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

September S&P 500 futures (ESU23) are trending down -0.04% this morning after three major U.S. benchmark indices finished the regular session slightly higher as market participants digested milder-than-feared U.S. consumer inflation report while also bracing for crucial U.S. PPI data.

In Thursday’s trading session, Walt Disney Company (DIS) climbed over +4% and was the top percentage gainer on the blue-chip Dow after the company lowered its 2023 capital expenditures forecast and said it would raise prices on its streaming services. Also, U.S.-listed Chinese technology stocks gained ground, with Alibaba Group Holding Limited (BABA) rising more than +4% after the company reported better-than-expected Q1 revenue. In addition, Capri Holdings Ltd (CPRI) surged over +55% after Tapestry said it would acquire the Michael Kors parent for $57.00 per share in cash. On the bearish side, Ralph Lauren Corp (RL) plunged more than -4% after the apparel giant posted weaker-than-expected Q1 total comparable sales ex-forex.

The Labor Department’s report on Thursday showed consumer prices rose +0.2% m/m in July, matching the consensus figure. On an annual basis, headline inflation rose +3.2% y/y in July, weaker than expectations of +3.3% y/y. Also, U.S. core CPI eased to +4.7% y/y in July from +4.8% y/y in June. In addition, the number of Americans filing for jobless claims the past week rose +21K to a 5-week high of 248K, higher than the anticipated 230K figure.

“The case is building for the Fed to keep policy rates unchanged in September. While inflation is moving in the right direction, the still-elevated level suggests that the Fed is some distance from cutting rates,” said Seema Shah, chief global strategist at Principal Asset Management.

San Francisco Fed President Mary Daly acknowledged in an interview on Thursday that recent inflation data had been moving in the right direction. However, Daly added that the central bank still has “more work to do.” “Whether we raise another time, hold rates steady for a longer period, those things are yet to be determined, and it would be premature to project what I think would happen because there's a lot of information coming in between now and our next meeting,” she said.

Meanwhile, U.S. rate futures have priced in a 90.5% probability of no hike and a 9.5% chance of a 25 basis point rate increase at September’s monetary policy meeting.

Today, all eyes are focused on the U.S. Producer Price Index (PPI) in a couple of hours. Economists, on average, forecast that July U.S. PPI will stand at +0.2% m/m and +0.7% y/y, compared to the previous values of +0.1% m/m and +0.1% y/y.

U.S. Core PPI reading will also be closely watched today. Economists expect July figures to be +0.2% m/m and +2.3% y/y, compared to the previous numbers of +0.1% m/m and +2.4% y/y.

U.S. Michigan Consumer Sentiment Index will be reported today as well. Economists foresee this figure to stand at 71.0 in August, compared to the previous figure of 71.6.

In the bond markets, United States 10-Year rates are at 4.088%, up +0.07%.

The Euro Stoxx 50 futures are down -1.07% this morning, tracking weakness in Asian markets, while hawkish comments from San Francisco Fed President Mary Daly also weighed on sentiment. Mining and energy stocks lost ground on Friday, while financial services stocks outperformed. According to the Office for National Statistics on Friday, the U.K. economy eked out unexpected growth in the second quarter, supported by a robust performance in June. In corporate news, Bechtle Ag (BC8.D.DX) climbed over +5% after reporting stronger-than-expected Q2 pretax profit. 

U.K.’s GDP (preliminary), U.K.’s Industrial Production, U.K.’s Manufacturing Production, U.K.’s Monthly GDP 3M/3M Change, France’s CPI, and Spain’s CPI data were released today.

U.K. GDP has been reported at +0.2% q/q and +0.4% y/y in the second quarter, stronger than expectations of 0.0% q/q and +0.2% y/y.

U.K. June Industrial Production stood at +1.8% m/m and +0.7% y/y, stronger than expectations of +0.1% m/m and -1.1% y/y.

U.K. June Manufacturing Production came in at +2.4% m/m and +3.1% y/y, stronger than expectations of +0.2% m/m and +0.3% y/y.

U.K. June Monthly GDP 3M/3M Change was at +0.2%, stronger than expectations of 0.0%.

The French July CPI arrived at +0.1% m/m and +4.3% y/y, compared to expectations of 0.0% m/m and +4.3% y/y.

The Spanish July CPI stood at +0.2% m/m and +2.3% y/y, compared to expectations of +0.1% m/m and +2.3% y/y.

China’s Shanghai Composite Index (SHCOMP) closed down -2.01%, while the Japanese market was closed for a holiday.

China’s Shanghai Composite today closed sharply lower amid ongoing concerns over the deceleration in the country’s economic growth, exacerbated by a series of lackluster economic readings this week. Also, apprehensions regarding a property market meltdown resurfaced this week, fueled by reports indicating that the country’s biggest developers were encountering difficulties in meeting their debt obligations. Meanwhile, heavyweight property stocks experienced another round of sell-off on Friday, with Country Garden Holdings Co Ltd plunging over -5% after it projected a first-half loss of up to $7.6 billion, alongside reports indicating the company’s pursuit of debt restructuring amid a worsening outlook. In other news, China has announced that provincial-level governments will be permitted to raise about 1 trillion yuan through bond sales to settle the debt of local-government financing vehicles and other off-balance sheet issuers. On the positive side, Hong Kong-listed shares of Alibaba Group Holding Ltd rose about +1% after the Chinese e-commerce giant posted its strongest quarterly revenue growth in nearly two years. 

Pre-Market U.S. Stock Movers

Cano Health Inc (CANO) tumbled about -47% in pre-market trading after the company reported downbeat Q2 results and withdrew its FY23 guidance. In addition, management expressed significant uncertainty regarding the company’s ability to continue as a “going concern” within one year.

Archer Aviation Inc (ACHR) surged over +24% in pre-market trading after the company received a $215M equity investment from top industry players, including Stellantis, Boeing, and United Airlines.

Flowers Foods Inc (FLO) rose more than +1% in pre-market trading after the company posted upbeat Q2 results.

Maxeon Solar Technologies Ltd (MAXN) plunged over -24% in pre-market trading after the company reported weaker-than-expected Q2 revenue and issued below-consensus Q3 and FY23 revenue guidance.

DigitalOcean Holdings Inc (DOCN) gained more than +2% in pre-market trading after Morgan Stanley upgraded the stock to Equal Weight from Underweight.

Medical Properties Trust Inc (MPW) fell over -2% in pre-market trading after Raymond James downgraded the stock to Underperform from Strong Buy.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Friday - August 11th

Spectrum Brands (SPB), Central Puerto (CEPU), Soho House (SHCO), Airsculpt Technologies (AIRS), Mammoth Energy Services (TUSK).

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