The outlook for U.S. stocks appears positive as investors eagerly await crucial inflation figures, set to be released later today. These data points could play a role in shaping the future course of the Federal Reserve’s monetary policies.
Scheduled for 8:30 a.m ET, the Consumer Price Index (CPI) for July is anticipated to reflect a 0.2% increase, mirroring the previous month’s upturn. Looking at the year-on-year comparison through July, experts estimate the CPI to have risen by 3.3%, surpassing the 3.0% uptick recorded in the preceding month.
Ipek Ozkardeskaya, a senior analyst at Swissquote Bank, highlighted, “While an unexpected rise in inflation might reignite concerns at the Federal Reserve, it’s important to note that we are currently not factoring in another rate hike for September.”
The consensus among traders is that the Federal Reserve has likely concluded its aggressive interest rate hike strategy. CME FedWatch Tool data reflects an 86.5% probability of no rate hike in the central bank’s upcoming September policy meeting.
The day’s agenda also includes the release of initial jobless claims data and insights from Atlanta Fed President Raphael Bostic and Philadelphia President Patrick Harker.
Yesterday saw a decline on Wall Street, led by the tech-heavy Nasdaq, which witnessed a 4.7% drop in Nvidia’s stock. This trend was mirrored by other prominent mega-cap stocks known as the “Magnificent Seven,” responsible for driving this year’s impressive stock market rally.
Throughout the year, Nasdaq has enjoyed a robust 31% gain, fueled by expectations of a controlled economic slowdown amid the Federal Reserve’s proactive interest rate strategy and the buoyancy surrounding artificial intelligence prospects.
Pre-market trading showed promising signs for rate-sensitive mega-cap stocks like Amazon.com, Microsoft, and Apple, which saw early gains ranging from 0.6% to 0.8%.
As of 05:27 a.m. ET, Dow e-minis were up by 174 points (0.49%), S&P 500 e-minis were up by 24.25 points (0.54%), and Nasdaq 100 e-minis recorded an increase of 94.75 points (0.62%).
In the earnings arena, Walt Disney experienced a 1.6% surge in premarket trading after surpassing Wall Street’s projections for adjusted earnings per share.
Capri Holdings also made headlines, with its shares surging by 30.1% on the back of reports suggesting that New York-based Tapestry, the owner of Coach, was nearing an acquisition deal with the Michael Kors-owner.
Additionally, a significant development emerged as President Joe Biden signed an executive order aimed at restricting new U.S. investments in China within sensitive technology sectors, such as computer chips, while mandating government notification for other tech domains.
(Original Article Source: Reuters)
