U.S. stock futures rose Friday as closely watched inflation indicator The U.S. economy maintained momentum as inflation slowed and investors absorbed the fallout from the Biden-Trump debate.
S&P 500 Futures (ES=F) rose about 0.3% after the benchmark index closed one step closer at its highest level. Contracts on the Nasdaq 100, a technology-heavy index (NQ=F) also rose 0.4%, while futures on the Dow Jones Industrial Average (YM=F) hovered above the flat line.
Indicators are looking at an optimistic end to a turbulent week that saw the S&P 500 (^GSPC) and the Nasdaq Composite (^IXIQUE) are coming back from a three-day losing streak. With stocks poised for a bumper first half heading into the final trading day of June, those swings have fueled fears of a retreat in the rest of the year.
The last significant data point of this first half came with the latest reading of the Fed’s preferred inflation gauge, which Josh Schafer of Yahoo Finance reported showed that inflation eased in May as prices rose at their slowest pace since March 2021.
The core personal consumption expenditures (PCE) index, which excludes food and energy costs and is closely watched by the Fed, rose 0.1% in May from the previous month, in line with Wall Street expectations.
At the same time, with the US elections in November high on the risk list, investors have taken note of the President Joe Biden’s weak performance during his first debate with presumptive Republican nominee Donald Trump. Tax cuts and a trade crackdown promised by the former president are seen as likely to boost stocks. Shares in Trump Media & Technology Group (DJT) jumped in premarket trading.
The market is also on alert for further signs that consumer resilience is running out of steam, as major companies signal gloomy sales prospects. Nike (OF) action sank by almost 15% in pre-market trading, while Walgreens (The WBA) stocks remained under pressure after 22% drop on Thursday.
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The Fed’s preferred inflation gauge shows prices rising at their slowest pace since March 2021
The latest reading of the Fed’s preferred inflation gauge showed inflation eased in May, with prices rising at their slowest pace since March 2021.
The core personal consumption expenditures (PCE) index, which excludes the cost of food and energy and is closely monitored by the Federal Reserve, increased 0.1% in May from the previous month , in line with Wall Street expectations and slower than the 0.3% increase. increase observed in April.
Core PCE rose 2.6% from a year earlier in May, in line with estimates and unchanged from annual increase observed over the last two monthsThe month of May marked the lowest annual increase in more than three years.
Trump Media on the Move
After a shaky debate for President Joe Biden, shares of Trump Media & Technology (DJT) are in motion.
As of this writing, shares are up 7.5% in pre-market trading.
Just as bad to watch (in a way…) as last night’s debate is the Nike one (OF) in pre-market trading, down 14% at the time of writing.
The company’s forecast was a disappointment, and there are concerns about management’s execution of product innovation. Not seeing better forecasts from Nike in this Olympic year is a red flag.
I liked Stifel analyst Jim Duffy’s take on the quarter:
“The FY25 guidance (the 5th consensus downward revision in 6 quarters) pushes the outlook for a growth turnaround further into 2025 (perhaps to the fourth quarter of FY2025 or spring 2025 at the earliest) , asking investors to both ensure the success of as-yet-unproven styles and examine an uncertain consumer. Management’s credibility is seriously questioned and the possibility of a C-level regime change adds even more. of uncertainty. An investor day in November will likely present a multi-year economic model with lower returns than before adding risk to the premium enjoyed by the historical multiple. We remain grateful for the advantage of the N scale in a category. benefiting from long-term tailwinds and structural margin potential, but, at current valuation, we cannot support a compelling upside scenario until the growth inflection becomes more tangible. “.
Duffy downgraded his rating on Nike to “hold” this morning.
