June S&P 500 E-Mini futures (ESM24)are trending up +0.02% this morning as market participants awaited the all-important U.S. consumer inflation report that will likely shape the outlook for Federal Reserve policy.
In yesterday’s trading session, Wall Street’s major indices closed in the green, with the benchmark S&P 500 posting a 5-week high and the tech-heavy Nasdaq 100 notching a 1-month high. Super Micro Computer (SMCI) climbed over +5% following CQG Partners’ disclosure of a new position in the stock in Q1, amounting to 1.31 million shares. Also, Oracle (ORCL) advanced more than +3% following a report from the Information stating that the company is close to a deal for a $10 billion cloud contract with xAI. In addition, Charles Schwab (SCHW) gained over +3% after reporting that its net new assets brought by new and existing clients amounted to $10 billion in April. On the bearish side, Paramount Global (PARA) slumped more than -5% and was the top percentage loser on the S&P 500 amid a report that Sony may be reconsidering its takeover bid.
Economic data on Tuesday showed the U.S. April producer price index came in at +0.5% m/m and +2.2% y/y, compared to expectations of +0.3% m/m and +2.2% y/y. Also, the U.S. core PPI, which excludes food and energy, rose +2.4% y/y in April, in line with expectations and faster than the +2.1% pace in March (revised from +2.4% y/y).
“These days, we mostly care about what the PPI means for the Fed’s preferred PCE deflator measure of core consumer price inflation. In that respect, April’s news was mixed but, on balance, encouraging,” Paul Ashworth, chief North America economist at Capital Economics, said in a note.
Federal Reserve Chair Jerome Powell emphasized on Tuesday that the U.S. central bank must exercise patience and await evidence that inflation continues to ease. The Fed chief noted that recent inflation figures indicate it will probably require more time than previously anticipated to gain the confidence needed to lower borrowing costs. “We did not expect this to be a smooth road, but these were higher than I think anybody expected,” Powell said during an event hosted by the Foreign Bankers’ Association in Amsterdam, referring to the lack of progress in inflation in the first quarter. He added, “I don’t think it’s likely that the next move would be a rate hike, but it is more likely that we will hold the policy rate where it is.”
Meanwhile, U.S. rate futures have priced in an 8.7% probability of a 25 basis point rate cut at the next central bank meeting in June and a 29.2% chance of a 25 basis point rate cut at July’s monetary policy meeting.
On the earnings front, notable companies like Cisco Systems (CSCO), Grab (GRAB), and Monday.com (MNDY) are set to report their quarterly figures today.
Today, all eyes are focused on the U.S. consumer inflation report in a couple of hours. Economists, on average, forecast that the U.S. April CPI will come in at +0.4% m/m and +3.4% y/y, compared to the previous numbers of +0.4% m/m and +3.5% y/y.
Also, investors will likely focus on the U.S. Core CPI. Economists anticipate the Core CPI to be +0.3% m/m and +3.6% y/y in April, compared to the previous figures of +0.4% m/m and +3.8% y/y.
U.S. Retail Sales data will be closely watched today as well. Economists foresee this figure to stand at +0.4% m/m in April, compared to the previous figure of +0.7% m/m.
U.S. Core Retail Sales data will be reported today. Economists expect April’s figure to be +0.2% m/m, compared to the previous number of +1.1% m/m.
The U.S. NY Empire State manufacturing index will come in today. Economists foresee this figure to come in at -9.90 in May, compared to the previous value of -14.30.
U.S. Crude Oil Inventories data will be reported today as well. Economists estimate this figure to be -0.400M, compared to last week’s value of -1.362M.
In addition, market participants will be anticipating speeches from Fed officials Barr, Kashkari, and Bowman.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.424%, down -0.49%.
The Euro Stoxx 50 futures are up +0.08% this morning as investors assessed the latest batch of economic data from the region while also bracing for the release of a key U.S. inflation report. Mining and healthcare stocks outperformed on Wednesday, while household goods stocks lost ground. Eurostat’s second estimate, published on Wednesday, indicated that the Eurozone's seasonally adjusted gross domestic product expanded by 0.3% on a quarterly basis in the first quarter, matching the initial reading. Separately, flash data from Eurostat showed that the Eurozone’s employment growth remained stable at 0.3% in the first quarter. In addition, figures published Wednesday indicated that industrial production in the euro area increased for the second consecutive month in March compared to the previous month. Meanwhile, investors are awaiting the critical U.S. inflation print to gauge when the Fed might start cutting rates. In corporate news, Experian Plc (EXPN.LN) climbed over +7% after the credit-checking and data giant provided an upbeat full-year organic revenue growth guidance. Also, Merck Kgaa (MRK.D.DX) gained more than +3% after reporting better-than-expected Q1 adjusted earnings. At the same time, Neste Oyj (NESTE.H.DX) plunged over -12% after the company slashed its 2024 comparable sales margin forecast for renewable products.
France’s CPI, Eurozone’s Employment Change (preliminary), Eurozone’s Industrial Production, and Eurozone’s GDP (preliminary) data were released today.
The French April CPI has been reported at +0.5% m/m and +2.2% y/y, in line with expectations.
Eurozone Employment Change came in at +0.3% q/q in the first quarter, in line with expectations.
Eurozone March Industrial Production arrived at +0.6% m/m and -1.0% y/y, stronger than expectations of +0.5% m/m and -1.2% y/y.
Eurozone GDP stood at +0.3% q/q and +0.4% y/y in the first quarter, in line with expectations.
Asian stock markets today settled mixed. China’s Shanghai Composite Index (SHCOMP) closed down -0.82% and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.08%.
China’s Shanghai Composite Index closed lower today as sentiment was dampened by the Biden administration’s decision to hike tariffs on imports of a range of Chinese products. U.S. President Joe Biden on Tuesday announced significant tariff increases on various Chinese imports, including electric vehicles, lithium batteries, photovoltaic cells and semiconductors, and steel products. China’s Ministry of Commerce immediately pledged retaliation. Brokerages and semiconductor stocks led the declines on Wednesday. At the same time, property stocks outperformed following a Bloomberg report stating that the government is contemplating a proposal to purchase millions of unsold homes in an attempt to salvage the struggling property market. Meanwhile, China’s central bank kept a key policy rate unchanged on Wednesday, in line with expectations. The People’s Bank of China announced it was maintaining the rate on 125 billion yuan ($17.28 billion) in one-year medium-term lending facility loans to some financial institutions unchanged at 2.50%. In corporate news, Guolian Securities surged about +10% after unveiling a plan to buy a stake in smaller peer Minsheng Securities. Investors’ focus this week is also directed toward the release of a series of Chinese economic data for April, including fixed asset investment, unemployment, industrial production, and retail sales, scheduled for Friday.
Japan’s Nikkei 225 Stock Index closed marginally higher today as investors cautiously awaited the release of U.S. inflation data for clues on the Federal Reserve’s policy. Healthcare and technology stocks outperformed on Wednesday, while energy and real estate stocks led the declines. The Japan Machine Tool Builders’ Association reported Tuesday that machine tool orders in Japan amounted to 117.26 billion yen in April, a decrease from 135.65 billion yen in March. In corporate news, Sony Group surged over +8% after the tech and entertainment conglomerate reported a better-than-expected net profit in the March quarter, unveiled a $1.6 billion stock buyback, and disclosed plans to incrementally raise dividends, aiming for a 40% total payout ratio by the financial year ending March 2027. It will also conduct a five-for-one stock split, effective October 1st. At the same time, Nitori Holdings tumbled over -16% after the house goods shop operator provided weaker-than-expected full-year net profit guidance. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up +1.21% to 18.45.
Pre-Market U.S. Stock Movers
Arcutis Biotherapeutics (ARQT) surged over +20% in pre-market trading after the company reported better-than-expected Q1 results.
Nextracker (NXT) climbed more than +11% in pre-market trading after the company posted upbeat Q4 results.
Nio Inc. (NIO) rose over +3% in pre-market trading after JPMorgan upgraded the stock to Neutral from Underweight.
Dlocal Ltd. (DLO) plummeted about -26% in pre-market trading after reporting weaker-than-expected Q1 results.
Boeing (BA) fell over -1% in pre-market trading following a report by the Associated Press, stating that the Justice Department revealed the company had breached a 2021 settlement protecting it from criminal charges related to the fatal 737 Max crashes over five years ago.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Wednesday - May 15th
Cisco (CSCO), ZTO Express Cayman (ZTO), Grab Holdings (GRAB), Dynatrace Inc (DT), Monday.Com (MNDY), MakeMyTrip (MMYT), Copa (CPA), Hafnia (HAFN), Arcos Dorados (ARCO), FinVolution Group (FINV), Navigator Holdings (NVGS), Orla Mining (ORLA), Dole (DOLE), B. Riley Financial (RILY), Nayax (NYAX), Perspective Therapeutics (CATX), Riskified (RSKD), Karooooo (KARO), Iris Energy (IREN), European Wax Center (EWCZ), Ast Spacemobile (ASTS), Bitfarms (BITF), Celcuity (CELC), Dada Nexus (DADA), MYT Netherlands (MYTE), Adaptimmune Therapeutics (ADAP), Repositrak (TRAK), Natural Gas Services (NGS), Omeros (OMER).
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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.