September S&P 500 E-Mini futures (ESU24) are up +0.01%, and September Nasdaq 100 E-Mini futures (NQU24) are up +0.15% this morning as investors awaited a flurry of U.S. economic data, remarks from Federal Reserve officials, and an earnings report from retail giant Walmart.
In yesterday’s trading session, Wall Street’s major indices ended in the green, with the benchmark S&P 500, blue-chip Dow, and tech-heavy Nasdaq 100 posting 1-1/2 week highs. Kellanova (K) climbed over +7% and was the top percentage gainer on the S&P 500 after Mars agreed to acquire the company for $83.50 a share in a deal valued at about $36 billion. Also, Cardinal Health (CAH) gained more than +3% after the company posted upbeat Q4 results and boosted its FY25 adjusted EPS guidance. In addition, Illumina (ILMN) rose over +2% after TD Cowen upgraded the stock to Buy from Hold with a price target of $144. On the bearish side, Alphabet (GOOGL) fell more than -2% after Bloomberg News reported that the U.S. Department of Justice is considering several options to break up Google following a landmark court ruling that the company monopolized the online search market.
The Labor Department’s report on Wednesday showed consumer prices increased +0.2% m/m in July, in line with expectations. On an annual basis, headline inflation eased to +2.9% in July from +3.0% in June, better than expectations of no change at +3.0% and the smallest year-over-year increase since March 2021. In addition, the core CPI, which excludes volatile food and fuel prices, eased to +3.2% y/y in July from +3.3% y/y in June, in line with expectations and the smallest annual increase in 3-1/4 years.
“It may not have been as cool as [Tuesday’s] PPI, but [Wednesday’s] as-expected CPI likely will not rock the boat,” said Chris Larkin at E*Trade from Morgan Stanley. “Now the primary question is whether the Fed will cut rates by 25 or 50 basis points next month. If most of the data over the next five weeks points to a slowing economy, the Fed may cut more aggressively.”
Atlanta Fed President Raphael Bostic told the Financial Times in an interview released on Thursday that he is open to a rate cut in September, noting that the central bank cannot “afford to be late” in easing monetary policy. “I’m open to something happening in terms of us moving before the fourth quarter,” Bostic told the newspaper.
Meanwhile, U.S. rate futures have priced in a 64.5% chance of a 25 basis point rate cut and a 35.5% probability of a 50 basis point rate cut at the next FOMC meeting in September.
On the earnings front, notable companies like Walmart (WMT), Applied Materials (AMAT), Deere (DE), and Tapestry (TPR) are slated to release their quarterly results today.
On the economic data front, all eyes are focused on U.S. Retail Sales data, set to be released in a couple of hours. Economists, on average, forecast that July Retail Sales will stand at +0.4% m/m, compared to the June figure of 0.0% m/m.
Also, investors will focus on U.S. Core Retail Sales data, which came in at +0.4% m/m in June. Economists foresee the July figure to be +0.1% m/m.
The U.S. Philadelphia Fed Manufacturing Index will be reported today. Economists foresee this figure to stand at 5.4 in August, compared to the previous value of 13.9.
U.S. Industrial Production and Manufacturing Production data will be closely monitored today. Economists forecast July Industrial Production to be at -0.3% m/m and July Manufacturing Production to stand at -0.2% m/m, compared to the June numbers of +0.6% m/m and +0.4% m/m, respectively.
U.S. Export and Import Price Indexes for July will come in today. Economists anticipate the export price index to be 0.0% m/m and the import price index to be -0.1% m/m, compared to the previous figures of -0.5% m/m and 0.0% m/m, respectively.
U.S. Initial Jobless Claims data will be reported today as well. Economists estimate this figure to be 236K, compared to last week’s value of 233K.
In addition, market participants will be looking toward speeches from St. Louis Fed President Alberto Musalem and Philadelphia Fed President Patrick Harker.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 3.850%, up +0.63%.
The Euro Stoxx 50 futures are up +0.25% this morning, marking a third straight session of gains, supported by optimism that the Fed may soon lower interest rates following cooler-than-expected U.S. inflation data. Insurance and technology stocks outperformed on Thursday. Data from the Office for National Statistics revealed on Thursday that Britain’s economy slowed in the second quarter and stalled in June, as expected, leaving expectations for further rate cuts by the Bank of England unchanged. In corporate news, Admiral Group Plc (ADM.LN) climbed over +7% after the British motor and home insurer reported a 32% increase in its first-half pre-tax profit. Also, Bavarian Nordic A/S (BAVA.C.DX), one of the few companies with an approved mpox vaccine, surged more than +11% after the World Health Organization declared a rapidly spreading outbreak of the disease a global public health emergency.
U.K.’s GDP (preliminary), U.K.’s Industrial Production, U.K.’s Manufacturing Production, and U.K.’s Monthly GDP 3M/3M Change data were released today.
U.K. GDP has been reported at +0.6% q/q and +0.9% y/y in the second quarter, in line with expectations.
U.K. June GDP stood at 0.0% m/m and +0.7% y/y, compared to expectations of 0.0% m/m and +0.8% y/y.
U.K. June Industrial Production came in at +0.8% m/m and -1.4% y/y, stronger than expectations of +0.1% m/m and -2.1% y/y.
U.K. June Manufacturing Production arrived at +1.1% m/m and -1.5% y/y, stronger than expectations of +0.2% m/m and -2.4% y/y.
U.K. June Monthly GDP 3M/3M Change was at +0.6%, weaker than expectations of +0.7%.
Asian stock markets today closed in the green. China’s Shanghai Composite Index (SHCOMP) closed up +0.94%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.78%.
China’s Shanghai Composite Index closed higher today as a mixed bag of economic data from the country supported expectations that Beijing will introduce additional measures to stimulate the economy. Insurance and property stocks led the gains on Thursday. Data published by China’s National Bureau of Statistics on Thursday indicated that retail sales rose more than expected in July, while industrial production fell short of forecasts. Also, fixed-asset investment growth unexpectedly slowed in the January-July period, and the urban unemployment rate edged higher in July. At the same time, the decline in China’s home prices eased in July, with new-home prices in 70 cities, excluding state-subsidized housing, dropping 0.65% from July, a decrease that was less steep than the 0.67% decline seen a month earlier. The figures offered little insight into China’s economic trajectory, while investors continue to be optimistic about additional stimulus measures. ING economist Lynn Song stated Thursday that the country’s growth indicators continue to present a case for further policy easing. Meanwhile, authorities announced they would purchase excessive apartments and further reduce housing inventories. In other news, the People’s Bank of China announced that it would provide one-year liquidity to domestic lenders on August 26th, instead of August 15th, a rare postponement occurring amid a comprehensive overhaul of its policy toolkit. In corporate news, NetEase gained nearly +4% in Hong Kong after peer Tencent posted strong gaming growth in the second quarter.
The Chinese July Industrial Production stood at +5.1% y/y, weaker than expectations of +5.2% y/y.
The Chinese July Retail Sales came in at +2.7% y/y, stronger than expectations of +2.6% y/y.
The Chinese Fixed Asset Investment arrived at +3.6% y/y in the January-July period, weaker than expectations of +3.9% y/y.
The Chinese July Unemployment Rate was at 5.2%, weaker than expectations of 5.1%.
Japan’s Nikkei 225 Stock Index closed higher today as investors digested stronger-than-expected GDP data from the country, which alleviated concerns about the economic outlook. Japanese stocks also followed a strong lead from Wall Street as the latest U.S. CPI report confirmed that inflation is easing to more normalized levels, potentially giving the Fed room to lower rates soon. Automobile and financial stocks led the gains on Thursday. Preliminary data from the Cabinet Office on Thursday indicated that Japan’s economy returned to growth in the second quarter, driven by an increase in private consumption. Separately, final data from the Ministry of Economy, Trade, and Industry revealed that industrial production in Japan dropped more than initially estimated in June. Meanwhile, SMBC Nikko Securities economists stated on Thursday that the Bank of Japan might increase interest rates to 0.5% from the current 0.25% in January 2025 if it can verify that the economy is firmly on a recovery track in the October-December quarter. The yen was little changed on Thursday, maintaining a sideways movement over the past week even after strong GDP data from Japan. Investors will also be paying attention to further reactions to Japanese Prime Minister Fumio Kishida’s decision to step aside from the ruling Liberal Democratic Party’s leadership election next month. In corporate news, Monstarlab Holdings plummeted about -35% after announcing an insolvency of 2.593 trillion yen. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -12.99% to 27.25.
The Japanese GDP has been reported at +0.8% q/q and +3.1% y/y in the second quarter, stronger than expectations of +0.6% q/q and +2.1% y/y.
The Japanese June Industrial Production arrived at -4.2% m/m, weaker than expectations of -3.6% m/m.
Pre-Market U.S. Stock Movers
Cisco Systems (CSCO) climbed over +6% in pre-market trading after the company posted upbeat Q4 results, provided solid Q1 guidance, and announced plans to cut its global workforce by about 7%.
Ulta Beauty (ULTA) surged more than +16% in pre-market trading after a 13F filing revealed that Warren Buffett’s Berkshire Hathaway purchased approximately 690,000 shares of the company, valued at around $266 million, during the second quarter.
Nike (NKE) gained over +3% in pre-market trading after activist investor Bill Ackman’s Pershing Square disclosed a new stake of about 3 million shares in the shoe giant, valued at $229 million.
Robinhood Markets (HOOD) rose more than +2% in pre-market trading after Deutsche Bank upgraded the stock to Buy from Hold with a $24 price target.
Progressive (PGR) advanced over +1% in pre-market trading after Goldman Sachs upgraded the stock to Buy from Neutral with a price target of $262.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Thursday - August 15th
Walmart (WMT), Applied Materials (AMAT), Deere&Company (DE), Grab Holdings (GRAB), Coherent (COHR), Tapestry (TPR), H&R Block (HRB), Applied Industrial Technologies (AIT), Golar (GLNG), Alvotech (ALVO), Cellebrite (CLBT), ReNew Energy Global (RNW), Sigma Lithium Resources (SGML), Despegar.com (DESP), SpartanNash Co (SPTN), Diversified Energy Company (DEC), ID Systems (AIOT), LSI Industries (LYTS).
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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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