September S&P 500 futures (ESU23) are up +0.24%, and September Nasdaq 100 E-Mini futures (NQU23) are up +0.27% this morning after three major U.S. benchmark indices ended the regular session mixed as investors weighed Fed Chair Jerome Powell’s hawkish signals, while bracing for another round of economic data.
In Wednesday’s trading session, the tech-heavy Nasdaq 100 outperformed major benchmarks, buoyed by gains in megacap technology stocks as U.S. Treasury yields dipped despite Powell’s hawkish remarks. Also, cruise stocks gained ground, with Carnival Corporation (CCL) rising over +8% and Norwegian Cruise Line (NCLH) climbing more than +7%. In addition, Netflix Inc (NFLX) gained about +3% after Oppenheimer raised its price target on the stock to $500 from $450. On the bearish side, NVIDIA Corporation (NVDA) fell over -1%, dragging down other chip stocks after the WSJ reported the U.S. could impose new restrictions on exports of AI chips to China. Also, General Mills Inc (GIS) plunged over -5% and was the top percentage loser on the benchmark S&P 500 after the company’s Q4 revenue and organic sales fell short of expectations.
During his appearance at the European Central Bank Forum in Portugal, Federal Reserve Chair Jerome Powell expressed his belief that further policy tightening was imminent and hinted that the central bank would remain open to two consecutive interest rate hikes in upcoming meetings. Mr. Powell also acknowledged the significant possibility of a recession in the United States, although he clarified that it is not the most probable outcome.
“The concern is about Powell’s comments that we’re just not done with the rate hiking cycle, that inflation is still too strong ... the market has to accept that the Fed is not done hiking rates,” said Phil Blancato, CEO at Ladenburg Asset Management.
U.S. rate futures have priced in an 81.8% probability of a 25 basis point rate increase and an 18.2% chance of no hike at the next central bank meeting in July.
Meanwhile, Nike Inc (NKE) is set to report its quarterly figures today.
Today, all eyes are focused on the final U.S. GDP reading in a couple of hours. Economists, on average, forecast that U.S. GDP will stand at +1.4% q/q in the first quarter, compared to the fourth-quarter value of +2.6% q/q.
Also, investors are likely to focus on the U.S. GDP Price Index, which came in at +3.9% q/q in the fourth quarter. Economists anticipate the first-quarter figure to be +4.2% q/q.
U.S. Pending Home Sales data will also be closely watched today. Economists foresee this figure to stand at +0.2% m/m in May, compared to the previous number of 0.0% m/m.
U.S. Initial Jobless Claims data will be reported today as well. Economists estimate this figure to be 266K, compared to last week’s value of 264K.
In addition, investors will likely focus on a speech from Atlanta Fed President Raphael Bostic.
In the bond markets, United States 10-Year rates are at 3.747%, up +0.98%.
The Euro Stoxx 50 futures are up +0.27% this morning as encouraging earnings updates from H&M and Renault outweighed hawkish signals from a slew of major central bankers. European Central Bank President Christine Lagarde and Bank of England Governor Andrew Bailey acknowledged that there is still progress to be made in controlling elevated inflation, given the surprisingly resilient global economy and inflationary pressures. Meanwhile, retail and automobile stocks outperformed on Thursday, with Renault Sa (RNO.P.DX) climbing over +6% after the French car maker upgraded its full-year earnings guidance. Bank stocks also advanced after Wall Street peers passed the Federal Reserve’s annual stress test. In other corporate news, H & M Hennes & Mauritz Ab (HMB.S.DX) surged more than +11% after the world’s second-biggest fashion retailer reported a stronger-than-expected Q2 profit.
Spain’s CPI (preliminary) and Eurozone’s Consumer Confidence data were released today.
The Spanish June CPI stood at +0.6% m/m and +1.9% y/y, stronger than expectations of +0.2% m/m and +1.7% y/y.
Eurozone June Consumer Confidence came in at -16.1, in line with expectations.
Asian stock markets today settled mixed. China’s Shanghai Composite Index (SHCOMP) closed down -0.22%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.12%.
China’s Shanghai Composite today closed lower as worries about the sluggish economic recovery in the world’s second-largest economy and the absence of strong stimulus measures weighed on sentiment. Real estate developers in China retreated on Thursday as investors awaited further stimulus measures for the sector. Artificial intelligence stocks also lost ground, extending yesterday’s losses after the Wall Street Journal reported that Washington is considering new restrictions on exports of AI chips to China. Meanwhile, in an interview that aired on Wednesday, U.S. Treasury Secretary Janet Yellen expressed her desire to visit China and “reestablish contact” with Beijing, despite the existing disagreements between the two countries. In other news, the United States and China agreed to consider the possibility of increasing commercial flights between the two nations to improve people-to-people contact. Investor attention is now focused on Chinese purchasing manager indexes for June, due on Friday.
At the same time, Japan’s Nikkei 225 Stock Index closed slightly higher today, rising for a second straight session as a weaker yen boosted export-oriented stocks while strong Japan’s retail sales data also lifted sentiment. Government data on Thursday showed that the country’s retail sales grew more than expected in May, while April’s reading was also revised higher as consumer spending remained resilient. Meanwhile, Nissan Motor gained over +4% as the yen’s depreciation to a seven-month low boosted the value of its international sales. Chip stocks also gained ground on Thursday, with Tokyo Electron and Advantest climbing more than +2% after memory maker Micron Technology issued an upbeat forecast. In other news, official data showed on Thursday that foreign investors turned net sellers of Japanese equities after 12 consecutive weeks of purchases. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up 0.95% to 20.19.
The Japanese May Retail Sales came in at +5.7% y/y, stronger than expectations of +5.4% y/y.
The Japanese June Household Confidence stood at 36.2, in line with expectations.
Pre-Market U.S. Stock Movers
Micron Technology Inc (MU) climbed over +3% in pre-market trading after the company reported upbeat Q3 results and provided better-than-expected Q4 revenue guidance.
Wells Fargo & Company (WFC) gained about +2% in pre-market trading after the Federal Reserve released the results of its annual stress test, showing all lenders passed. JPMorgan Chase & Co (JPM) and Bank of America Corp (BAC) also rose over +1% in pre-market trading.
Overstockcom Inc (OSTK) soared over +10% in pre-market trading after announcing the consummation of its acquisition of certain intellectual property assets of the Bed Bath & Beyond banner from Bed Bath & Beyond Inc under a Bankruptcy Court supervised process.
Academy Sports Outdoors Inc (ASO) rose about +1% in pre-market trading after B. Riley initiated coverage of the stock with a Buy rating.
CorMedix Inc (CRMD) tumbled over -19% in pre-market trading after the company priced a $40M securities offering.
Pfizer Inc (PFE) fell about -1% in pre-market trading after Credit Suisse downgraded the stock to Neutral from Outperform.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Thursday - June 29th
Nike (NKE), Paychex (PAYX), MSC Industrial Direct (MSM), Acuity Brands (AYI), Simply Good Foods (SMPL), Progress (PRGS), Lindsay (LNN), Smart Global (SGH), Greenbrier (GBX), Nano Dimension (NNDM), Mitek (MITK), Corus Entertainment (CJREF), Rite Aid (RAD).
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