S&P futures rise ahead of key US PPI data and big banks earnings

S&P 500 E-Mini Index Futures for September (ESU24) Stocks are up +0.12% this morning, stabilizing after yesterday’s tech-led sell-off. Investors are eagerly awaiting key U.S. producer inflation data and earnings reports from major U.S. banks.

Wall Street’s major indexes closed mixed yesterday, with the tech-heavy Nasdaq 100 falling to a one-week low. Tesla TSLA fell more than -8% and was the biggest percentage loser on the S&P 500 and Nasdaq 100 after Bloomberg News reported that the company was delaying a planned robotaxi event from its expected Aug. 8 date to October. In addition, Delta Air Lines GAVE fell about -4% after the leading U.S. carrier reported unfavorable Q2 results and delivered below-consensus Q3 adjusted EPS guidance. Chip stocks also fell, with Nvidia NVDA falling by more than -5% and Intel INTC falling almost -4% to lead the Dow’s losers. On the bullish side, WD-40 WDFC gained more than 4% after the company announced better-than-expected third-quarter results.

The Labor Department’s report on Thursday showed that consumer prices fell by -0.1% m/m in June, below the +0.1% m/m forecast. On a year-over-year basis, inflation fell to +3.0% in June from +3.3% in May, beating expectations for a +3.1%. Also, the core CPI, which excludes volatile food and fuel prices, fell to a three-year low of +3.3% y/y in June, beating expectations for a +3.4% y/y no change. At the same time, the number of Americans filing jobless claims last week fell by -17,000 to a six-week low of 222,000, beating expectations for a +236,000.

Chicago Federal Reserve President Austan Goolsbee described the latest inflation data Thursday as “excellent,” saying the numbers provided the evidence he was waiting for to be confident the central bank was on track to meet its 2% target. Additionally, San Francisco Federal Reserve President Mary Daly said, “Given the information we’ve received to date, including employment, inflation, GDP growth and the economic outlook, I think it’s likely that some policy adjustment will be warranted.” At the same time, St. Louis Federal Reserve President Alberto Musalem said the June CPI report showed “encouraging progress toward lower inflation” but he wanted more evidence that price pressures were easing.

“See you in September! Better-than-expected inflation readings in a number of key sectors should allow the Fed to start talking about adjusting policy in July — and potentially allow the Fed to act in September,” said George Mateyo of Key Wealth. “That said, we still see the Fed wanting to gain more confidence before cutting aggressively unless the labor market becomes stressed.”

US interest rate futures include a 6.7% probability of a 25 basis point rate cut at the next FOMC meeting in July and an 86.4% probability of a 25 basis point rate cut at the September FOMC meeting.

Meanwhile, the second-quarter earnings season is starting, with the largest US banks including JPMorgan Chase JPMWells Fargo WFCand Citigroup Cis set to announce its quarterly results today.

In terms of economic data, all eyes are on the US Producer Price Index, which is due out in a few hours. Economists are forecasting, on average, that the US PPI will be +0.1% m/m and +2.3% y/y in June, down from the previous reading of -0.2% m/m and +2.2% y/y.

The US Core PPI will also be closely watched today. Economists expect the June figure to be +0.2% m/m and +2.5% y/y, compared to the previous figure of 0.0% m/m and +2.3% y/y.

The preliminary reading of US Michigan Consumer Sentiment will also be released today. Economists estimate the July number will be 68.5, down from 68.2 in June.

On the bond market, the yield on 10-year US Treasury bonds is 4.222%, up 0.77%.

Euro Stoxx 50 futures rose +0.40% this morning as investors digested the upbeat earnings report and awaited the release of U.S. producer inflation data later in the day. Telecoms stocks led the gains on Friday, with Telefonaktiebolaget Lm Ericsson (ERICB.S.DX) rising more than +6% after the company reported a smaller-than-expected drop in second-quarter revenue. Final data from statistics agency Insee showed Friday that France’s annual inflation rate fell less than expected in June to 2.2%. Separately, the National Institute of Statistics said Friday that Spain’s annual inflation rate fell to 3.4% in June, confirming preliminary data. In other corporate news, Norwegian Air Shuttle ASA (NAS.O.DX) rose more than +5% after reporting a better-than-expected second-quarter operating profit.

Today, CPI data for France and Spain were released.

The French CPI in June was +0.1% m/m and +2.2% y/y, while the expectations were +0.1% m/m and +2.1% y/y.

In June, the Spanish CPI was +0.4% m/m and +3.4% y/y, while the expectations were +0.3% m/m and +3.4% y/y.

Asian stock markets ended the day mixed today with China’s Shanghai Composite Index (SHCOMP) up +0.03% and Japan’s Nikkei 225 Stock Index (NIK) down -2.45%.

China’s Shanghai Composite Index closed just above flat today as investors digested mixed trade data from the country and looked ahead to a key political economy meeting, the Third Plenum. Property stocks outperformed on Friday as investors anticipated additional stimulus for the property sector at the upcoming plenum. Customs data released on Friday revealed that China’s exports rose more than expected in June, marking the fastest growth in outbound shipments since March 2023, while imports unexpectedly fell, another sign of subdued domestic demand. Meanwhile, all eyes now turn to the Chinese Communist Party’s Third Plenum, which is set to begin on Monday, where some fiscal and financial reform measures are expected to be unveiled. In corporate news, Beijing Yanjing Brewery rose more than 6% after announcing that it was forecasting a 55% year-on-year increase in its attributable net profit for the first half of the year to a range of 719.5 million yuan to 796.5 million yuan.

China’s trade balance in June was $99.05 billion, better than expectations of $85.10 billion.

Chinese exports in June were +8.6% y/y and were better than expected at +8.0% y/y.

Chinese imports in June were -2.3% y/y and were weaker than expected at +2.8% y/y.

Japan’s Nikkei 225 stock index closed lower today, posting its biggest decline in more than two and a half months, as overnight losses on Wall Street and the threat of currency intervention prompted profit-taking. Electronics and financial shares led the declines Friday after an overnight rout in U.S. technology shares sent bond yields tumbling. Data from the Ministry of Economy, Trade and Industry on Friday showed that Japan’s industrial production was revised higher in May. Separately, the Bank of Japan’s quarterly survey on Friday revealed that nearly 90% of Japanese households expect prices to rise in a year, a sign of rising inflation expectations that would support the case for a near-term interest rate hike. Meanwhile, the Japanese yen hovered around 159 per dollar on Friday and is expected to remain volatile after a sharp rebound in the previous session on suspicion of intervention by Japanese authorities following cooler-than-expected U.S. inflation data. The Nikkei newspaper also reported that the BOJ held so-called interest rate checks with banks on the euro versus the yen on Friday, a move often seen as a prelude to intervention. Japan’s top currency diplomat, Masato Kanda, said on Friday that authorities would take action if necessary in the currency market, but refrained from commenting on whether the government intervened to support the yen on Thursday. In corporate news, SoftBank Group fell more than -4% after announcing the acquisition of artificial intelligence chip maker Graphcore. The Nikkei Volatility, which tracks the implied volatility of Nikkei 225 options, closed up 1.38% at 18.37.

Industrial production in Japan in May was +3.6% m/m and was higher than expected at +2.8% m/m.

US Stocks Pre-Market Moves

Tesla TSLA fell by more than -1% in pre-market trading after UBS downgraded the stock from Neutral to Sell and set a price target of $197.

ASP isotopes ASPI fell more than -18% in pre-market trading after the company announced it had commenced an underwritten public offering of common stock.

Today’s US Results: Friday – July 12

They included: JPMorgan (JPM), Wells Fargo&Co (WFC), Citigroup (C), Bank of NY Mellon (BK), Fastenal (FAST).

On the date of publication, Oleksandr Pylypenko did not have (directly or indirectly) a position in any of the securities mentioned in this article. All information and data in this article is for informational purposes only. For more information, please see Barchart’s Disclosure Policy here.