Stock Index Futures Mixed as Investors Cautiously Await U.S. Big Bank Earnings

September S&P 500 futures (ESU23) are up +0.05%, and September Nasdaq 100 E-Mini futures (NQU23) are down -0.07% this morning after three major U.S. benchmark indices closed higher on Thursday as economic data provided more evidence that inflationary pressures were subsiding, while market participants braced for earnings from big U.S. banks.

In Thursday’s trading session, the benchmark S&P 500 climbed to a 15-month high, and the tech-heavy Nasdaq 100 posted a 1-1/2 year high. Alphabet (GOOGL) gained over +4% after the company launched its artificial intelligence chatbot Bard in Europe and Brazil and said the tool can be interacted with in more than 40 languages. Also, Amazon.com Inc (AMZN) rose more than +2% after saying its Prime Day shopping event set a sales record. In addition, regional bank stocks advanced, with KeyCorp (KEY) climbing over +3% and Zions Bancorporation (ZION) rising more than +2%. On the bearish side, Exxon Mobil Corp (XOM) fell over -1% after the oil major agreed to acquire Denbury (DEN) in an all-stock transaction valued at $4.9B.

Data on Thursday showed U.S. producer price index eased to +0.1% y/y in June from +0.9% y/y in May, lower than the expected increase of +0.4% y/y. Also, U.S. June Core PPI came in at +2.4% y/y compared to an expectation of +2.6% y/y, the smallest pace of increase in about 2-1/2 years. At the same time, the Labor Department report showed claims for state unemployment benefits unexpectedly dropped -12K to 237K, stronger than expectations of 250K, indicating continued resilience in the labor market.

“PPI is another confirmation this week that inflation continues to trend in the right direction even as we see better overall labor market and consumer data. That is a good sign,” said Mona Mahajan, a senior investment strategist at Edward Jones.

Meanwhile, San Francisco Fed President Mary Daly stated Thursday that it is premature for policymakers to assert that they have taken sufficient measures to return U.S. inflation to their target. Fed Governor Christopher Waller also said he anticipates that the U.S. central bank will need to implement two additional rate hikes this year to lower inflation to its target.

U.S. rate futures have priced in a 94.9% probability of a 25 basis point rate increase and a 5.1% chance of no hike at July’s monetary policy meeting.

On the earnings front, big banks, including JPMorgan Chase & Co (JPM), Wells Fargo & Company (WFC), Citigroup (C), along with health insurance giant UnitedHealth (UNH), are set to report their quarterly earnings today.

Today, all eyes are focused on the U.S. Michigan Consumer Sentiment preliminary reading in a couple of hours. Economists, on average, forecast that the Michigan Consumer Sentiment Index will stand at 65.5 in July, compared to the previous value of 64.4.

U.S. Michigan Consumer Expectations will be reported today. Economists estimate the preliminary figure to come in at 61.8 in July, compared to 61.5 in June.

U.S. Export and Import Price Indexes for June will also be in focus today. Economists anticipate Export Price Index to be at -0.2% m/m and Import Price Index to stand at -0.1% m/m.

In the bond markets, United States 10-Year rates are at 3.795%, up +0.96%.

The Euro Stoxx 50 futures are up +0.11% this morning as investors braced for the start of a challenging earnings season in the U.S. and Europe. Technology stocks gained ground, while mining and telecom stocks underperformed on Friday. Investors are currently directing their attention toward the earnings season, which will determine the resilience of profits and margins in the face of economic headwinds and declining consumer demand. In corporate news, Nokia Oyj (NOKIA.H.DX) plunged over -9% after the Finnish vendor of 5G equipment cut its full-year guidance. Also, Telefonaktiebolaget Lm Ericsson (ERICB.S.DX) tumbled more than -7% after the Swedish telecom equipment maker posted a 62% drop in Q2 adjusted operating profit.

Germany’s WPI and Eurozone’s Trade Balance data were released today.

The German June WPI has been reported at -0.2% m/m and -2.9% y/y, compared to expectations of -1.2% m/m and -1.2% y/y.

Eurozone May Trade Balance stood at -0.3B, stronger than expectations of -7.6B. 

Asian stock markets today settled mixed. China’s Shanghai Composite Index (SHCOMP) closed up +0.04%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -0.09%.

China’s Shanghai Composite today closed slightly higher as investors exercised caution in anticipation of the release of key second-quarter gross domestic product data, which would provide further insights into the state of the Chinese economy. The People’s Bank of China official stated on Friday that the central bank would employ policy tools to navigate the challenges encountered by the world’s second-largest economy. Meanwhile, artificial intelligence stocks outperformed on Friday after China introduced measures to manage its flourishing generative AI industry and said regulators would seek to support the development of the technology. Investor focus is now squarely on Chinese GDP data due on Monday. A decision regarding China’s key Loan Prime Rate is also due next week, following the People’s Bank of China’s rate cut in June, which marked the first reduction in eight months.

“We continue to see constructive signs emerging gradually on supporting the economy and stabilization of geopolitical dynamics fronts,” said Morgan Stanley in a note.

Japan’s Nikkei 225 Stock Index closed slightly lower today, giving up the initial gains due to cautious sentiment ahead of the Bank of Japan’s policy meeting and the forthcoming corporate earnings season. The BOJ is set to commence a two-day policy meeting on July 27th. Japan’s 10-year government bond yield reached its highest level in 4-1/2 months on Friday amid speculation of potential adjustments to the central bank’s ultra-loose monetary policy. Also, the yen strengthened on Friday and touched a fresh two-month high, weighing on export-oriented stocks. Meanwhile, chip stocks gained ground and limited the Nikkei’s decline, with chip-testing equipment maker Advantest soaring over +5% and chip-making equipment maker Tokyo Electron rising more than +1%. In other news, Takisawa Machine Tool climbed about +25% after electric motor maker Nidec announced a takeover plan of the company. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down 5.99% to 20.23.

The Japanese May Industrial Production came in at -2.2% m/m, weaker than expectations of -1.6% m/m.

Pre-Market U.S. Stock Movers

Intuitive Machines Inc (LUNR) surged over +20% in pre-market trading after the company said it had conducted a complete spacecraft test of its Nova-C lunar lander.

Leslies Inc (LESL) tumbled more than -25% in pre-market trading after the company announced weaker-than-expected preliminary Q3 results.

Microsoft Corporation (MSFT) rose over +1% in pre-market trading after UBS upgraded the stock to Buy from Neutral.

AT&T Inc (T) fell more than -1% in pre-market trading after JPMorgan downgraded the stock to Neutral from Overweight.

Lennar Corporation (LEN) gained over +1% in pre-market trading after Raymond James upgraded the stock to Outperform from Market Perform.

Caribou Biosciences Inc (CRBU) slid more than -7% in pre-market trading after the company announced it had priced an upsized stock offering of 19.23 million shares at a public offering price of $6.50 per share.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Friday - July 14th

JPMorgan (JPM), UnitedHealth (UNH), Wells Fargo&Co (WFC), BlackRock (BLK), Citigroup (C), State Street (STT).

More Stock Market News from Barchart

• Stocks Finish Higher as Easing Price Pressures Curb Interest Rate Concerns
• Can American Airlines Stock Continue to Soar in the Second Half of 2023?
• Will Meta Platform’s Threads Upend the Social Media Landscape?
• Stocks Gain as Easing Price Pressures May End Fed Rate Hikes