Stocks Set to Open Higher as Investors Await U.S. Inflation Data and Retail Earnings

September S&P 500 E-Mini futures (ESU24) are up +0.10%, and September Nasdaq 100 E-Mini futures (NQU24) are up +0.21% this morning as investors looked ahead to the release of U.S. inflation data, quarterly earnings reports from retail heavyweights, and remarks from Federal Reserve officials.

In Friday’s trading session, Wall Street’s major averages closed higher. Akamai Technologies (AKAM) climbed over +10% and was the top percentage gainer on the S&P 500 after the company posted upbeat Q2 results. Also, Trade Desk (TTD) surged more than +12% and was the top percentage gainer on the Nasdaq 100 after the company reported strong Q2 results and provided above-consensus Q3 revenue and adjusted EBITDA guidance. In addition, Expedia (EXPE) gained over +10% after the online travel company reported better-than-expected Q2 results. On the bearish side, Insulet (PODD) slumped more than -8% and was the top percentage loser on the S&P 500 after reporting weaker-than-expected Q2 adjusted EPS. Also, Intel (INTC) slid over -3% and was the top percentage loser on the Dow and Nasdaq 100 after Moody’s Ratings downgraded Intel’s senior unsecured debt rating to Baa1 from A3 and revised its outlook to negative from stable.

“Even if that nerve-racking event is over, we learned how sensitive markets now are to cooler US economic data, how broad-reaching the impact of the yen carry trade can be, and how conditioned investors are to expect rate cuts as the salve for every scrape,” said Liz Young Thomas at SoFi.

Boston Fed President Susan Collins stated in an interview with the Providence Journal on Friday that the U.S. central bank might start lowering interest rates soon if inflation maintains its downward trajectory amid a robust labor market. “If the data continue the way that I expect, I do believe that it will be appropriate soon to begin adjusting policy and easing how restrictive the policy is,” Collins said. “My outlook is for continued gradual reduction back to our 2% target amid a healthy labor market.” At the same time, Fed Governor Michelle Bowman said Saturday that she continues to see upside risks for inflation and continued strength in the labor market. “The progress in lowering inflation during May and June is a welcome development, but inflation is still uncomfortably above the committee’s 2% goal,” Bowman said. “I will remain cautious in my approach to considering adjustments to the current stance of policy.”

Meanwhile, U.S. rate futures have priced in a 51.5% chance of a 25 basis point rate cut and a 48.5% chance of a 50 basis point rate cut at the conclusion of the Fed’s September meeting.

Second-quarter earnings season winds down, but several notable companies are due to report this week, including Walmart (WMT), Home Depot (HD), Cisco (CSCO), Barrick Gold (GOLD), Deere (DE), Applied Materials (AMAT), and Sun Life Financial (SLF).

On the economic data front, the U.S. consumer inflation report for July will be the main highlight in the coming week. Also, market participants will be monitoring a spate of other economic data releases, including the U.S. Core CPI, PPI, Core PPI, Retail Sales, Core Retail Sales, Crude Oil Inventories, Export Price Index, Import Price Index, Initial Jobless Claims, NY Empire State Manufacturing Index, Philadelphia Fed Manufacturing Index, Industrial Production, Manufacturing Production, Business Inventories, Building Permits (preliminary), Housing Starts, and Michigan Consumer Sentiment Index (preliminary).

In addition, Atlanta Fed President Raphael Bostic, St. Louis Fed President Alberto Musalem, Philadelphia Fed President Patrick Harker, and Chicago Fed President Austan Goolsbee will be making appearances this week.

The U.S. economic data slate is mainly empty on Monday.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 3.953%, up +0.23%.

The Euro Stoxx 50 futures are up +0.09% this morning, starting the new trading week on a positive note, as investors braced for the release of key economic data from the U.S. and Europe throughout the week. Energy and financial stocks led the gains on Monday. Germany’s Federal Statistical Office reported Monday that the country’s annual wholesale selling prices dropped 0.1% year-over-year in July, representing the 15th consecutive month of decline in wholesale prices, albeit at the softest rate in the sequence. Meanwhile, market participants look forward to U.S. inflation data later this week, which will influence the direction of global monetary policy. Eurozone’s preliminary employment and GDP data, as well as inflation figures from France and Spain, will also be on investors’ radar this week. In corporate news, Bt Group Plc (BT-A.LN) jumped more than +6% after India’s Bharti Enterprises agreed to purchase a roughly 24.5% stake from Altice UK, the British telecommunications firm’s largest shareholder.

Germany’s WPI data was released today.

The German July WPI arrived at +0.3% m/m, stronger than expectations of +0.2% m/m.

China’s Shanghai Composite Index (SHCOMP) closed down -0.14%, while the Japanese markets were closed for a holiday.

China’s Shanghai Composite Index closed slightly lower today, even while regional markets gained, as investors cautiously awaited the release of key domestic economic indicators later in the week. Real estate and consumer services stocks underperformed on Monday, while pharmaceutical stocks gained ground. Meanwhile, the People’s Bank of China pledged in a quarterly monetary policy report published Friday to “create a favorable monetary and financial environment for achieving the full-year economic and social development goals.” According to Goldman Sachs, the central bank is expected to implement a 25 basis point reduction in the reserve requirement ratio in the third quarter to support increased government bond issuance, and a 10 basis point cut in the policy rate in the fourth quarter to reduce funding costs for the real economy. In other news, Bloomberg reported on Monday that at least four Chinese brokerages initiated new measures last week to scale back trading of domestic government bonds. In corporate news, Guangzhou R&F Properties slid over -2% after the company announced that a unit failed to make coupon payments on three dollar bonds and the grace period has expired. Investors will focus on a raft of Chinese economic data this week, including industrial production, retail sales, and unemployment figures, to assess whether the nation’s economy is gaining traction. Market participants will also digest earnings reports from major Chinese internet firms, including Tencent Holdings, Alibaba, and JD.com.

Japan’s Nikkei Stock Index was closed today for the Mountain Day holiday. The markets will reopen on Tuesday.

Pre-Market U.S. Stock Movers

Starbucks (SBUX) rose over +2% in pre-market trading after the Wall Street Journal reported that activist investor Starboard Value has built a stake in the coffee giant and urges it to take action to boost its stock price.

Qualcomm (QCOM) slid more than -1% in pre-market trading after Wolfe Research downgraded the stock to Peer Perform from Outperform.

Robinhood (HOOD) gained over +1% in pre-market trading after Piper Sandler upgraded the stock to Overweight from Neutral with a price target of $23.

Prologis (PLD) dropped more than -1% in pre-market trading after BofA downgraded the stock to Neutral from Buy.

Kraft Heinz (KHC) fell about -0.8% in pre-market trading after Goldman Sachs initiated coverage of the stock with a Sell rating and a $34 price target.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Monday - August 12th

Barrick Gold (GOLD), Sun Life Financial (SLF), Ke Hldg (BEKE), Monday.Com (MNDY), Fortrea Holdings (FTRE), DHT Holdings Inc (DHT), Rumble (RUM), Terawulf (WULF), Pulse Biosciences (PLSE).

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