June S&P 500 futures (ESM23) are trending down -0.10% this morning after three major U.S. benchmark indices ended the regular session mixed as market participants digested a tamer-than-expected U.S. inflation report while also awaiting crucial U.S. PPI data.
In Wednesday’s trading session, the tech-heavy Nasdaq 100 outperformed major benchmarks as the U.S. Treasury yields plunged after a report showed U.S. inflation moderated slightly in April, sparking a rally in mega-cap technology stocks. Also, Alphabet Inc (GOOGL) rose more than +4% after the company unveiled new gadgets and details on its generative artificial intelligence tools at the I/O developer conference. In addition, Akamai Technologies (AKAM) climbed over +8% and was the top percentage gainer on the benchmark S&P 500 after reporting upbeat Q1 results and providing strong full-year guidance. At the same time, regional bank stocks extended declines amid concerns over the health of the bank sector, with KeyCorp (KEY) dropping over -4% and Zions Bancorporation (ZION) falling more than -2%. Energy stocks also retreated as the price of WTI crude dropped over -1% on an unexpected increase in U.S. crude stockpiles.
The Labor Department’s report on Wednesday showed consumer prices rose +0.4% m/m in April, in line with expectations. On an annual basis, headline inflation dipped to a 2-year low of 4.9% in April from 5.0% in March. Economists had expected a growth of +5.0% y/y. Also, core CPI, which excludes volatile food and fuel prices, rose +5.5% y/y in April, in line with expectations and lower than the +5.6% y/y increase in March.
“A slight increase in core inflation with significant deceleration on core services should encourage the Fed to keep the door open for a June hike,” Morgan Stanley said in a note.
After the release of the CPI report, U.S. rate futures have priced in a 92.6% chance of no hike and a 7.4% chance of a 25 basis point rate increase at the next central bank meeting in June.
Meanwhile, U.S. Treasury Secretary Janet Yellen Thursday called Congress to increase the $31.4 trillion federal debt limit. She emphasized the importance of avoiding a global economic recession and maintaining America’s dominant position in the world economy that could be threatened by an unprecedented default.
On the earnings front, Walt Disney Company (DIS) dropped more than -4% in pre-market trading after the company’s second-quarter revenues came roughly in line with Wall Street expectations and net income just short. The company also predicted a wider loss for its streaming service this quarter.
Today, all eyes are focused on the U.S. Producer Price Index (PPI) in a couple of hours. Economists, on average, forecast that April U.S. PPI will stand at +0.3% m/m and +2.4% y/y, compared to the previous values of -0.5% m/m and +2.7% y/y.
U.S. Core PPI reading will also be closely watched today. Economists expect April figures to be +0.2% m/m and +3.3% y/y, compared to the previous numbers of -0.1% m/m and +3.4% y/y.
U.S. Initial Jobless Claims data will be reported today as well. Economists estimate this figure to be 245K, compared to last week’s value of 242K.
In the bond markets, United States 10-Year rates are at 3.434%, down -0.04%.
The Euro Stoxx 50 futures are up +0.58% this morning as investors assessed the latest U.S. inflation report while awaiting the Bank of England’s interest rate decision. Gains in media and consumer product stocks are leading the overall market higher. Meanwhile, the Bank of England is widely expected to hike interest rates for the 12th time in a row, raising its key rate by a further 25 basis points to the highest since 2008. Investors will also be paying close attention to whether the BoE plans to implement more interest rate hikes in meetings ahead. In corporate news, shares of ING Groep NV (INGA.A.DX) gained over +3% after the lender announced a 1.5 billion euros share buyback and posted upbeat first-quarter results.
The European economic data slate is mainly empty on Thursday.
Asian stock markets today settled mixed. China’s Shanghai Composite Index (SHCOMP) closed down -0.29%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.02%.
China’s Shanghai Composite today closed lower as softer-than-expected Chinese inflation data raised more doubts over a post-COVID economic recovery in the world’s second-largest economy. Data on Thursday showed that Chinese consumer inflation rose at the slowest pace in more than two years in April, while producer inflation eased to its lowest level in about three years, suggesting more stimulus might be needed to boost an economic rebound. Meanwhile, the China Association of Automobile Manufacturers said on Thursday that the country’s vehicle sales rose +82.7% year-on-year in April compared to a +9.7% increase in the previous month.
“The subdued inflation readings suggest post-COVID recovery momentum continued to weaken in April,” said Ting Lu, a chief China economist at Nomura.
The Chinese April CPI stood at -0.1% m/m and +0.1% y/y, weaker than expectations of 0.0% m/m and +0.4% y/y.
The Chinese April PPI came in at -3.6% y/y, weaker than expectations of -3.2% y/y.
At the same time, Japan’s Nikkei 225 Stock Index closed just above the flatline today as investors digested a mixed bag of corporate earnings results. Mazda Motor Corp slid over -2% after the carmaker slashed sales and operating forecasts for the just-ended fiscal year. Sumitomo Metal Mining Co tumbled more than -11% after the company projected below-consensus earnings amid uncertainty over China’s economy and metals prices. On the positive side, Fujifilm Holdings Corp climbed over +5% after reporting better-than-expected full-year results. In addition, AI-related Japanese stocks jumped on Thursday after SoftBank Group Corp.’s mobile unit said it was joining a global race to create a version of ChatGPT. Meanwhile, finance leaders of the Group of Seven economies kick off three days of meetings in Japan today. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up 2.03% to 16.09.
Pre-Market U.S. Stock Movers
Sonos Inc (SONO) plunged over -26% in pre-market trading after the company reported better-than-expected Q2 results but cut its 2023 revenue outlook.
Caredx Inc (CDNA) fell over -6% in pre-market trading after the company posted downbeat Q1 results and withdrew its 2023 revenue guidance.
Unity Software Inc (U) climbed about +10% in pre-market trading after the company reported upbeat Q1 results, posted stronger-than-expected Q2 revenue guidance, and raised its FY23 outlook.
Albemarle Corp (ALB) rose over +2% in pre-market trading after KeyBanc upgraded the stock to overweight from sector weight.
Applovin Corp (APP) soared about +15% in pre-market trading after the company reported mixed Q1 results but posted above-consensus Q2 guidance.
Twilio Inc (TWLO) dropped over -1% in pre-market trading after Goldman Sachs downgraded the stock to neutral from buy.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Thursday - May 11th
Sun Life Financial (SLF), PerkinElmer (PKI), Entegris (ENTG), Gen Digital (GEN), Charles River Laboratories (CRL), News Corp (NWS), Tapestry (TPR), US Foods (USFD), Pharming Group (PHAR), Algonquin Power (AQN), Cyberark Software (CYBR), Haemonetics (HAE), YETI (YETI), Euronav (EURN), Sanmina (SANM), NantKwest Inc (IBRX), Enlight Energy (ENLT), Nova (NVMI), Utz Brands (UTZ), Getty Images Holdings (GETY), National Vision (EYE), IAMGold (IAG), PGT Innovations (PGTI), Orla Mining (ORLA), Geron (GERN), Janus International Group (JBI), IONQ (IONQ), indie Semiconductor (INDI), Docebo (DCBO), Himax (HIMX), CTi Biopharma (CTIC), BRC Inc. (BRCC), Fiverr International (FVRR), SilverCrest Metals (SILV), Adecoagro SA (AGRO), Westrock Coffee (WEST), Harrow Health (HROW), Gogoro (GGR), Arlo Technologies (ARLO), Bioceres Crop (BIOX), Marketwise (MKTW), Marinus Pharma (MRNS), Butterfly Network (BFLY), Avita Medical (RCEL), Compass Pathways (CMPS), Brilliant Earth (BRLT), Bakkt Holdings (BKKT), Rain Therapeutics (RAIN), Vasta Platform (VSTA), Pulse Biosciences (PLSE), Holley (HLLY), Hirequest (HQI), UroGen Pharma (URGN), Selectquote (SLQT).
More Stock Market News from Barchart
- Moderation in U.S. Consumer Prices Boost Stocks
- This Stock Is a Buy: Brookfield Asset Management Looks to Credit Market for Growth
- Is It Time To Bet on a Market Recovery? 3 Sectors Poised for Growth in a Post-Pandemic Era
- Unusual Call Option Activity in Microsoft Indicates a Bullish Outlook on MSFT Stock
On the date of publication, Oleksandr Pylypenko did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
/Advanced%20Micro%20Devices%20Inc_%20logo%20and%20chart%20data-by%20Poetra_%20RH%20via%20Shutterstock.jpg)
/Cisco%20Systems%2C%20Inc_%20HQ-by%20Sundry%20Photography%20via%20iStock.jpg)