U.S. stock futures rose on Friday as a closely watched inflation gauge kept momentum going and investors digested the fallout from the Biden-Trump debate.
S&P 500 futures (ES=F) rose about 0.3% after the benchmark closed a step closer to its record high. Contracts on the tech-heavy Nasdaq 100 (NQ=F) were also up 0.4%, while Dow Jones Industrial Average futures (YM=F) hovered above the flatline.
The gauges are looking at an upbeat end to a bumpy week that saw the S&P 500 (^GSPC) and Nasdaq Composite (^IXIC) bounce back from three-day losing streaks. While stocks are expected to have a bumper first half heading into the final trading day of June, the swings have fueled fears of a pullback for the rest of the year.
The last key data point from that first half was the latest reading from the Fed’s preferred inflation gauge, with Yahoo Finance’s Josh Schafer reporting that inflation eased in May as prices rose at their slowest pace since March 2021.
The core personal consumption expenditures (PCE) index, which excludes food and energy costs and is closely watched by the Fed, rose 0.1% in May from the previous month, in line with Wall Street expectations.
Meanwhile, with the November US election high on the list of risks, investors took note of President Joe Biden’s weak performance in his first debate with presumptive Republican nominee Donald Trump. The former president’s promised tax cuts and trade restrictions are seen as likely boosts for stocks. Shares in Trump Media & Technology Group (DJT) rose in pre-market trading.
The market is also on alert for more signs that consumer resilience is losing steam, as key companies signal bleak sales prospects. Nike (NKE) stock fell nearly 15% in pre-market trading, while Walgreens (WBA) stock remained under pressure after falling 22% Thursday.
The Fed’s preferred inflation gauge shows prices rose at the slowest pace since March 2021
The latest reading of the Fed’s favorite inflation gauge showed that inflation eased in May as prices rose at the slowest pace since March 2021.
The core Personal Consumption Expenditures (PCE) index, which excludes food and energy costs and is closely watched by the Federal Reserve, rose 0.1% in May from the previous month, in line with Wall Street expectations, and slower than the 0.3%. increase observed in April.
Core PCE rose 2.6% in May from the previous year, in line with estimates and unchanged from the annual increase over the past two months. The May reading marked the slowest annual gain in more than three years.
Trump media on the move
After a shaky debate performance from President Joe Biden, shares of Trump Media & Technology (DJT) are on the move.
At the time of writing, shares are up 7.5% in pre-market trading.
Folks, be careful what you trade here.
Here’s the company’s latest 10-Q report, which shows a “company” doing something and losing a lot of money in the process.
Nike shares get trampled
Just as bad to watch (sort of…) as last night’s debate is Nike’s (NKE) premarket share price, which is down 14% at the time of writing.
The company’s guidance was a real disappointment and concerns remain about management’s execution of product innovation. It’s a warning sign that Nike isn’t providing better guidance in an Olympic year.
I found Stifel analyst Jim Duffy’s take on the quarter interesting:
“The FY25 guidance (the fifth downgrade to consensus in six quarters) pushes the outlook for a growth inflection further into 2025 (perhaps Q4 2025 at the earliest) and asks investors to both underwrite the success of unproven styles and look to an uncertain consumer discretionary context in 2HCY24 until momentum could regain momentum in 2HCY25. Management credibility is being severely tested and the potential for regime change at C-level adds further uncertainty. An investor day in November is likely to paint a multi-year economic model with lower returns than precedent, adding risk to the premium enjoyed in the historical multiple. We continue to appreciate the N-scale advantage in a category with long-term growth tailwinds and structural margin upside, but cannot support a compelling upside scenario at current valuations until the growth inflection becomes more tangible.”
Duffy this morning downgraded his rating on Nike to ‘hold’.
