Stocks Set to Open Mixed as Investors Await Key U.S. Inflation Data and Nvidia Earnings

September S&P 500 E-Mini futures (ESU24)are up +0.11%, and September Nasdaq 100 E-Mini futures (NQU24) are down -0.10% this morning as market participants awaited an earnings report from semiconductor stalwart Nvidia as well as the release of the Fed’s preferred inflation gauge later in the week.

In Friday’s trading session, Wall Street’s major averages closed higher, with the blue-chip Dow notching a 3-week high. Workday (WDAY) climbed over +12% and was the top percentage gainer on the Nasdaq 100 after the back-office software provider reported better-than-expected Q2 results and said it would sharply increase profitability over the next three years. Also, chip stocks gained ground, with Nvidia (NVDA), Marvell Technology (MRVL), and Arm (ARM) advancing more than +4%. In addition, CAVA Group (CAVA) soared over +19% after the company posted upbeat Q2 results and boosted its full-year guidance for adjusted EBITDA and restaurant comparable sales growth. On the bearish side, Intuit (INTU) slid more than -6% and was the top percentage loser on the S&P 500 and Nasdaq 100 after providing below-consensus Q1 adjusted EPS guidance.

Economic data on Friday showed that U.S. new home sales rose +10.6% m/m to a 14-month high of 739K in July, stronger than expectations of 624K.

Fed Chair Jerome Powell said Friday that “the time has come” for the U.S. central bank to lower its key policy rate. The Fed chief acknowledged recent progress on inflation and stated that the cooling in labor market conditions is “unmistakable.” Powell also mentioned that he observes the economy expanding at a “solid pace.” “The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks,” Powell said in the text of a speech at the Kansas City Fed’s annual conference in Jackson Hole, Wyoming. Also, Atlanta Fed President Raphael Bostic said it is possible that more than one interest rate cut may now be required by year-end following data indicating falling inflation and a slowing labor market. In addition, Chicago Fed President Austan Goolsbee said it’s time to focus more on the employment side of the Fed’s dual mandate now that inflation is moderating toward the 2% target. “We’re not just fighting inflation now, inflation’s on a path to 2%,” Goolsbee said.

“The market should be happy with [Powell’s] speech because it wasn’t hawkish in any way, gave the green light for 25 basis-point rate cuts - and left the door open for even larger cuts if that becomes necessary,” said Chris Zaccarelli at Independent Advisor Alliance.

Meanwhile, U.S. rate futures have priced in a 63.5% chance of a 25 basis point rate cut and a 36.5% chance of a 50 basis point rate cut at the conclusion of the Fed’s September meeting.

Market participants will focus on earnings reports from several leading technology and retail companies this week, with chipmaker Nvidia’s (NVDA) report on Wednesday drawing the most attention. Prominent tech firms like Salesforce (CRM), Dell Technologies (DELL), HP (HPQ), and CrowdStrike (CRWD), along with retailers including Dollar General (DG), Lululemon (LULU), Best Buy (BBY), and Ulta Beauty (ULTA), are also scheduled to release their quarterly results this week.

On the economic data front, the July reading of the U.S. core personal consumption expenditures price index, the Fed’s preferred inflation gauge, will be the main highlight in the coming week. Also, investors will be monitoring a spate of other economic data releases, including U.S. GDP (second estimate), CB Consumer Confidence Index, S&P/CS HPI Composite - 20 n.s.a., Richmond Manufacturing Index, Crude Oil Inventories, Goods Trade Balance (preliminary), Initial Jobless Claims, Wholesale Inventories (preliminary), Pending Home Sales, Personal Income, Personal Spending, Chicago PMI, and Michigan Consumer Sentiment Index.

In addition, San Francisco Fed President Mary Daly, Fed Governor Christopher Waller, and Atlanta Fed President Raphael Bostic will be making appearances this week.

Today, investors will focus on U.S. Durable Goods Orders data, set to be released in a couple of hours. Economists, on average, forecast that July Durable Goods Orders will stand at +4.0% m/m, compared to -6.6% m/m in June.

U.S. Core Durable Goods Orders data will also be reported today. Economists foresee this figure to be unchanged m/m in July, compared to the previous number of +0.5% m/m.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 3.788%, down -0.32%.

The Euro Stoxx 50 futures are down -0.06% this morning as investors awaited a slew of important economic data from the region later this week. Market participants also monitored geopolitical developments in the Middle East following military exchanges between Israel and Hezbollah over the weekend, raising concerns about reduced energy supply. Financial and technology stocks underperformed on Monday, while real estate stocks advanced. Meanwhile, European Central Bank chief economist Philip Lane said on Saturday that the central bank is making “good progress” in reducing inflation to its 2% target, but success is not yet certain, necessitating the continuation of restrictive monetary policy. A survey released on Monday indicated that sentiment among German companies dipped in August, as Europe’s largest economy continues to display scant signs of recovery amid an ongoing manufacturing downturn. Preliminary inflation data for the Eurozone, France, Italy, Spain, and Germany, along with German employment and Eurozone industrial and consumer sentiment data, will also be watched by investors this week. In corporate news, Telecom Italia Spa/Milano (TIT.M.DX) gained over +3% on a report that Italian banker Claudio Costamagna is organizing a plan to assemble a group of investors potentially interested in purchasing France’s Vivendi shares in the telecom group.

Germany’s Ifo Business Climate Index, Germany’s Business Expectations, and Germany’s Current Assessment data were released today.

The German August Ifo Business Climate Index has been reported at 86.6, stronger than expectations of 86.0.

The German August Business Expectations came in at 86.8, stronger than expectations of 86.5.

The German August Current Assessment stood at 86.5, in line with expectations.

Asian stock markets today settled mixed. China’s Shanghai Composite Index (SHCOMP) closed up +0.04%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -0.66%.

China’s Shanghai Composite Index closed just above the flatline today as investors continued to evaluate the country’s economic outlook. Gains in real estate and energy stocks led the overall market higher on Monday. At the same time, pharmaceutical stocks lost ground. The People’s Bank of China said Monday it was keeping the rate on 300 billion yuan ($42.11 billion) worth of one-year medium-term lending facility loans to some financial institutions at 2.30%, the same as the previous operation. The PBOC also conducted an injection of 471 billion yuan through seven-day reverse repos to banks at an interest rate of 1.70%, unchanged from its previous operation. The central bank has indicated that it is reducing the emphasis on the medium-term lending facility as a policy instrument while raising the significance of the seven-day reverse repurchase rate. Meanwhile, China Securities Regulatory Commission chief Wu Qing urged leading state-run investment institutions and private asset managers on Sunday to increase their presence and help restore investor confidence in the underperforming stock market. In other news, according to a front-page report by Financial News, China has begun conducting stress tests with financial institutions on their bond investments to ensure they can withstand any market volatility if a record-breaking rally were to reverse. Investors now await official Chinese PMI figures for August, scheduled for release on Saturday, for updates on the world’s second-largest economy.

Japan’s Nikkei 225 Stock Index closed lower today, retreating from a three-week high as a stronger yen dampened investor sentiment. Financial and healthcare stocks led the declines on Monday. Export-oriented stocks, including chip-related and auto firms, also slumped. A strong yen harms the profit outlook for Japan’s export-heavy industries and compels investors to unwind carry trades. Meanwhile, the Japanese yen strengthened for a second day to its highest level against the dollar since January as the Fed’s dovish tilt prompted Asian-domiciled funds to increase their existing short positions on the greenback. In corporate news, Nitori Holdings gained about +4% amid expectations that a stronger yen would boost the outlook for the furniture and kitchen goods retailer. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up +0.20% to 25.43.

Pre-Market U.S. Stock Movers

Intel (INTC) advanced about +0.7% in pre-market trading after a CNBC report revealed that the chip maker has hired advisors, including those from Morgan Stanley, to assist in defending the company against potential shareholder activism.

BJ’s Wholesale (BJ) rose more than +1% in pre-market trading after JPMorgan upgraded the stock to Neutral from Underweight.

Summit Materials (SUM) gained about +1% in pre-market trading after Morgan Stanley initiated coverage of the stock with an Overweight rating and a $51 price target.

B. Riley Financial (RILY) slid more than -2% in pre-market trading after announcing a notification of delinquency with the Nasdaq.

Invitation Homes (INVH) fell over -1% in pre-market trading after Wells Fargo downgraded the stock to Equal Weight from Overweight.

You can see more pre-market stock movers here

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

Heico (HEI), Tuya (TUYA), Viomi Technology (VIOT).

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