September S&P 500 E-Mini futures (ESU24) are trending up +0.39% this morning as investors bet that the upcoming reading of the Federal Reserve’s preferred inflation gauge will strengthen the argument for lower interest rates.
Nike (NKE) plunged over -14% in pre-market trading after the world’s largest sportswear company reported weaker-than-expected Q4 revenue and provided FY25 revenue guidance that fell short of analyst estimates.
In yesterday’s trading session, Wall Street’s major indices ended in the green. McCormick (MKC) gained over +4% after the company reported better-than-expected Q2 results. Also, cybersecurity stocks advanced after Bloomberg Intelligence said it sees increased demand for cloud security as more companies aim to train their own AI models, with Zscaler (ZS) climbing more than +5% to lead gainers in the Nasdaq 100 and Palo Alto Networks (PANW) rising over +4%. On the bearish side, Walgreens Boots Alliance (WBA) plummeted more than -22% and was the top percentage loser on the S&P 500 and Nasdaq 100 after the company posted mixed Q3 results and lowered its full-year adjusted EPS guidance. In addition, Micron Technology (MU) slid over -7% after the memory chipmaker provided Q4 sales guidance that trailed the estimates of some investors.
The U.S. Department of Commerce’s final estimate of Q1 GDP growth was revised upward to +1.4% (q/q annualized) from the second estimate of +1.3%, in line with expectations. Also, U.S. pending home sales unexpectedly fell -2.1% m/m in May, weaker than expectations of +0.6% m/m. In addition, U.S. May durable goods orders unexpectedly rose +0.1% m/m, stronger than expectations of -0.5% m/m, while U.S. May core durable goods orders unexpectedly fell -0.1% m/m, weaker than expectations of +0.2% m/m. Finally, the number of Americans filing for initial jobless claims in the past week fell -6K to 233K, compared with 236K expected.
“We expect both consumer and business activity to slow in the latter half of 2024, giving the Fed ample opportunity to begin cutting rates later this year,” said Jeff Roach, chief economist at LPL Financial.
Atlanta Fed President Raphael Bostic reiterated on Thursday his expectation for one interest rate cut in the fourth quarter of this year, maintaining his stance unchanged from March, citing indications that inflation has resumed its decline. “Inflation still remains the chief concern,” Bostic said. “But the risks are becoming more balanced across our two mandate items, and we’ll just have to think about that.”
Meanwhile, U.S. rate futures have priced in a 10.3% chance of a 25 basis point rate cut at July’s monetary policy meeting and a 57.9% chance of a 25 basis point rate cut at the September FOMC meeting.
In other news, President Joe Biden and former President Donald Trump squared off in their first 2024 debate late Thursday in the U.S., with Trump widely perceived as the victor. Markets speculate that a second Trump term could lead to reduced corporate taxes, a prospect viewed as bullish for both stock prices and bond yields.
Today, all eyes are focused on the U.S. core personal consumption expenditures price index, the Fed’s preferred price gauge, set to be released in a couple of hours. Economists, on average, forecast that the core PCE price index will come in at +0.1% m/m and +2.6% y/y in May, compared to the previous figures of +0.2% m/m and +2.8% y/y.
Also, investors will focus on the U.S. Chicago PMI, which stood at 35.4 in May. Economists foresee the June figure to be 39.7.
U.S. Personal Spending and Personal Income data will also be closely monitored today. Economists forecast May Personal Spending to be at +0.3% m/m and May Personal Income to stand at +0.4% m/m, compared to the April numbers of +0.2% m/m and +0.3% m/m, respectively.
The U.S. Michigan Consumer Sentiment Index will be reported today as well. Economists estimate this figure to arrive at 65.6 in June, compared to 69.1 in May.
In addition, market participants will be anticipating speeches from Richmond Fed President Thomas Barkin and Fed Governor Michelle Bowman.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.310%, up +0.49%.
The Euro Stoxx 50 futures are up +0.20% this morning, ending the week on a positive note as investors cheered a slowdown in inflation in France and Spain for the month and awaited the release of crucial U.S. inflation data. Automobile and energy stocks led the gains on Friday. Preliminary data from statistics agency Insee released Friday indicated that France’s annual inflation rate eased to 2.1% in June from 2.3% in May. Separately, provisional data from the National Statistics Institute showed Friday that the Spanish annual inflation rate declined to 3.4% in June from 3.6% in May. Meanwhile, market participants are awaiting the release of the Fed’s preferred inflation gauge later in the day as well as the first round of French parliamentary elections on Sunday. In corporate news, Nokia Oyj (NOKIA.H.DX) rose more than +1% after agreeing to buy Infinera Corp. in a $2.3 billion deal.
U.K.’s GDP, Germany’s Unemployment Change, Germany’s Unemployment Rate, France’s CPI (preliminary), Spain’s CPI (preliminary), and Italy’s CPI (preliminary) data were released today.
U.K. GDP has been reported at +0.7% q/q and +0.3% y/y in the first quarter, stronger than expectations of +0.6% q/q and +0.2% y/y.
The German June Unemployment Change stood at 19K, weaker than expectations of 14K.
The German June Unemployment Rate was at 6.0%, weaker than expectations of 5.9%.
The French June CPI came in at +0.1% m/m and +2.1% y/y, in line with expectations.
The Spanish June CPI arrived at +0.3% m/m and +3.4% y/y, compared to expectations of +0.2% m/m and +3.4% y/y.
The Italian June CPI stood at +0.1% m/m and +0.8% y/y, weaker than expectations of +0.2% m/m and +1.0% y/y.
Asian stock markets today closed in the green. China’s Shanghai Composite Index (SHCOMP) closed up +0.73%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.61%.
China’s Shanghai Composite Index closed higher today. Technology and consumer stocks outperformed on Friday. Sentiment received a boost after China’s Ministry of Commerce announced an increase in the duty-free shopping cap for mainland tourists entering Hong Kong and Macau to 12,000 yuan ($1,651) from 5,000 yuan. Also, U.S. President Joe Biden and his predecessor Donald Trump surprised markets in their first presidential debate by not heavily focusing on criticisms against China. Meanwhile, Chinese President Xi Jinping on Friday emphasized the need to construct “bridges” in the global economy. In other news, Chinese state-backed property developer Sino-Ocean Group announced on Friday it had received a winding-up petition from The Bank of New York Mellon in a Hong Kong court for non-repayment of $400 million in 3.25% guaranteed notes due 2026 issued by one of its subsidiaries. In corporate news, China Merchants Energy Shipping gained over +3% following the signing of a deal worth 1.05 billion yuan to construct two Newcastlemax bulk carriers, slated for delivery to Qingdao Yangfan Shipbuilding in the second half of 2027. Investor focus is currently centered on the release of crucial Chinese Purchasing Managers’ Index data for June, scheduled for Saturday.
Japan’s Nikkei 225 Stock Index closed higher today. Machinery, trading house, and bank stocks led the gains on Friday. Data released on Friday by Japan’s Statistics Bureau indicated that core consumer prices in Japan’s capital accelerated in June from the previous month, driven by rising fuel bills and the impact of a weak yen on import costs, which weighed on households. Separately, preliminary data released by the Ministry of Economy, Trade, and Industry on Friday showed that Japan’s industrial production experienced a modest recovery in May. Meanwhile, the yen slipped below 161 against the dollar as the U.S. presidential debate began, its lowest level since 1986, but rebounded from the day’s low following a report by Nikkei Shimbun announcing Atsushi Mimura’s appointment as the new vice finance minister for international affairs, replacing Masato Kanda. In other news, Japanese Finance Minister Shunichi Suzuki said on Friday that the authorities were “deeply concerned” regarding the economic impact of “rapid and one-sided” foreign exchange fluctuations. In corporate news, Atrae climbed about +6% after raising its year-end dividend forecast to 20 yen per share from 15 yen per share. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -0.31% to 16.13.
The Japanese June Tokyo Core CPI has been reported at +2.1% y/y, stronger than expectations of +2.0% y/y.
The Japanese May Industrial Production stood at +2.8% m/m, stronger than expectations of +2.0% m/m.
The Japanese May Housing Starts arrived at -5.3% y/y, stronger than expectations of -6.1% y/y.
The Japanese May Unemployment Rate was at 2.6%, in line with expectations.
Pre-Market U.S. Stock Movers
Nike (NKE) plunged over -14% in pre-market trading after the world’s largest sportswear company reported weaker-than-expected Q4 revenue and provided FY25 revenue guidance that fell short of analyst estimates.
Accolade (ACCD) plummeted about -26% in pre-market trading after the company issued below-consensus FY25 revenue guidance.
Infinera (INFN) surged more than +18% in pre-market trading after Nokia agreed to acquire the company for $2.3 billion.
Travelers (TRV) fell over -1% in pre-market trading after Citi downgraded the stock to Sell from Neutral with a price target of $200.
Digital Realty Trust (DLR) gained more than +1% in pre-market trading after JPMorgan upgraded the stock to Overweight from Neutral with a price target of $175.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Friday - June 28th
iHuman (IH), Crown Crafts (CRWS), Highway Holdings Limited (HIHO).
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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.
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