Stock Index Futures Muted After Record Rally, U.S. Confidence Data on Tap

September S&P 500 E-Mini futures (ESU25) are down -0.11%, and September Nasdaq 100 E-Mini futures (NQU25) are down -0.04% this morning, taking a breather as investors assess how much further the record rally fueled by expectations of Federal Reserve rate cuts can continue.

Higher bond yields today are also weighing on stock index futures.

Investors now await the University of Michigan’s preliminary reading on U.S. consumer sentiment due later in the day.

In yesterday’s trading session, Wall Street’s three main equity benchmarks closed in the green, with the S&P 500, Dow, and Nasdaq 100 notching new record highs. Warner Bros. Discovery (WBD) jumped over +28% and was the top percentage gainer on the S&P 500 and Nasdaq 100 after the Wall Street Journal reported that Paramount Skydance was preparing a majority cash bid for the entertainment giant. Also, Centene (CNC) surged about +9% after the healthcare company reiterated its full-year adjusted EPS guidance. In addition, Micron Technology (MU) climbed over +7% after Citi raised its price target on the stock to $175 from $150. On the bearish side, Netflix (NFLX) slid more than -3% and was the top percentage loser on the Nasdaq 100 after Chief Product Officer Eunice Kim announced her departure from the company.

The U.S. Bureau of Labor Statistics report released on Thursday showed that consumer prices rose +0.4% m/m in August, stronger than expectations of +0.3% m/m. On an annual basis, headline inflation picked up to +2.9% in August from +2.7% in July, in line with expectations. Also, the core CPI, which excludes volatile food and fuel prices, rose +0.3% m/m and +3.1% y/y in August, in line with expectations. In addition, the number of Americans filing for initial jobless claims in the past week unexpectedly rose by +27K to a 3-3/4-year high of 263K, compared with the 235K expected.

“[Thursday’s] CPI report has been trumped by the jobless claims report,” said Seema Shah at Principal Asset Management. “If anything, the jump in jobless claims will inject a bit more urgency in the Fed’s decision-making, with Powell likely signaling a sequence of rate cuts is on the way.”

Meanwhile, U.S. rate futures have priced in a 100% probability of a 25 basis point rate cut and a 7.5% chance of a 50 basis point rate cut at the upcoming monetary policy meeting.

In tariff news, the Financial Times reported on Thursday that the U.S. will push G7 countries to impose higher tariffs on India and China over their purchases of Russian oil.

Today, investors will focus on the University of Michigan’s U.S. Consumer Sentiment Index, which is set to be released in a couple of hours. Economists, on average, forecast that the preliminary September figure will stand at 58.2, the same as in August. 

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.044%, up +0.82%.

The Euro Stoxx 50 Index is down -0.24% this morning as cautious sentiment prevails, with investors awaiting Fitch Ratings’ decision on France’s sovereign rating. Healthcare stocks led the declines on Friday. Still, the benchmark index is on track to post a weekly gain. Data from the Office for National Statistics released on Friday showed that the U.K. economy stagnated in July, though the Bank of England is still expected to stick with its cautious path of rate cuts at next week’s meeting amid persistently high inflation. Separately, final data confirmed that Germany’s annual inflation rate rose to a 5-month high in August. At the same time, France’s annual inflation rate eased in August, while Spain’s annual inflation rate held steady in the previous month, confirming preliminary data. Meanwhile, European Central Bank Governing Council member Olli Rehn said on Friday that the central bank needs to remain cautious of downside risks to inflation stemming from lower energy prices and a stronger euro. The ECB on Thursday kept its deposit rate unchanged at 2.00% for the second consecutive meeting, saying the Eurozone economy is in a “good place,” while noting that further easing could not be ruled out over the longer term. Investor attention now shifts to Fitch’s review of France’s credit rating later in the day, with investors bracing for a potential downgrade. In corporate news, Novartis AG (NOVN.Z.IX) fell over -2% after Goldman Sachs downgraded the stock to Sell from Neutral.

U.K. GDP, Germany’s CPI, France’s CPI, and Spain’s CPI data were released today.

U.K. July GDP was unchanged m/m and rose +1.4% y/y, compared to expectations of no change m/m and +1.5% y/y.

The German August CPI rose +0.1% m/m and +2.2% y/y, in line with expectations.

The French August CPI rose +0.4% m/m and +0.9% y/y, in line with expectations.

The Spanish August CPI was unchanged m/m and rose +2.7% y/y, in line with expectations.

Asian stock markets today settled mixed. China’s Shanghai Composite Index (SHCOMP) closed down -0.12%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.89%.

China’s Shanghai Composite Index gave up earlier gains and closed slightly lower today as investors decided to take some profits. Bank stocks underperformed on Friday. Morgan Stanley’s China strategist, Laura Wang, said, “Investors are likely temporarily taking profits and awaiting clear signals on macro, policy, and fundamentals after a solid good run since June.” Still, the benchmark index posted solid gains for the week, rebounding from the sharp decline in the first week of September that was triggered by profit-taking after China’s military parade. Meanwhile, U.S. Treasury Secretary Scott Bessent will meet Chinese Vice Premier He Lifeng next week in Madrid to discuss trade, economic, and national security matters, in another sign that talks between the two nations are intensifying. The discussions will also include TikTok’s status and initiatives to combat money laundering, according to a schedule released by the Treasury Department on Thursday. In other news, Chinese Finance Minister Lan Foan said on Friday that the country will advance fiscal reforms and deploy fiscal policy tools to bolster consumption and investment. In corporate news, Baidu surged over +8% and Alibaba climbed more than +5% in Hong Kong following reports that they have begun using internally-designed chips to train their AI models. Investor focus now turns to a key batch of China’s economic data for August, scheduled for release on Monday, for fresh clues on the health of the Chinese economy.

Japan’s Nikkei 225 Stock Index closed higher and hit a new record high today, tracking overnight gains on Wall Street after U.S. inflation and jobless claims data reinforced expectations that the Fed will cut interest rates next week. Technology stocks led the gains on Friday. The expiration of options and futures contracts on the Nikkei 225 Index on Friday in the so-called special quotation settlement also provided a boost to the market. Seiichi Suzuki, chief equity market analyst at Tokai Tokyo Research Institute, said, “The Nikkei’s strong rally was partly supported by active buying of the Nikkei stock futures ahead of the fixing of special quotation prices.” The benchmark index notched a strong weekly gain. Meanwhile, the Japanese yen weakened on Friday after the U.S. and Japan issued a joint statement reaffirming their commitment to “market-determined” exchange rates and agreeing that foreign exchange interventions should be limited to addressing excessive volatility. Speaking to reporters, Japan’s Finance Minister Katsunobu Kato downplayed speculation that the U.S. is pressuring Japan to strengthen the yen to address trade imbalances. On the economic front, data showed that Japan’s monthly industrial production fell less than initially thought in July. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed down -0.41% to 24.44.

The Japanese July Industrial Production was revised to -1.2% m/m from the preliminary estimate of -1.6% m/m.

Pre-Market U.S. Stock Movers

Super Micro Computer (SMCI) climbed over +5% in pre-market trading after it began volume shipments of its AI Blackwell Ultra solutions powered by Nvidia chips.

Adobe (ADBE) rose more than +4% in pre-market trading after the Photoshop maker posted upbeat FQ3 results and raised its full-year guidance.

Microsoft (MSFT) gained over +1% in pre-market trading after it struck a deal to extend its partnership with OpenAI.

General Motors (GM) advanced more than +1% in pre-market trading after Barclays upgraded the stock to Overweight from Equal Weight with a price target of $73.

RH (RH) plunged over -10% in pre-market trading after the home furnishings retailer reported downbeat Q2 results and cut its full-year revenue growth guidance.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Friday - September 12th

Cantaloupe (CTLP), Uranium Royalty (UROY), OFS Credit (OCCI), Golden Matrix (GMGI).