US Stock Futures Climb Ahead of PCE Inflation Data; Nike Falls 12% on Guidance Cut

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US Stock Futures Rise Ahead of PCE Inflation Data, Nike Plunges in Extended Trading

Team FS

28/Jun/2024

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US stock futures climbed higher on Friday as markets anticipated PCE inflation data and possible Federal Reserve interest rate cuts.
Nike's stock dropped 12% in extended trading after the company cut its full-year guidance, impacting other retail stocks.
The S&P 500, Nasdaq Composite, and Dow Jones saw modest gains on Thursday, with 6 out of 11 S&P sectors advancing.

US stock futures climbed higher on Friday as investors awaited the release of the Personal Consumption Expenditures (PCE) inflation data, which could provide critical insights into the path for Federal Reserve interest rate cuts. This data is particularly significant as it is the Fed's preferred measure of inflation, reflecting changes in the prices of goods and services consumed by households. A lower-than-expected inflation reading could reinforce the case for rate cuts, providing a boost to the stock market.

Market sentiment was also influenced by the first US presidential debate, where former President Donald Trump was perceived as the frontrunner. His policies, traditionally favoring lower taxes and deregulation, could have substantial implications for the economic outlook and investor confidence.

In extended trading, Nike experienced a significant drop, plunging 12% after the company announced a cut in its full-year guidance. This unexpected revision dragged down other retail stocks, highlighting concerns about consumer spending and the retail sector's performance. Nike's disappointing outlook underscores the challenges faced by retailers amid shifting consumer preferences and economic uncertainties.

In regular trading on Thursday, the major US stock indexes posted modest gains. The S&P 500 rose 0.09%, while the Nasdaq Composite increased by 0.3%, both extending gains for a third consecutive day. The Dow Jones Industrial Average also edged up 0.09%, marking its second straight winning session. Six out of the eleven S&P sectors advanced, with real estate, consumer discretionary, and communication services leading the way.

These gains were supported by a retreat in bond yields after fresh data pointed to a continued slowdown in economic activity, bolstering expectations for Federal Reserve rate cuts. Initial jobless claims fell for the second week in a row, indicating some resilience in the labor market. However, continuing claims rose to their highest levels since 2021, suggesting a cooling labor market. This mixed labor market data further supports the case for a more accommodative monetary policy.

In addition to labor market indicators, GDP growth was revised slightly higher to 1.4% from 1.3% in the second estimate. This upward revision, while modest, signals a slightly stronger economic performance than previously thought. However, the overall economic picture remains mixed, with signs of slowing growth and persistent inflationary pressures.

The bond market's reaction to the economic data is also noteworthy. Lower bond yields typically indicate that investors are expecting slower economic growth and potential rate cuts by the Federal Reserve. This environment can be favorable for stocks, as lower interest rates reduce borrowing costs and can stimulate economic activity.

The upcoming PCE inflation data will be closely watched by investors and policymakers alike. A higher inflation reading could prompt the Fed to maintain a more cautious approach to rate cuts, while a lower reading could accelerate the timeline for reducing borrowing costs. The Fed's decisions in the coming months will be critical in shaping the economic and financial landscape.

In conclusion, US stock futures rose on Friday as markets anticipated the release of PCE inflation data and the potential for Federal Reserve interest rate cuts. The market was also reacting to the recent US presidential debate and the significant drop in Nike's stock after the company cut its full-year guidance. With mixed economic indicators and evolving political developments, investors will need to stay informed and agile in response to these dynamic factors.

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US Stock Futures Rise Ahead of PCE Inflation Data, Nike Plunges in Extended Trading

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