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

September S&P 500 futures (ESU23) are trending up +0.06% this morning as market participants looked ahead to a reading on the Federal Reserve’s preferred inflation gauge.

In Wednesday’s trading session, Wall Street’s major averages ended in the green, with the benchmark S&P 500 rising to a 2-1/2 week high, the blue-chip Dow notching a 2-week high, and the tech-heavy Nasdaq 100 rising to a 3-1/2 week high. Insulet Corporation (PODD) climbed over +6% and was the top percentage gainer on the S&P 500 after the insulin pump maker’s CEO, James Hollingshead, disclosed the purchase of more than $1M worth of company shares. Also, Apple Inc (AAPL) rose more than +1% after Citigroup reiterated its Buy rating on the stock, expressing optimism regarding the upcoming launch of the iPhone 15 scheduled for September 12th. In addition, Netflix (NFLX) gained about +1% after Truist Securities raised its price target on the stock to $485 from $339. On the bearish side, HP Inc (HPQ) fell more than -6% after the PC giant posted mixed Q3 results and cut its full-year cash flow and profit outlook.

The ADP National Employment report on Wednesday showed private payrolls rose by 177K jobs in August, much lower than the consensus figure of 195K, signaling a softening labor market. Also, the second estimate of U.S. Q2 GDP was revised downward to +2.1% q/q from +2.4% q/q. At the same time, U.S. July pending home sales unexpectedly rose +0.9% m/m, stronger than expectations of -0.6% m/m.

“We’re back to a spot now where bad news is something of good news. The most recent data really shows that the economy is not overheating, and it keeps this sort of Goldilocks hope alive. It puts us back in the situation where we don’t have as much fear of additional rate hikes at this point,” said David Russell, global head of market strategy at TradeStation.

Meanwhile, U.S. rate futures have priced in an 11.5% probability of a 25 basis point rate increase at the September FOMC meeting and a 40.0% chance of a 25 basis point rate hike at November’s monetary policy meeting.

On the earnings front, notable companies like Broadcom (AVGO), VMware (VMW), Lululemon Athletica (LULU), Dell Tech (DELL), Dollar General (DG), and Campbell Soup (CPB) are slated to release their quarterly results today.

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 come in at +0.2% m/m and +4.2% y/y in July, compared to the previous values of +0.2% m/m and +4.1% y/y.

Also, investors will likely focus on the U.S. Chicago PMI reading, which stood at 42.8 in July. Economists foresee the August figure to be 44.1.

U.S. Personal Spending data will also be closely watched today. Economists forecast Personal Spending to be at +0.7% m/m in July, compared to the previous figure of +0.5% m/m.

U.S. Initial Jobless Claims data will be reported today as well. Economists estimate this figure to be 235K, compared to last week’s value of 230K.

In the bond markets, United States 10-year rates are at 4.103%, down -0.29%.

The Euro Stoxx 50 futures are up +0.07% this morning as investors digested a slew of important regional economic data while exercising caution in anticipation of the U.S. inflation print. Financial and real estate stocks gained ground on Thursday, while food and beverage stocks underperformed. Eurostat data showed on Thursday that Eurozone headline inflation unexpectedly remained unchanged in August, but underlying price growth fell as expected. Meanwhile, European Central Bank Executive Board member Isabel Schnabel said Thursday that the growth outlook for the euro area is bleaker than officials predicted in June, while underlying inflation remains “stubbornly high.” In corporate news, UBS Group Ag (UBSG.Z.IX) climbed over +6% after reporting the biggest-ever quarterly profit, attributed to its emergency acquisition of Credit Suisse Group AG.

Germany’s Retail Sales, France’s CPI (preliminary), France’s GDP, Germany’s Unemployment Change, Germany’s Unemployment Rate, Italy’s CPI (preliminary), Eurozone’s Unemployment Rate, Eurozone’s CPI (preliminary), and Eurozone’s Core CPI (preliminary) data were released today.

The German July Retail Sales stood at -0.8% m/m and -2.2% y/y, weaker than expectations of +0.3% m/m and -1.0% y/y.

The French August CPI came in at +1.0% m/m and +4.8% y/y, stronger than expectations of +0.8% m/m and +4.6% y/y.

The French GDP has been reported at +0.5% q/q in the second quarter, in line with expectations.

The German August Unemployment Change arrived at 18K, weaker than expectations of 10K.

The German August Unemployment Rate was at 5.7%, in line with expectations.

The Italian August CPI stood at +0.4% m/m and +5.5% y/y, stronger than expectations of +0.1% m/m and +5.3% y/y.

Eurozone July Unemployment Rate was at 6.4%, in line with expectations.

Eurozone August CPI has been reported at +0.6% m/m and +5.3% y/y, stronger than expectations of +0.4% m/m and +5.1% y/y.

Eurozone August Core CPI came in at +0.3% m/m and +5.3% y/y, in line with expectations.

Asian stock markets today closed mixed. China’s Shanghai Composite Index (SHCOMP) closed down -0.55%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.88%.

China’s Shanghai Composite today closed lower as mixed business activity data weighed on risk appetite. An official factory survey showed Thursday that China’s manufacturing activity contracted for a fifth consecutive month in August, although the pace was slower than anticipated. Also, the services PMI showed slowing expansion, raising concerns that a downturn in the property sector was impacting the economy. Meanwhile, the People’s Bank of China met with lenders and private enterprises on Wednesday, pledging to enhance their access to funding as part of an initiative to stimulate economic growth. In other news, the southern business hubs of Guangzhou and Shenzhen implemented eased regulations on home purchases on Wednesday, allowing more individuals to access favorable mortgage conditions for their initial home purchases.

The Chinese August Manufacturing PMI stood at 49.7, stronger than expectations of 49.4.

The Chinese August Non-Manufacturing PMI came in at 51.0, weaker than expectations of 51.1.

At the same time, Japan’s Nikkei 225 Stock Index closed higher today, buoyed by gains in automobile stocks after Toyota Motor posted record monthly global sales, while stronger-than-expected retail sales data also boosted sentiment. Government data showed on Thursday that Japanese retail sales rose more than expected in July, extending a streak of expansion for the 17th consecutive month since March 2022. Separately, Japan’s factory output experienced a larger-than-anticipated decline in July, indicating a challenging start to the second half of the year for manufacturers. Meanwhile, automobile stocks outperformed on Thursday, underpinned by a more than +2% gain in Toyota Motor Corp after the automaker posted an 8% increase in July global sales to a record 859,506 vehicles. Chip stocks also gained ground, with chip-making equipment maker Tokyo Electron and chip-testing equipment maker Advantest rising over +1%. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -4.79% to 16.89.

The Japanese July Industrial Production stood at -2.0% m/m, weaker than expectations of -1.4% m/m.

The Japanese July Retail Sales came in at +6.8% y/y, stronger than expectations of +5.4% y/y.

Pre-Market U.S. Stock Movers

Okta Inc (OKTA) climbed over +9% in pre-market trading after the company posted upbeat Q2 results and raised its FY24 guidance.  

Salesforce Inc (CRM) soared more than +5% in pre-market trading after the cloud-computing giant posted better-than-expected Q2 results and lifted its FY24 guidance.

UGI Corporation (UGI) gained over +8% in pre-market trading after announcing that its Board of Directors initiated a process to evaluate potential strategic alternatives, especially focusing on the LPG businesses.

Victoria’s Secret & Co (VSCO) plunged more than -6% in pre-market trading after the company reported downbeat Q2 results and issued a soft Q3 outlook.

Crowdstrike Holdings Inc (CRWD) rose over +1% in pre-market trading after the cyber security company posted upbeat Q2 results and provided better-than-expected Q3 guidance.

Palantir Technologies Inc (PLTR) dropped more than -4% in pre-market trading after Morgan Stanley downgraded the stock to Underweight from Equal Weight. 

Medical Properties Trust Inc (MPW) fell over -1% in pre-market trading after Mizuho downgraded the stock to Neutral from Buy.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Thursday - August 31st

Broadcom (AVGO), VMware (VMW), Lululemon Athletica (LULU), Dell Tech (DELL), Canadian Imperial Bank (CM), Dollar General (DG), Hormel Foods (HRL), Ke Hldg (BEKE), Campbell Soup (CPB), Polestar Automotive Holding A (PSNY), Nutanix (NTNX), Ciena Corp (CIEN), Elastic (ESTC), Hashicorp (HCP), Ollies Bargain Outlet Holdings Inc (OLLI), Academy Sports (ASO), Signet Jewelers (SIG), Chindata (CD), Pagerduty (PD), Hello Group (MOMO), Oxford Industries (OXM), Arco Platform  (ARCE), Caleres (CAL), Quanex Building Products (NX), Amark Preci (AMRK), Titan Machinery (TITN), Genesco (GCO).

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