S&P Futures Climb as Key U.S. Inflation Data Looms

September S&P 500 E-Mini futures (ESU24) are trending up +0.82% this morning, signaling a rebound from yesterday’s slump, while investors looked ahead to the release of the Fed’s preferred inflation gauge.

In yesterday’s trading session, Wall Street’s major indexes closed mixed. Edwards Lifesciences (EW) plummeted over -31% and was the top percentage loser on the S&P 500 after the company reported weaker-than-anticipated Q2 revenue, issued lackluster Q3 guidance, and cut its annual guidance for sales of some heart valve replacements. Also, Lululemon Athletica (LULU) slumped more than -9% and was the top percentage loser on the Nasdaq 100 after Citi downgraded the stock to Neutral from Buy. In addition, Ford Motor (F) tumbled over -18% after the carmaker reported downbeat Q2 results. On the bullish side, ServiceNow (NOW) surged more than +13% and was the top percentage gainer on the S&P 500 after the company posted upbeat Q2 results and raised its FY24 subscription revenue guidance. Also, International Business Machines (IBM) climbed over +4% and was the top percentage gainer on the Dow after the IT giant reported better-than-expected Q2 results and raised its full-year free cash flow forecast.

The U.S. Department of Commerce’s preliminary reading on Thursday showed that the U.S. economy grew at a +2.8% annualized rate in the second quarter, surpassing the +2.0% consensus estimate and accelerating from +1.4% in the prior quarter. Also, the U.S. Q2 core personal consumption expenditures price index rose +2.90%, slowing from +3.70% in Q1. In addition, U.S. June durable goods orders unexpectedly plunged -6.6% m/m, weaker than expectations of +0.3% m/m, while U.S. June core durable goods orders rose +0.5% m/m, stronger than expectations of +0.2% m/m. Finally, the number of Americans filing for initial jobless claims in the past week fell -10K to 235K, compared with the 237K expected. 

“Goldilocks is getting stronger and the risk of stagflation is fading,” said David Russell at TradeStation. “There’s not much ‘stag; and not much ‘flation’. This kind of GDP report is a potential tailwind for corporate earnings that keeps us on pace for lower rates going forward.”

Meanwhile, U.S. rate futures have priced in a 6.7% chance of a 25 basis point rate cut at next week’s monetary policy meeting and a 99.8% probability of at least a 25 basis point rate cut at the conclusion of the Fed’s September meeting.

On the earnings front, notable companies like Bristol-Myers Squibb (BMY), Colgate-Palmolive (CL), Charter Communications (CHTR), and 3M (MMM) are set to report their quarterly figures today.

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 stand at +0.2% m/m and +2.5% y/y in June, compared to last month’s figures of +0.1% m/m and +2.6% y/y.

U.S. Personal Spending and Personal Income data will also be closely monitored today. Economists forecast June Personal Spending to be at +0.3% m/m and June Personal Income to come in at +0.4% m/m, compared to the May numbers of +0.2% m/m and +0.5% m/m, respectively.

The U.S. Michigan Consumer Sentiment Index will be reported today as well. Economists estimate this figure to arrive at 66.0 in July, compared to 68.2 in June.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.252%, down -0.17%.

The Euro Stoxx 50 futures are up +0.83% this morning as investors continued to digest fresh corporate earnings reports while also awaiting key U.S. inflation data due later in the day. Mining and energy stocks led the gains on Friday, while food and beverage stocks lost ground. Data from the national statistics agency Insee released Friday showed that France’s household confidence indicator improved in July compared to the previous month. Separately, Italy’s statistical office Istat reported on Friday that consumer sentiment in the country brightened in July compared to the previous month. Meanwhile, a European Central Bank survey released on Friday showed that median expectations for inflation over the next 12 months in the Eurozone held steady at 2.8% in June after declining in May to their lowest level since September 2021. In corporate news, Hermes Intl (RMS.FP) gained over +4% after the Birkin bag maker reported better-than-expected Q2 sales growth. Also, Eni Spa (ENI.M.DX) rose more than +3% after the company boosted its annual profit guidance. At the same time, Thyssenkrupp Ag (TKA.D.DX) tumbled over -6% after slashing its 2024 forecast.

France’s Consumer Confidence and Italy’s Consumer Confidence data were released today.

The French July Consumer Confidence arrived at 91, stronger than expectations of 90.

The Italian July Consumer Confidence came in at 98.9, stronger than expectations of 98.0.

Asian stock markets today settled mixed. China’s Shanghai Composite Index (SHCOMP) closed up +0.14%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -0.53%.

China’s Shanghai Composite Index closed slightly higher today, ending a four-session losing streak as the country’s trade-in subsidy program boosted investor sentiment. Consumer durables and automobile stocks led the gains on Friday, while telecom stocks underperformed. The National Development and Reform Commission, in a joint notice with the finance ministry, stated on Thursday that Beijing would allocate 300 billion yuan ($42 billion) from proceeds raised through ultra-long treasury bonds to support goods trade-ins and equipment renewal programs. Also, China’s top state asset regulator announced on Friday that state-owned enterprises overseen by the central government are expected to invest over 3 trillion yuan in equipment upgrades over the next five years. In corporate news, East Buy Holding plummeted over -23% after the live-streaming commerce operator’s top influencer departed to start his own business. Investor attention is now centered on the official June data for Chinese companies’ industrial profits, set to be released on Saturday, which is expected to offer insights into second-quarter earnings for Chinese-listed companies. Market participants are also anticipating a Politburo meeting, expected later this month, for insights into how President Xi Jinping will address economic challenges such as a slump in home sales and weak consumer spending.

Japan’s Nikkei 225 Stock Index reversed early gains and closed lower today, tracking overnight losses on Wall Street. Technology stocks led the declines on Friday. Government data showed on Friday that core consumer prices in Japan’s capital accelerated for a third consecutive month in July, bolstering expectations of a potential interest rate hike when the Bank of Japan’s policy board convenes next week. Separately, data from the Cabinet Office showed that Japan’s leading economic index, which is used to gauge the economic outlook for a few months ahead on data such as job offers and consumer sentiment, was revised upward in May. Meanwhile, the Japanese yen hovered near a 12-week high against the dollar on Friday as investors braced for the BOJ’s policy meeting next week, which could potentially include a rate hike. In addition, the BOJ is anticipated to reveal its bond purchase tapering plans next week as part of efforts to unwind its substantial monetary stimulus. In corporate news, Hino Motors surged over +12% after narrowing its quarterly net loss, while Canon climbed more than +6% on the back of a solid increase in its full-year operating profit. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up +0.82% to 22.20.

The Japanese July Tokyo Core CPI came in at +2.2% y/y, in line with expectations.

The Japanese May Leading Index stood at 111.2, stronger than expectations of 111.1.

Pre-Market U.S. Stock Movers

Coursera (COUR) soared over +23% in pre-market trading after the company reported stronger-than-expected Q2 results.

Deckers Outdoor (DECK) surged more than +10% in pre-market trading after the company posted upbeat Q1 results and raised its FY25 EPS guidance.

Duolingo (DUOL) climbed over +3% in pre-market trading after BofA upgraded the stock to Buy from Neutral with a $245 price target.

DexCom (DXCM) plummeted about -37% in pre-market trading after the diabetes device maker reported mixed Q2 results, issued below-consensus Q3 revenue guidance, and lowered its FY24 revenue outlook.

Boston Beer (SAM) fell over -3% in pre-market trading after reporting weaker-than-expected Q2 results.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Friday - July 26th

Bristol-Myers Squibb (BMY), Colgate-Palmolive (CL), Natwest Group (NWG), Aon (AON), 3M (MMM), Charter Communications (CHTR), Centene (CNC), T Rowe (TROW), Booz Allen Hamilton (BAH), Avantor (AVTR), Saia (SAIA), Franklin Resources (BEN), Gentex (GNTX), Balchem (BCPC), Trinet Grou (TNET), Portland General Electric (POR), AllianceBernstein Holding LP (AB), Howard Hughes Holdings (HHH), Sensient Technologies (SXT), First Hawaiian (FHB), Newell Brands (NWL), Carter’s (CRI), Barnes (B), Virtus (VRTS), WisdomTree (WT), Oxford Lane (OXLC), Stellar Bancorp (STEL), World Acceptance (WRLD).

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