S&P Futures Rise Ahead of Key U.S. PPI Data, ECB Decision Takes Center Stage

U.S. PPI Data

September S&P 500 futures (ESU23) are showing a positive trend, up by +0.29% this morning. This follows a mixed performance in the three major U.S. benchmark indices during the regular session. Investors are carefully digesting the latest U.S. inflation report while also preparing for the release of crucial U.S. Producer Price Index (PPI) data.

During Wednesday’s trading session, Moderna Inc (NASDAQ:MRNA) recorded a significant gain of over +3% after announcing that its flu vaccine mRNA-1010 successfully met the primary goal in a late-stage trial. Additionally, JB Hunt Transport Services Inc (NASDAQ:JBHT) saw an increase of more than +4% following its statement projecting a gradual rise in freight demand, attributed to retailers trimming their excess inventories. Ford Motor Company (NYSE:F) also joined the upward trend with a gain of over +1%, driven by its plan to double the production of hybrid F-150 pickup trucks in 2024.

However, not all stocks fared well, as American Airlines Group (NASDAQ:AAL) faced a decline of more than -5%. The carrier lowered its Q3 adjusted EPS guidance due to rising jet fuel prices.

The Labor Department’s report on Wednesday indicated that consumer prices rose +0.6% month-on-month in August, aligning with consensus expectations. On an annual basis, headline inflation accelerated to +3.7% in August, up from July’s +3.2%. Economists had forecasted a growth rate of +3.6% year-on-year. Simultaneously, U.S. core CPI eased to +4.3% year-on-year in August from +4.7% in July, marking the smallest increase in nearly two years.

Krishna Guha, vice chairman at Evercore ISI, commented on the report, stating, “Not a great CPI report, but not something that changes the basic Fed outlook. This Fed is not itching to hike again, and we think it would take significantly more to push the FOMC to actually deliver another increase – with our base case remaining, the Fed is done here.”

In the realm of interest rates, U.S. rate futures indicate a mere 3.0% probability of a 25 basis point rate increase next week and a 39.0% chance of a similar hike at November’s monetary policy meeting.

In the earnings arena, prominent companies like Adobe (NASDAQ:ADBE), Copart (NASDAQ:CPRT), and Lennar (NYSE:LEN) are set to report their quarterly figures today.

In other news, Arm Holdings Plc is set to commence trading on the Nasdaq Global Select Market, having priced its initial public offering at $51 per share, at the top end of the range.

Today, market attention is firmly fixed on the U.S. Producer Price Index (PPI) data, set to be released in a few hours. Economists anticipate that August U.S. PPI will stand at +0.4% month-on-month and +1.2% year-on-year, compared to previous values of +0.3% and +0.8% respectively.

Additionally, investors will closely monitor U.S. Retail Sales data, which registered +0.7% month-on-month in July. Economists predict that the August figure will be +0.2% month-on-month.

The U.S. Core PPI reading will also be closely watched, with economists expecting August figures of +0.2% month-on-month and +2.2% year-on-year, down from the previous numbers of +0.3% and +2.4% respectively.

Furthermore, U.S. Core Retail Sales data is on the agenda, with economists forecasting a +0.4% month-on-month increase in August, compared to the previous +1.0%.

Lastly, U.S. Initial Jobless Claims data will be reported today, with economists estimating this figure to be 225K, slightly higher than last week’s value of 216K.

In the bond markets, United States 10-year rates currently stand at 4.258%, up +0.24%.

Across the Atlantic, Euro Stoxx 50 futures are up +0.05% this morning. Market participants are exercising caution as they await the European Central Bank’s monetary policy decision. Gains in mining and energy stocks are leading the overall market higher, although automobile stocks underperformed due to China’s criticism of the European Union’s investigation into electric vehicle subsidies. The ECB faces a dilemma of either raising the key interest rate to a record level or pausing rate hikes due to the worsening economic situation in the Eurozone. Money markets suggest a two-thirds chance of a quarter-point interest rate hike by the ECB.

In corporate news, Deliveroo Plc (ROO.L.EB) saw an increase of over +4% following a report from activist investor Sachem Capital, which indicated the possibility of the food delivery company becoming a takeover target.

As for economic data in Europe, the calendar is relatively empty today.

In Asian markets, stocks closed in the green. China’s Shanghai Composite Index (SHCOMP) edged up +0.11%, while Japan’s Nikkei 225 Stock Index (NIK) registered a significant gain of +1.41%.

China’s Shanghai Composite closed slightly higher as investors continue to seek policy measures and signs of economic recovery. The People’s Bank of China intends to stimulate demand and support a moderate price rebound, according to an unnamed senior central bank official. Meanwhile, mainland property developers traded in Hong Kong retreated after Moody’s downgraded China’s property sector outlook to negative.

Japan’s Nikkei 225 closed higher, touching its highest level in a week. Weak economic readings have bolstered expectations that the Bank of Japan will maintain negative interest rates. Economic Revitalization Minister Yoshitaka Shindo stressed the need for strong economic measures, as data indicated a sharp decline in Japanese core machinery orders and a drop in industrial production.

In pre-market U.S. stock movements, Oracle Corporation (ORCL) gained about +1% after DZ Bank upgraded the stock to Buy from Hold. Purecycle Technologies Holdings Corp (PCT) declined more than -14% after declaring force majeure due to a storm’s impact on Ironton. MetLife Inc (MET) rose over +1% after Jefferies upgraded the stock to Buy from Hold. OKYO Pharma (OKYO) tumbled more than -20% after filing for an underwritten public offering. Carnival Corporation (CCL) climbed over +1% after Redburn upgraded the stock to Buy from Neutral. First Solar Inc (FSLR) gained more than +2% after BMO Capital upgraded the stock to Outperform from Market Perform.

Today’s U.S. earnings spotlight includes Adobe (NASDAQ:ADBE), Copart (NASDAQ:CPRT), Lennar (NYSE:LEN), MYT Netherlands (NYSE:MYTE), Innate Pharma (NASDAQ:IPHA), and eGain (NASDAQ:EGAN).

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