ZINGER KEY POINTS
- With earnings season slowly winding down, focus between now and June FOMC meeting will be on developments on debt ceiling.
- Traders may also look toward each incoming economic evidence to confirm the slowing inflation – key factor for a Fed pivot.
U.S. stocks have the potential to continue their positive momentum from the previous session, supported by recent inflation data. The index futures indicate a slightly higher opening on Thursday. However, factors such as the debt ceiling issue, oil prices, and economic data on jobless claims and producer prices may influence today’s trading direction.
Wednesday Cues
Wall Street stocks had a mostly positive day of trading on Wednesday, driven by lower inflation data and a subsequent decrease in bond yields. The stock market opened higher as the annual inflation rate showed a greater easing than anticipated. The monthly rates of both headline and core inflation were in line with expectations.
After the initial rise, the market lost some momentum during the morning session, leading to the major averages hitting the day’s low by early afternoon. However, the indices recovered later in the day, with the Nasdaq Composite and the S&P 500 Index closing with solid gains. The Dow Industrials, on the other hand, ended slightly lower. Notably, the Nasdaq Composite Index is currently at its highest level since late August.
On Wednesday, technology stocks performed exceptionally well, driven by the Federal Reserve’s shift in monetary policy, which is expected to benefit growth-focused tech companies. Utility and real estate stocks also attracted significant buying interest. However, financial stocks experienced some selling pressure.
U.S. Indices’ Performance Wednesday
| Index | Performance (+/-) | Value |
| Nasdaq Composite Index | +0.18% | 12,256.92 |
| S&P 500 Index | +0.05% | 4,136.12 |
| Dow Industrials | -0.17% | 33,618.69 |
Analyst Color:
The positive reaction to the CPI report stemmed from the “owners-equivalent rent” component, which is seeing the slowest pricing pressure in a year, and moderating services costs, said fund manager Louis Navellier.
Earnings have outperformed expectations, with techs leading the year. Delving into the debt ceiling impasse, Navellier said, “The deficit ceiling is a political football and since 2024 is an election year, both sides are seeking to score political points.”
“As long as Treasury bond yields do not panic,” investors should not panic,” he added.
Futures Performance On Thursday
| Futures | Performance (+/-) |
| Nasdaq 100 | -0.44% |
| S&P 500 | -0.39% |
| Dow | -0.39% |
| R2K | -0.63% |
In premarket trading on Thursday, the SPDR S&P 500 ETF Trust fell 0.03% to $411.41 and the Invesco QQQ ETF declined 0.39% at $322.42, according to Benzinga Pro data.
Upcoming Economic Data:
OPEC will release its monthly oil market report at 7 a.m. EDT.
The Bureau of Labor Statistics is due to release a duo of reports at 8:30 a.m. EDT. The wholesale price inflation report for April is expected to show a 0.3% month-over-month increase in producer prices, reversing from the 0.5% drop in March. Core producer prices may have risen 0.2% compared to a 0.1% drop in the previous month.
The annual rates of the headline and core producer prices are expected at 2.4% and 3.3%, respectively. This compares to the previous month’s increases of 2.75 and 3.4%, respectively.
The jobless claims report will likely show that the number of individuals claiming unemployment benefits came in at 245,000 in the week ended May 6 compared to 242,000 in the week ended April 29.
Federal Reserve Governor Christopher Waller is scheduled to speak at 10:15 a.m. EDT.
The Treasury will auction 8- and 4-week Treasury bills at 11:30 a.m. EDT and 30-year notes at 1 p.m. EDT.
Stocks In Focus:
- Walt Disney Company stock slid 5.29% to $95.79 in premarket trading after the company reported in-line quarterly results.
- Robinhood Markets, Inc. climbed over 5% in reaction to its quarterly report.
- Beyond Meat, Inc. slipped 2.40% after the company announced an at-the-market equity offering. The company also reported its quarterly results Wednesday after the close.
- JD.com, Inc. shares climbed over 4% after the company announced its quarterly results and the appointment of CFO Sandy Ran Xu to the position of CEO. The company said the incumbent Lei Xu is retiring due to personal reasons.
- Krispy Kreme, Inc. and US Foods Holding Corp. are among the important companies reporting their results ahead of the market opening.
Commodities, Bonds, Other Global Equity Markets:
Crude oil futures were rebounding by 0.58% to $72.98, reversing some of the 1.56% pullback seen on Wednesday.
The yield on the benchmark 10-year Treasury note fell 0.013 percentage points to 3.423%.
Asian stocks defied the mostly positive lead from Wall Street and ended on a lackluster note, as traders in the region weighed in on data out of China that showed a deflationary trend. This stirred concerns about economic growth in the world’s second-largest economy.
The major European markets showed strength in late morning trading, although the U.K. market is showing nervousness ahead of the Bank of England’s interest rate decision due at 7 a.m. EDT. The central bank is widely expected to increase rates by 25 basis points to 4.50%.
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Originally Posted May 11, 2023 – Nasdaq, S&P 500 Futures Climb On Rate Optimism, Bond Yield Retreat: Analyst Disregards Debt-Ceiling ‘Political Football’
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