Stocks Climb Before the Open as Investors Await Key U.S. Inflation Data

September S&P 500 futures (ESU23) are up +0.55%, and September Nasdaq 100 E-Mini futures (NQU23) are up +0.62% this morning as market participants geared up for the hotly anticipated U.S. consumer inflation report for cues on the Federal Reserve’s future actions.

In Wednesday’s trading session, Wall Street’s major averages closed lower, with the benchmark S&P 500 and tech-heavy Nasdaq 100 falling to 4-week lows. Roblox Corp (RBLX) tumbled more than -21% after the company’s Q2 user and engagement growth fell short of expectations. Also, chip stocks retreated, with NVIDIA Corporation (NVDA) dropping over -4% and Advanced Micro Devices Inc (AMD) falling more than -2%. In addition, WeWork Inc (WE) plunged over -38% after the co-working space provider said “substantial doubt” existed about its ability to continue as a going concern. On the bullish side, PENN Entertainment Inc (PENN) climbed more than +9% after announcing an exclusive partnership with Disney’s ESPN. Energy stocks also gained ground as the price of WTI crude rose over +1% to an 8-3/4 month high. 

“Markets are vulnerable to a period of consolidation. This is not uncommon during the seasonally weak August and September period, though the fundamental strength in economic and earnings data supports higher markets once we emerge from the malaise,” said Mark Hackett, chief of investment research at Nationwide.

Meanwhile, U.S. rate futures have priced in an 86.5% probability of no hike and a 13.5% chance of a 25 basis point rate increase at the next central bank meeting in September.

Today, all eyes are focused on the U.S. consumer inflation report in a couple of hours. Economists, on average, forecast that July U.S. CPI will come in at +0.2% m/m and +3.3% y/y, compared to the previous values of +0.2% m/m and +3.0% y/y.

Also, investors will likely focus on U.S. Core CPI data. Economists anticipate Core CPI to be +0.2% m/m and +4.8% y/y in July, compared to the previous figures of +0.2% m/m and +4.8% y/y.

U.S. Initial Jobless Claims data will be reported today as well. Economists estimate this figure to be 230K, compared to last week’s value of 227K.

In the bond markets, United States 10-Year rates are at 4.022%, up +0.25%.

The Euro Stoxx 50 futures are up +1.06% this morning as investors digested a batch of corporate earnings results and braced for the release of the crucial U.S. inflation reading. Gains in luxury and travel stocks are leading the overall market higher, prompted by China’s move to lift the ban on group tours in the United States and other key markets. In corporate news, Allianz Se (ALV.D.DX) rose over +3%, and Zurich Insurance Group Ag (ZURN.Z.IX) gained more than +2% after both insurers posted better-than-expected results. At the same time, Siemens Ag (SIE.D.DX) plunged over -5% after the German engineering group reported weaker-than-expected Q3 profit. 

Italy’s CPI data was released today.

The Italian July CPI has been reported at 0.0% m/m and +5.9% y/y, compared to expectations of +0.1% m/m and +6.0% y/y.

Asian stock markets today closed in the green. China’s Shanghai Composite Index (SHCOMP) closed up +0.31%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.84%.

China’s Shanghai Composite today closed slightly higher, with support from energy-related stocks, although a sense of caution prevailed due to ongoing concerns about the troubled property sector and the impact of U.S. President Joe Biden’s ban on investments in Chinese technology. U.S. President Joe Biden on Wednesday signed an executive order that will prohibit certain new investments in Chinese technologies, including semiconductors and other technology-related sectors. Meanwhile, the decline in Chinese property stocks continued for a sixth consecutive session, with Country Garden Holdings Co Ltd plunging over -6% amid debt woes. In corporate news, China Unicom rose over +3% after the company posted a 13.1% increase in its first-half net profit and added 5.3 million new mobile subscribers.

Japan’s Nikkei 225 Stock Index closed higher today as strong corporate earnings results boosted sentiment ahead of U.S. inflation data. Data on Thursday showed that Japanese producer inflation decelerated in July on a year-on-year basis, marking the seventh consecutive month of easing primarily due to lower energy utility costs. Meanwhile, Honda Motor Co Ltd climbed over +5% after the automaker reported a 78% jump in quarterly profit, driven by higher sales, particularly in the North American market. Also, Inpex Corp soared more than +16% after the oil and gas explorer lifted its annual net profit guidance and revealed measures to boost the company’s value and shareholder returns. At the same time, Sony Group Corp slid over -3% after the tech and media conglomerate reported weak earnings and indicated a downturn in the smartphone market. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -3.99% to 19.23.

The Japanese July PPI stood at +0.1% m/m and +3.6% y/y, compared to expectations of +0.2% m/m and +3.5% y/y.

Pre-Market U.S. Stock Movers

Applovin Corp (APP) surged over +24% in pre-market trading after the company reported stronger-than-expected Q2 results and issued upbeat Q3 revenue guidance.

Sonos Inc (SONO) climbed about +7% in pre-market trading after the company posted upbeat Q3 results.

Walt Disney Company (DIS) rose more than +1% in pre-market trading after the company announced a round of price increases to its streaming services.

The Trade Desk (TTD) fell over -3% in pre-market trading despite the ad-buying digital platform reporting upbeat Q2 results and providing solid Q3 revenue guidance.

Nuvei Corp (NVEI) dropped about -3% in pre-market trading after Goldman Sachs downgraded the stock to Neutral from Buy.

Global Payments Inc (GPN) rose more than +1% in pre-market trading after Jefferies upgraded the stock to Buy from Hold.

You can see more pre-market stock movershere

Today’s U.S. Earnings Spotlight: Thursday - August 10th

Wheaton Precious Metals (WPM), Credicorp (BAP), News Corp (NWS), YPF Sociedad Anonima (YPF), News Corp A (NWSA), US Foods (USFD), Ralph Lauren A (RL), Cyberark Software (CYBR), Onto Innovation (ONTO), Applied Industrial Technologies (AIT), Algonquin Power (AQN), Flowers Foods (FLO), Capri Holdings (CPRI), Savers Value Village (SVV), Global Business Travel (GBTG), Immunocore Holdings (IMCR), IONQ (IONQ), Cogent (CCOI), Golar (GLNG), NAble (NABL), Krispy Kreme (DNUT), Viavi Solutions (VIAV), Primo Water (PRMW), Utz Brands (UTZ), Profrac Holding (ACDC), Ventyx Biosciences (VTYX), Adtalem Education (ATGE), Six Flags (SIX), Hanesbrands (HBI), Janus International Group (JBI), Amylyx Pharmaceuticals (AMLX), P10 Inc (PX), indie Semiconductor (INDI), Maxeon Solar Technologies (MAXN), Azul (AZUL), Cymabay Therapeu (CBAY), Docebo (DCBO), IAMGold (IAG), Himax (HIMX), FREYR Battery (FREY), Wolverine (WWW).

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