Nasdaq, S&P 500 Futures Slip Ahead Of Inflation Data – Invesco QQQ Trust, Series 1

Sentiment has soured ahead of the key inflation data that is due ahead of the market open on Friday, with the index futures pointing to a modestly lower opening. A fairly benign data could keep the upward trajectory intact ahead of next week’s key labor market data. Stocks are on track to finish September, a seasonally weaker month, on a positive note, and election uncertainty could weigh down on the market in the upcoming month. The focus would shift to the third-quarter reporting season in the latter half of October.

In premarket trading on Friday, the SPDR S&P 500 ETF Trust SPY edged up 0.03% to $572.46 and the Invesco QQQ ETF QQQ fell 0.08% to $489.09, according to Benzinga Pro data.

Cues From Last Session:

U.S. stocks advanced on Thursday as traders digested a slew of economic data, Chinese stimulus that set the Asian markets on fire and Micron Technology, Inc.’s MU earnings. A sharp drawdown in the shares of Super Micro Computer, Inc. SMCI on the back of the news of a Department of Justice probe tempered optimism toward the tech stocks.

The major indices opened sharply higher after separate reports showed jobless claims fell in the recent reporting week, durable goods orders remained flat, belying expectations for a decline, and the second-quarter GDP data was left unrevised at 3%.

The indices squandered the early gains but remained mostly above the unchanged line for the rest of the session before closing higher for the day.

The S&P 500 scored another record intraday and closing highs, with nine of the 11 S&P 500 sector classes closing higher. Material stocks advanced notably, while energy stocks came under significant selling pressure.

Insights From Analysts:

LPL Chief Economist Jeffrey Roach said in a note he anticipates a period of higher volatility among both bonds and equities during the present period of global uncertainty and softer growth outlook. “We expect volatility to remain elevated over the next few months, and believe a better entry point back into the longer-term bull market is likely,” he said.

The economist said the long and variable lag of monetary policy is not perfectly symmetrical, and it could take time for the monetary stimulus to filter down from Wall Street to Main Street. “Portfolio allocators should consider keeping a domestic bias during these periods of flux,” he added.

With just two sessions to go for September, the S&P 500 is up about 17.2% for the month-to-date period. Carson Group Chief Investment Strategist Ryan Detrick underlined a positive aspect of it. If the index finishes September in the green, it would mark gains for eight of the nine months of 2024. Going back into history, this has occurred nine other times and in those years, the index posted gains for the fourth quarter all nine times. The average gain is a decent 6.7%.

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Upcoming Economic Data:

• The Bureau of Economic Analysis is due to release a personal income and spending report for August at 8:30 a.m. EDT. Economists, on average, expect personal income and spending to have increased by 0.4% and 0.3% month-over-month, respectively, in August. This compares to the July rates of 0.3% and 0.5%, respectively. The price consumption expenditure index may have edged up 0.1% compared to July’s 0.2% increase. Annually, the rate of increase in the PCEI is expected to have slowed from 2.5% in July to 2.3% in August. The monthly and annual rates of the core PCEI are estimated at 0.2% and 2.7%, respectively, for August, compared to July’s 0.2% and 2.6% rates.
• The advanced trade balance report for August will be released by the Commerce Department at 8:30 a.m. EDT. The consensus estimate calls for a deficit of $100.60 billion for August compared to a deficit of $102.84 billion in July. The Commerce Department will also release advance wholesale and retail inventory data at 8:30 a.m. EDT.
• The University of Michigan’s final consumer sentiment index for September is scheduled to be released at 10 a.m. EDT. The headline consumer sentiment index is expected to be revised from the flash reading of 69 to 69.3, marking an increase from 67.9 in August. The one-year and five-year inflation expectations readings will likely come in at 2.7% and 3.1%, respectively,
• Atlanta Fed GDPNow for the third quarter, due at 10:30 a.m. EDT, is expected to show 2.9% growth.
• Federal Reserve Governor Michelle Bowman is scheduled to speak at 1:15 p.m. EDT.

Stocks In Focus:

• BlackBerry Limited BB fell over 1.50% in premarket trading following the company’s earnings announcement, and Costco Wholesale Corporation COST was down about 1.30% on earnings.
• Bristol Myers Squibb Co. BMY shares rose over 6% after the FDA approved Cobenfy, an oral medication for the treatment of schizophrenia in adults.

Commodities, Bonds And Global Equity Markets:

Crude oil futures are weaker yet again, although more modestly than in the previous two sessions, and gold futures retreated modestly and traded just shy of the record. Bitcoin BTC/USD rallied over 3% over the past 24 hours and is fast approaching the next psychological resistance of $66K.

The yield on the 10-year Treasury note remained almost flattish with a slight negative bias at 3.785%.

In Asia, stocks in Hong Kong, Japan and China rose strongly and the Australian averages gained modestly, but major indices elsewhere settled mostly lower. China’s optimism continued to buoy sentiment in the mainland markets.

The European markets advanced in early trading as traders digested inflation data from some key countries in the region and other data.

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