US Stocks On Track For Mixed Start Ahead Of More Inflation Data: JPMorgan, Wells Fargo Fall On Earnings

Author: Shanthi Rexaline | July 12, 2024 07:35am

The major index futures traded narrowly mixed early Friday as the imminent release of the June producer price inflation report kept traders on edge as they await confirmation that inflation is sustainably decreasing. After moving sharply to the downside, bond yields have begun ticking higher, but gold futures slipped.

Traders may also focus on the earnings report from big banks as they herald the start of the reporting season. Analysts are optimistic about a healthy pace of earnings growth, with Factset estimating S&P 500 companies to report cumulative earnings growth of 8.8% for the second quarter.

Futures	Performance (+/-)
Nasdaq 100	-0.07%
S&P 500	+0.03%
Dow	+0.05%
R2K	+0.73%

Cues From Last Session:

U.S. stocks closed Thursday’s session sharply lower, with the Nasdaq Composite and the S&P 500 Index slumping from their all-time highs. These two averages opened on a positive note but fell steadily in the morning session. They saw a consolidation move around the lower levels and ended notably lower for the session.

The 30-stock Dow Jones Industrial Average opened lower but recovered in early trading and moved mostly below the unchanged line before settling marginally higher.

The decline came amid the release of a tamer-than-expected inflation report that sent bond yields lower and rate-cut odds spiking higher. Making sense of the contrarian move, economist David Rosenberg said, “Maybe it's realizing the data aren't exactly all that constructive for corporate pricing power or top-line growth.”

The noteworthy development during a largely negative session is the spike in small-cap stocks, with the iShares Russell 2000 ETF (NYSE:IWM) settling 3.59% higher.

Index	Performance (+/-)	Value
Nasdaq Composite	-1.95%	18,283.41
S&P 500 Index	-0.88%	5,584.54
Dow Industrials	+0.08%	39,753.75
Russell 2000	+3.57%	2,125.04

Following the June inflation report, fund manager Louis Navellier said a Sept. 18 key interest rate cut is likely forthcoming and that should be clarified in the Federal Open Market Committee statement on July 31. The fund manager also sees support coming from earnings growth. “The expectations for the second quarter earnings remain very high with 8.8% forecasted annual earnings growth for the S&P 500,” he said, adding that these are the highest forecasted earnings growth since the first quarter of 2022.

Upcoming Economic Data:

• The Bureau of Labor Statistics is due to release its June producer price inflation report at 8:30 a.m. EDT. Economists, on average, expect monthly and annual headline inflation rates of 0.1% and 2.3%, respectively. This compares to the May reading of -0.2% and 2.2%, respectively. Core producer prices may have climbed 0.2% month-over-month and 2.5% year-over-year, up from 0% and 2.3%, respectively.
• The University of Michigan will release the results of its preliminary July consumer sentiment survey, with the consensus calling for a slight rise in the index from June’s 68.2 to 68.5 in July. The forward inflation expectations readings of the report could also evince some interest.

See Also: How To Trade Futures

Stocks In Focus:

• Tesla, Inc. (NASDAQ:TSLA) fell over 2% in premarket trading in an extended sell-off on reports of a potential delay in the Robotaxi unveil event.
• JPMorgan Chase & Co. (NYSE:JPM), Citigroup Inc. (NYSE:C), Wells Fargo & Company (NYSE:WFC) and Bank of New York Mellon Corporation (NYSE:BK) and Fastenal Company (NASDAQ:FAST) are among the companies reporting ahead of the market open. Bank of New York Mellon rose 2% following the bank’s earnings release, JPMorgan fell moderately despite a beat and Wells Fargo slid over 5.5%.

Commodities, Bonds And Global Equity Markets:

Crude oil futures climbed for a third straight session and traded around the $83.50-a-barrel level, while gold futures fell after Thursday’s strong advance.

The 10-year Treasury note yield, which fell 1.64% on Thursday on the back of the CPI data, rose 3.9 basis points to 4.229%.

Bitcoin (CRYPTO: BTC) slid below the $57K level, down over 2% over the past 24 hours.

The Asian stock markets closed Thursday’s session on a mixed note, with the Japanese, South Korean and Taiwanese markets pulling back sharply. Most other major markets in the region advanced, drawing clues from the U.S. inflation data. The Chinese market rose after mixed trade data kept stimulus hopes alive.

European stocks firmed up in early trading.

Read Next:

• S&P 500 To Plunge More Than 20% Near Term? Top Economist Breaks Down Broader Market Vs. Small-Cap Divergence After June CPI Report

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