U.S. Stock Futures Rise ahead of Inflation Data

Stock-Index Futures Trading

  • S&P 500 futures (ES00) rose 6 points, or 0.1%, to 4530.
  • Dow Jones Industrial Average futures (YM00) added 116 points, or 0.3%, to 35072.
  • Nasdaq 100 futures (NQ00) gained 12 points, or 0.1%, to 15513.

On Wednesday, the Dow Jones Industrial Average (DJIA) rose 38 points, or 0.11%, to 34890. Meanwhile, the S&P 500 (SPX) increased by 17 points, or 0.38%, reaching 4515. The Nasdaq Composite (COMP) also gained 76 points, or 0.54%, closing at 14019.

According to Dow Jones data, the S&P 500 is down 1.6% so far for August and is on track to deliver its first negative month in six.

Market Drivers

Wall Street is striving for a five-day winning streak as shown by early action in futures. However, the attainment of this streak will likely depend on the release of the July Personal Consumption Expenditures Price Index at 8:30 a.m. Eastern.

The recent rally of the S&P 500 to a four-week high coincided with benchmark Treasury yields pulling back from multi-year peaks. Traders are betting that some weaker jobs data will allow the Federal Reserve to halt their raising of borrowing costs.

Stephen Innes, managing partner at SPI Asset Management, stated, “Since softer employment metrics are one of the most critical inputs for inflation normalization, it has led to a significant shift in the near-term outlook for U.S. interest rates and ignited a rally in stocks and other high-risk assets.”

Federal Reserve’s Preferred Inflation Gauge Awaits Scrutiny

The upcoming release of the core Personal Consumption Expenditures (PCE) data, one of the Federal Reserve’s favored measures of inflation, is on investors’ radar. The hope is that it will reflect a lack of price pressures, reinforcing the notion of a less hawkish central bank in the coming months.

According to analysts, the core PCE is expected to have increased by 0.2% in August, the same as in June. The annual rate is projected to reach 4.2%, slightly higher than the previous month’s 4.1%.

In addition to the PCE data, market participants will also be paying attention to the nonfarm payrolls report scheduled for release on Friday. The report will provide valuable insights into whether the labor market is losing momentum, with a consensus estimate of 170,000 job additions in August compared to 187,000 in the previous month, as highlighted by Richard Hunter, Head of Markets at Interactive Investor.

With traders currently anticipating a pause in interest rate hikes for September, the question arises as to whether the end of the tightening cycle has been reached. Such an outcome would bode well for growth stocks, particularly within the mega-cap technology sector, which has been exhibiting robust performance.

Meanwhile, positive earnings reports from notable tech firms such as Salesforce CRM, Okta OKTA, and CrowdStrike CRWD, released after Wednesday’s market close, are lending support to market sentiment.

On Thursday, investors can also expect other U.S. economic updates, including the weekly initial jobless claims at 8:30 a.m. and the release of the Chicago Business Barometer for August at 9:45 a.m.

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