Stock futures were seen fluctuating as fresh inflation data came in higher than expected, yet it didn’t significantly shift expectations surrounding Federal Reserve interest rate cuts.
Market Updates Overview
In early trading, S&P 500 futures remained relatively stable following a three-day upward trend. Meanwhile, Treasury yields showed minimal movement. Traders in the swaps market continued to forecast a modest quarter-point reduction by the Fed next week, with projections suggesting up to a full percentage point in easing this year. The euro exhibited volatility after the European Central Bank announced a reduction in interest rates.
The latest producer price index (PPI) reported a 0.2% increase from the previous month, slightly exceeding expectations of a 0.1% rise. Year-over-year, the PPI rose 1.7%. In related news, recent statistics indicated a slight uptick in applications for U.S. unemployment benefits, marking the first increase in three weeks—suggesting a gradual slowdown in the economy.
This week’s inflation figures, while significant, are unlikely to deter the Fed’s plans to cut rates in the near term. However, they do diminish the likelihood of an aggressive reduction. Federal policymakers have shifted their attention toward labor market conditions, which are expected to dominate discussions and decisions moving forward.
“Historically, weeks that feature both the CPI and PPI reports would attract major attention, but the current focus has shifted to employment metrics, making the latest reports less impactful than usual,” noted strategists from Bespoke Investment Group.
Market Performance Highlights
- S&P 500 futures increased by 0.1% in early trading.
- Nasdaq 100 futures remained comparatively unchanged.
- Futures for the Dow Jones Industrial Average also rose by 0.1%.
Additionally, the yield on 10-year Treasury notes slipped by two basis points to 3.64%, while the dollar’s movements were inconsistent.
Company News at a Glance
- Alaska Air Group Inc. has raised its earnings outlook for the third quarter, buoyed by robust summer demand and unexpectedly low fuel costs.
- Moderna Inc. plans to cut its research and development budget by approximately 20% over the upcoming three years, as it seeks a pathway to profitability amid disappointing vaccine sales.
- Roku Inc. experienced a boost in stock value following an upgrade to ‘outperform’ by Wolfe Research.
- OpenAI is nearing the release of a new AI model, codenamed “Strawberry,” which is said to have capabilities for human-like reasoning tasks based on insider information.
Upcoming Economic Events of Interest
- Eurozone’s industrial production figures will be released on Friday.
- Japan’s industrial production data will also be made public on Friday.
- Consumer sentiment assessments from the University of Michigan are scheduled for release on Friday.
Key Market Movements Today
Stocks:
– S&P 500 futures gained 0.1% as of the latest update.
– Nasdaq 100 futures were steady without significant changes.
– Dow Jones Industrial Average futures showed a 0.1% increase.
Global Markets:
– The Stoxx Europe 600 index rose by 0.9%.
– The MSCI World Index ticked up by 0.3%.
Currency Updates:
– The Bloomberg Dollar Spot Index remained stable.
– The euro noticed a slight increase, trading at 1.1027 against the dollar.
– The British pound climbed to $1.3058, and the Japanese yen rose to 142.07 per dollar, appreciating by 0.2%.
Crypt cryptocurrencies:
– Bitcoin values went up 0.4%, settling at $57,748.94.
– Ether saw a slight decline of 0.3%, priced at $2,341.04.
Bond Market:
– The yield on 10-year Treasury notes dipped two basis points to 3.64%.
– Germany’s equivalent yield fell one basis point to 2.10%.
– The UK’s 10-year yield decreased by two basis points to 3.75%.
Commodity Overview:
– West Texas Intermediate crude oil rose by 1.1%, now valued at $68.08 per barrel.
– Spot gold increased by 0.9%, reaching $2,534.40 per ounce.
In summary, despite fluctuating market trends and mixed economic signals, traders remain poised as they navigate the complexities of inflation data and its implications for monetary policy. This ongoing market landscape continues to evolve, reflecting broader economic conditions and investor sentiment across various sectors.