its biggest one-day percentage gain since mid-March, while the benchmark S&P 500 and the blue-chip Dow clinched their largest daily percentage gain since early January, boosted by a more than +13% jump in shares of Meta Platforms (META) after the social media giant reported upbeat Q1 results and issued better-than-expected Q2 revenue guidance. Also, easing concerns about the regional banking space buoyed sentiment, with First Republic Bank (FRC) climbing over +8%.

On the economic front, the Commerce Department’s preliminary reading showed that the U.S. economy grew at a +1.1% annualized rate in the first quarter, weaker than expectations of +2.0%, as an uptick in consumer spending was offset by a downturn in private inventories and nonresidential fixed investment. Also, the Labor Department report on Thursday showed claims for state unemployment benefits unexpectedly dropped -16K to 230K, stronger than expectations of 248K. In addition, U.S. pending home sales unexpectedly fell -5.2% m/m in March, weaker than expectations of +0.5% m/m.

“The economic reports continue to show a mixture of decelerating and accelerating trends. It’s tough to know how much good news is good news, and vice versa when it comes to what the Fed has to do,” said Thomas Martin, a Senior Portfolio Manager at Globalt Investments.

U.S. rate futures have priced in an 88.0% probability of a 25 basis point rate increase and a 12.0% chance of no hike at the May meeting.

First-quarter earnings season continues, with investors awaiting new reports from major global companies, including Exxon Mobil (XOM), Chevron (CVX), Aon (AON), Natwest Group (NWG), and Colgate-Palmolive (CL). Analysts expect aggregate S&P 500 earnings to notch a 2.4% year-over-year decline for the quarter, a drastic improvement compared with an expected drop of 5.1% at the start of the earnings season.

Today, all eyes are focused on the U.S. core personal consumption expenditures (PCE) price index, the Fed’s preferred inflation gauge, in a couple of hours. Economists, on average, forecast that the Core PCE Price Index will stand at +0.3% m/m and +4.5% y/y in March, compared to the previous values of +0.3% m/m and +4.6% y/y.

Also, investors are likely to focus on the U.S. Employment Cost Index, which was +1.0% q/q in the fourth quarter. Economists foresee the first-quarter figure to be +1.1% q/q.

U.S. Michigan Consumer Sentiment Index will be reported today. Economists foresee this figure to stand at 63.5 in April, compared to March’s value of 62.0.

U.S. Michigan Consumer Expectations Index will come in today. Economists expect the April figure to be 61.8, compared to 59.2 in March.

U.S. Personal Spending data will also be closely watched today. Economists forecast Personal Spending to be at -0.1% m/m in March, compared to the previous figure of +0.2% m/m.

U.S. Chicago PMI data will be reported today as well. Economists estimate April’s figure to come in at 43.5, compared to the previous number of 43.8.

In the bond markets, United States 10-Year rates are at 3.462%, down -1.88%.

The Euro Stoxx 50 futures are down -1.02% this morning as investors assessed more corporate earnings reports as well as important regional inflation and growth economic data. Losses in bank stocks are leading the overall market lower, with Natwest Group Plc (NWG.LN) dropping over -5% even after the British bank’s first-quarter operating profit topped expectations. Eurostat data released Friday showed the Eurozone economy grew by +0.1% q/q in the first quarter as high inflation and interest rates weighed on activity. In corporate news, shares of Remy Cointreau (RCO.FP) plunged over -8% after the French distiller reported weaker-than-expected sales in Q4. In other news, Numis Corporation Plc (NUM.LN) jumped more than +67% after Deutsche Bank agreed to buy the London-based institutional stockbroker and corporate adviser for about 410 million pounds.

France’s Consumer Spending, France’s GDP (preliminary), France’s CPI (preliminary), Spain’s CPI (preliminary), Spain’s GDP (preliminary), Germany’s Unemployment Change, Germany’s Unemployment Rate, Germany’s GDP (preliminary), Italy’s GDP (preliminary), and Eurozone’s GDP (preliminary) data were released today.

The French March Consumer Spending stood at -1.3% m/m, weaker than expectations of +0.3% m/m.

The French GDP has been reported at +0.2% q/q and +0.8% y/y in the first quarter, compared to expectations of +0.2% q/q and +0.5% y/y.

The French April CPI came in at +0.6% m/m and +5.9% y/y, stronger than expectations of +0.4% m/m and +5.7% y/y.

The Spanish April CPI was at +0.6% m/m and +4.1% y/y, weaker than expectations of +0.9% m/m and +4.4% y/y.

The Spanish GDP stood at +0.5% q/q and +3.8% y/y in the first quarter, stronger than expectations of +0.3% q/q and +3.0% y/y.

The German April Unemployment Change came in at 24K, weaker than expectations of 10K.

The German April Unemployment Rate was at 5.6%, in line with expectations.  

The Italian GDP stood at +0.5% q/q and +1.8% y/y in the first quarter, stronger than expectations of +0.2% q/q and +1.4% y/y.

The German GDP came in at -0.1% q/q and +0.2% y/y in the first quarter, weaker than expectations of +0.3% q/q and +0.8% y/y.

Eurozone GDP has been reported at +0.1% q/q and +1.3% y/y in the first quarter, weaker than expectations of +0.2% q/q and +1.4% y/y.

Asian stock markets today closed in the green. China’s Shanghai Composite Index (SHCOMP) closed up +1.14%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +1.40%.

China’s Shanghai Composite today closed higher ahead of the May Day holiday, led by gains in media, financials, and consumer stocks amid positive recovery signs and strong earnings. Financial and consumer staples stocks gained ground on Friday, with Ping An Insurance Group Co of China Ltd climbing over +2% following a +10% jump in the previous session on upbeat Q1 results. Media stocks also surged amid a frenzy around Chinese equivalents of OpenAI’s ChatGPT chatbot. Meanwhile, the China Banking and Insurance Regulatory Commission said it would enhance credit support and lower the actual financing costs of small and micro enterprises this year to better support economic recovery. In addition, concerns over geopolitical tensions slightly eased after White House National Security Advisor Jake Sullivan said Thursday the United States wants to de-risk and diversify its relationship with China, not decouple.

“Investor sentiment stabilized somewhat as consumption recovery stays on track and concerns over COVID-19 resurgence lessen,” Morgan Stanley said in a note.

Japan’s Nikkei 225 Stock Index closed sharply higher and hit an eight-month high after the Bank of Japan maintained ultralow interest rates and said it would  “patiently” continue with its quantitative easing and yield curve control measures. Also, the Japanese yen weakened after the central bank said core consumer prices are likely to rise 1.6% y/y in fiscal 2025, remaining under its inflation target of 2%. Meanwhile, government data showed on Friday that core consumer prices in Tokyo, Japan’s capital, rose more than expected in April. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down 2.38% to 16.42.

“The main message is that, of course, the BOJ will consider a change in monetary policy, but it will take a longer time,” said Masayuki Kichikawa, a chief macro strategist at Sumitomo Mitsui Asset Management.

The Japanese April Tokyo Core CPI stood at +3.5% y/y, stronger than expectations of +3.2% y/y.

The Japanese March Retail Sales came in at +7.2% y/y, stronger than expectations of +5.8% y/y.

The Japanese March Industrial Production was at +0.8% m/m, stronger than expectations of +0.5% m/m.

Pre-Market U.S. Stock Movers

Amazon.com Inc (AMZN) fell over -1% in pre-market trading after the company warned about cooling growth in its key cloud computing business.

Cloudflare Inc (NET) plunged more than -24% in pre-market trading after the company reported mixed Q1 results and issued weaker-than-expected Q2 and FY23 revenue guidance.

Snap Inc (SNAP) slid over -18% in pre-market trading after the company’s first-quarter revenue fell short of expectations.

Intel Corporation (INTC) gained more than +4% in pre-market trading after the semiconductor giant reported upbeat Q1 results and posted solid Q2 revenue guidance.

First Solar Inc (FSLR) dropped over -9% in pre-market trading after the company reported downbeat Q1 results.

Getty Images Holdings Inc (GETY) fell about -3% in pre-market trading after Imperial Capital initiated coverage of the stock with an in-line rating.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Friday - April 28th

Exxon Mobil (XOM), Chevron (CVX), Aon (AON), Natwest Group (NWG), Colgate-Palmolive (CL), Charter Communications (CHTR), TC Energy (TRP), Fomento Economico Mexicano (FMX), Imperial Oil (IMO), LyondellBasell Industries (LYB), Ares Management (ARES), W P Carey Inc (WPC), Avantor (AVTR), Cameco (CCJ), nVent Electric (NVT), Saia (SAIA), NewYork Community Bancorp (NYCB), Gentex (GNTX), Newell Brands (NWL), Portland General Electric (POR), Balchem (BCPC), Sensient Technologies (SXT), Lazard (LAZ), Carter’s (CRI), First Hawaiian (FHB), JinkoSolar (JKS), ArcBest Corp (ARCB), Dana (DAN), Bloomin Brands (BLMN), Virtus (VRTS), Tennant (TNC), GrafTech (EAF).

More Stock Market News from Barchart

• Stocks Close Sharply Higher as Meta’s Earnings Impress
• Intel Needs a Rebound in Chip Demand to Sustain Rally
• Stocks Rally as Meta’s Earnings Boosts Sentiment
• How High Can NVIDIA Stock Rise?