Here are five things you must know for Friday, June 10:
1. -- Stock Futures Edge Lower With Inflation In Focus
U.S. equity futures traded mixed Friday, following on from a late-hour sell-off on Wall Street that loped more than 600 points from the Dow, as investors nervously awaited a crucial reading of May inflation ahead of the start of trading.
Core consumer price pressures are expected to moderate from multi-decade peaks, according to consensus forecasts for Friday's all-important CPI reading, but the ongoing surge in oil and energy prices is likely to hold the annual pace of headline inflation in place at around 8.3%.
The data will not only provide details as to the pressures faced by American consumers -- whose spending drives around two-thirds of the world's biggest economy -- but also the near-term reaction of the Federal Reserve, which is tasked with brining inflation back closer to its preferred 2% target with rate hikes and liquidity pullbacks.
And while a 50 basis point rate hike from the Fed next week is a virtual lock, the CME Group's FedWatch tool now suggests an 18% chance of a 75 basis point rate hike in July, up from just 10% a month ago. Part of that move is linked to the European Central Bank's recent hawkishness, and bets that Christine Lagarde and her colleagues will lift rates this summer, with deeper hikes in the fall, as inflation hits record highs in the single-currency area.
Growth prospects are also in focus as a result of the inflation surge, and while Janet Yellen told a New York Times 'Deal Book' event last night that there is "nothing to suggest that a recession is in the works", the U.S. economy did contract sharply over the first quarter and is now only expanding at a 0.9% clip, according to the Atlanta Fed's GDPNow forecasting tool.
With all that at play, European and Asian stocks were notably heavy Friday, although data from China showing a 14-month low in the country's producer price index offered some relief for world shares. The region-wide Stoxx 600 was marked 1.4% lower in early Frankfurt trading, following on from a 0.88% slide for Asia's MSCI ex-Japan benchmark.
In the U.S., benchmark 10-year Treasury bond yields dipped to 3.03% while and the dollar index rose 0.1% against a basket of six global currencies to 103.301 in early European trading.
On Wall Street, futures tied to the Dow Jones Industrial Average indicating a 50 point opening bell dip while those linked the S&P 500 are priced for a 1.5 point fall. Futures linked to the Nasdaq are looking at 20 point opening bell gain.
2. -- Peak Inflation Debate May Not Be Decided In Complex CPI Data
Headline U.S. inflation likely held near a four-decade high of 8.3% last month, according to economists forecasts for Friday CPI reading from the Commerce Department, but the ongoing surge in global energy prices is set to test the 'peak inflation' theory heading into the summer months.
Record high gasoline prices, which nudged closer to the $5 a gallon mark last night, according to data from AAA, will continue to drive headline inflation rates as crude oil holds firmly above the $120 per barrel mark, while food prices extend their recent run-up amid transport snarls and uneven planting seasons.
Moderating wage growth, however, and easier year-on-year price comparisons for items such as used cars will help mitigate gains in core inflation, as jobless claims creep higher and firms pause hiring plans amid the broader economic uncertainty.
Those competing interests mean today's inflation reading -- which is expected to show an unchanged headline rate of 8.3% and a modestly slower core rate of 5.9% -- may have something for everyone when its released by the Commerce Department at 8:30 am Eastern time.
3. -- DocuSign Shares Crumble After Q2 Earnings Miss, Muted Outlook
DocuSign (DOCU) shares crumbled in pre-market trading Friday after the after the online signature vending group posted weaker-than-expected second quarter earnings and forecast muted revenue growth for the remainder of the year.
Docusign, which has been struggling to hold investor interest as pandemic-era restrictions bring more and more professionals back to the office, earned 38 cents per share over the three months ending in April, missing Street forecasts by around 8 cents on a non-GAAP basis.
Second quarter revenues were solid at $588.7 million, but the group held to its full-year estimate of sales in the region of $2.47 billion to $2.48 billion
"We are confident in our long-term opportunity and in our ability to add new customers and power their digital transformation," CFO Cynthia Gaylor told investors on a conference call late Thursday. "However, we are not immune to the macro challenges with our customers and peer space."
"While we have made considerable progress bringing in leaders with significant experience at scale, it's important to recognize that meaningful traction and better visibility will take multiple quarters," she added.
DocuSign shares were marked 24.3% lower in premarket trading to indicate an opening bell price of $66.16 each, a move that would extend the stock's year-to-date decline to around 56.5%.
4. -- AMD Shares Gain On Robust Near-Term Outlook For Chip Sector
Advanced Micro Devices (AMD) shares moved higher in pre-market trading after the chipmaker struck a bullish tone during its annual investor day presentation.
AMD, which makes chips for the data center, computing and gaming industry repeated its 2022 revenue forecast of around $26.3 billion, with gross margins in the 54% range. A softer market for PC chips should be offset by ongoing gains in data center, CEO Lisa Su said, and it plans to deepen the cost synergies linked to its $35 billion takeover of Xilinx (XLNX) by around $100 million to $400 million.
The group also sees more robust operating margins of around 57% over the near term, with a total addressable market in data center chips of around $125 billion.
"AMD's analyst day event left us incrementally more constructive on the company's ability to sustain outsized growth (20%) and share gains vs. Intel," said KeyBanc Capital Markets analyst John Vinh, who carries an 'overweight' rating on the stock. " With increased scale and profitability from the acquisition of Xlinix and a continued focus on data center, we expect AMD to sustain outsized growth given secular growth in cloud and share gains."
AMD shares were marked 1.2% higher in premarket trading to indicate an opening bell price of $100.01 each, a move that would still leave the stock down more than 30.5% for the year.
5. -- Stitch Fix Shares Slump After Q3 Loss, Job Cuts
Stitch Fix (SFIX) shares fell sharply in pre-market trading after the online fashion retailer posted weaker-than-expected third quarter sales and unveiled plans to cull around 15% of its staff.
Stitch Fix, which earlier this year said it would delay the rollout of its direct-buy platform, said third quarter sales fell 8% to $493 million, just shy of Street forecasts, and posted a wider-than-expected loss of 72 cents per share.
Stich Fix said the restructuring would save between $40 million and $60 million over its next fiscal year, but ultimately clip around $15 to $20 million from its current quarter bottom line.
"We know that we're in a tough macroeconomic time period. We also want to make sure that our cost structure and our operating model is positioned to build our future," company president Elizabeth Spaulding told investors on a conference call late Thursday. "And we saw areas of opportunity in some places where we could centralize and simplify some of our functions. We also wanted to be cognizant of setting ourselves up for profitable growth as we head into FY23 and beyond. And so, the timing was right."
Stitch Fix shares were marked 16.45% lower in premarket trading to indicate an opening bell price of $6.50 each.
