S&P Futures Muted With Focus on U.S. PCE Inflation Data and Nvidia Earnings

September S&P 500 E-Mini futures (ESU26) are down -0.07% this morning as investors refrain from making big bets ahead of Nvidia’s earnings and the July reading of the Federal Reserve’s preferred inflation gauge.

The price of WTI crude fell over -2% on Wednesday, extending its decline for a third straight day, after Iran and Oman discussed measures to temporarily reopen the Strait of Hormuz. Iranian Foreign Minister Abbas Araghchi and his Omani counterpart Badr Albusaidi discussed a proposal to establish a “temporary joint maritime corridor,” according to a statement published by the Oman News Agency. Talks between the two countries will continue “with a view to agreeing on a permanent navigational corridor and future administration of the strait,” the joint statement added.

Treasuries shrugged off the latest drop in oil prices and fell across the curve on Wednesday, steadying after sharp gains in the previous session. The 10-year T-note yield rose two basis points to 4.65%.

In yesterday’s trading session, Wall Street’s major indexes ended in the green. Chip and AI infrastructure stocks climbed, with Advanced Micro Devices (AMD) and Marvell Technology (MRVL) rising over +4%. Also, Moderna (MRNA) surged more than +14% and was the top percentage gainer on the S&P 500 after Wolfe Research upgraded the stock to Peer Perform from Underperform. In addition, Bloom Energy (BE) rose over +6%, extending Monday’s gains after a congressional disclosure revealed that Nancy Pelosi’s household had taken a position in the clean-energy company for the first time. On the bearish side, Dick’s Sporting Goods (DKS) tanked more than -30% after the retailer posted downbeat Q2 results and cut its full-year guidance.

Economic data released on Tuesday were mostly weaker than expected. The U.S. Conference Board’s consumer confidence index fell to a 7-month low of 89.4 in August, weaker than expectations of 90.3. Also, U.S. July new home sales fell -10.5% m/m to a 6-month low of 607K, weaker than expectations of 620K. In addition, the U.S. Richmond Fed manufacturing index unexpectedly fell to 4 in August, weaker than expectations of 6. At the same time, the U.S. June S&P/CS HPI Composite - 20 n.s.a. rose +2.1% y/y, stronger than expectations of +1.8% y/y.

Boston Fed President Susan Collins said on Tuesday that she favored keeping interest rates unchanged for now, but that stance depended on seeing further progress in bringing inflation back toward the central bank’s 2% target. “Should evidence of sustained inflation progress not materialize, I believe it will be appropriate to tighten policy soon,” Collins wrote in an essay.

Meanwhile, U.S. rate futures have priced in a 63.9% probability of no rate change and a 36.1% chance of a 25-basis-point rate hike at September’s monetary policy meeting.

Today, investors will closely watch earnings from AI bellwether Nvidia (NVDA) for clues about the health of the AI trade. The chipmaker, which remains at the center of the AI boom, is scheduled to report second-quarter results after the closing bell. Investors will be watching for updates on AI infrastructure demand, the timing of the Rubin ramp, China exposure, and the economics of the company’s growing financing partnerships. Nvidia shares rose on Tuesday, snapping their longest losing streak since September 2022. The absence of a strong pre-earnings rally may lower the bar for its Q2 print. However, it is also worth noting that NVDA stock slid after each of its last four quarterly reports, despite posting better-than-expected results and guidance. JPMorgan analyst Harlan Sur noted that what Nvidia says to address concerns about its competitive position and certain business decisions could matter more for the stock than a “beat and raise” headline. NVDA stock is expected to move 4.95% in either direction by Friday’s close, based on 85% of the value of the at-the-money straddle, according to Barchart.

Before Nvidia’s report, investors will focus on the U.S. core personal consumption expenditures price index, the Fed’s preferred inflation gauge, which is set to be released in a couple of hours. Economists, on average, forecast that the core PCE price index will rise +0.2% m/m and +3.3% y/y in July, compared with +0.1% m/m and +3.3% y/y in June. A hotter-than-expected reading would raise the odds of a September rate hike, while a softer or in-line print would reinforce expectations that the Fed can remain patient.

The U.S. Commerce Department’s second estimate of second-quarter gross domestic product will also be closely monitored today. Economists expect the U.S. economy to expand at an annual rate of 1.5% in the second quarter, in line with the initial estimate.

U.S. Personal Spending and Personal Income data will be released today. Economists project July personal spending to rise +0.1% m/m and personal income to grow +0.2% m/m, compared with the June figures of +0.3% m/m and +0.2% m/m, respectively.

U.S. Durable Goods Orders and Core Durable Goods Orders data will come in today. Economists expect July durable goods orders to rise +0.4% m/m and core durable goods orders to rise +0.6% m/m, compared with the prior month’s figures of +0.3% m/m and +0.6% m/m, respectively.

The EIA’s weekly crude oil inventories report will be released today as well. Economists expect this figure to be 1.6 million barrels, compared with last week’s value of 4.4 million barrels.

In addition, market participants will parse comments today from Richmond Fed President Tom Barkin.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.65%, up +0.35%.

The Euro Stoxx 50 Index is up +0.21% this morning as diplomatic developments in the Middle East drove oil prices lower and buoyed sentiment. Luxury stocks led the gains on Wednesday. Travel and mining stocks also climbed. At the same time, energy stocks slumped amid a drop in oil prices. In addition, software stocks sank as the sector came under pressure after U.S. software maker Intuit issued disappointing full-year revenue guidance, while chip-related stocks traded mixed ahead of Nvidia’s earnings. Meanwhile, Reuters reported on Wednesday that European Central Bank policymakers are prepared to raise interest rates at their next meeting in September to curb the inflationary impact of the Middle East conflict, but have little desire to signal additional tightening beyond that. ECB Executive Board member Isabel Schnabel said in an interview with Bloomberg published on Wednesday that interest rates need to rise further as the prolonged Middle East conflict and unexpectedly resilient Eurozone economy pose upside risks to inflation. In corporate news, SAP (SAP.D.DX) slid over -4% after UBS downgraded the stock to Neutral from Buy.

The European economic data slate is mainly empty on Wednesday.

Asian stock markets today closed in the green. China’s Shanghai Composite Index (SHCOMP) closed up +0.59%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.62%.

China’s Shanghai Composite Index closed higher today, led by gains in the tech sector. Semiconductor and other AI-related stocks advanced on Wednesday, tracking a rebound in their global peers. Brokerage stocks also climbed. In addition, non-ferrous metal stocks gained, rebounding from yesterday’s slump. At the same time, energy stocks slid as oil prices fell for a third straight day. Meanwhile, HSBC analysts said in a note that China’s AI-related stocks remain richly valued even after the July correction. “After the correction in July, valuations remain expensive, and further upside [is] likely only from other AI applications and monetisation scenarios beyond AI coding,” the analysts said. HSBC added that China’s non-AI equities will likely require stronger policy support to outperform. Elsewhere, Chinese lenders have begun pricing bonds against the nation’s overnight funding rate, signaling its growing role as a benchmark for the financial system. In corporate news, Consun Pharmaceutical surged over +11% in Hong Kong after the company posted a 13.8% increase in first-half revenue. Investor attention now turns to China’s July industrial profits data, scheduled for release on Thursday, which will offer another gauge of the health of the corporate sector in the world’s second-largest economy. Investors are also watching the ongoing National People’s Congress Standing Committee meeting for possible policy signals aimed at bolstering growth as economic momentum weakens.

Japan’s Nikkei 225 Stock Index reversed earlier losses and closed higher today as sentiment improved after oil prices extended their decline on hopes that the Strait of Hormuz could reopen soon. Financial stocks led the gains on Wednesday. Chip-related stocks also climbed, tracking overnight gains in their U.S. peers, though the moves were limited amid caution ahead of Nvidia’s earnings. Data released on Wednesday showed that a key gauge of Japan’s service-sector inflation accelerated to 3.6% in July from a year earlier, adding to evidence of price pressures linked to the Middle East conflict and fueling expectations that the Bank of Japan will raise its benchmark interest rate next month. Meanwhile, Japanese government bond yields were little changed on Wednesday, trimming an earlier decline as U.S. Treasury yields moved higher during Asian trading. In corporate news, Terra Drone jumped over +21% after announcing that it is set to mass-produce drones for a Japanese defense agency. Investors are now awaiting BOJ Deputy Governor Ryozo Himino’s speech on Thursday. BOJ watchers will scrutinize his remarks for clues on whether the bank is comfortable with expectations surrounding a September rate hike—or intends to temper such speculation. Attention will then turn to Japan’s Tokyo Core CPI for August. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed flat at 30.41.

The Japanese July Corporate Services Price Index rose +3.6% y/y, stronger than expectations of +3.2% y/y.

Pre-Market U.S. Stock Movers

Intuit (INTU) plunged over -11% in pre-market trading after the software company issued below-consensus FY27 revenue guidance.

Other software stocks slid in pre-market trading following Intuit’s disappointing guidance. Atlassian Corp (TEAM) was down about -3%, while ServiceNow (NOW) and Adobe (ADBE) were down more than -2%.

GoDaddy (GDDY) dropped more than -3% in pre-market trading after Wells Fargo downgraded the stock to Underweight from Equal Weight with a price target of $76.

nCino (NCNO) fell over -4% in pre-market trading after the banking software maker gave soft Q3 revenue guidance.

Semtech (SMTC) climbed more than +4% in pre-market trading after the semiconductor company reported better-than-expected Q2 results and provided upbeat Q3 guidance.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Wednesday - August 26th

NVIDIA (NVDA), CrowdStrike Holdings (CRWD), Salesforce (CRM), Synopsys (SNPS), Agilent Technologies (A), Veeva Systems (VEEV), Everpure (P), Williams-Sonoma (WSM), HP Inc. (HPQ), Okta, Inc. (OKTA), Nutanix (NTNX), The J. M. Smucker Company (SJM), Dycom Industries (DY), Donaldson Company (DCI), Urban Outfitters (URBN), Abercrombie & Fitch Co. (ANF), Bath & Body Works (BBWI), TORM plc (TRMD), Standard Nuclear (STDN), Kohl's (KSS), Photronics (PLAB), SFL Corporation (SFL), Phibro Animal Health (PAHC), Movado Group (MOV), Ooma, Inc. (OOMA), DSC Holdings (DSC), Lantronix (LTRX).