In the early hours of the trading day, June S&P 500 E-Mini futures (ESM24) displayed a slight downward trend of -0.13%. This cautious movement reflected a prevailing sentiment among market participants, who were holding back from making significant bets ahead of the release of the Federal Reserve’s first-line inflation gauge. This cautious approach followed a previous trading session where major indices on Wall Street experienced declines across the board. Specifically, the benchmark S&P 500 hit a two-week low, the Dow dropped to a four-week low, and the Nasdaq 100 slid to a 1-1/2 week low.
The decline in the indices was driven by a variety of factors, including disappointing corporate earnings reports. Notably, Salesforce (CRM) and Kohl’s (KSS) witnessed significant drops in their stock prices after reporting weaker-than-expected Q1 revenue and unexpected losses, respectively. Similarly, UiPath (PATH) experienced a sharp decline following a disappointing FY25 revenue outlook and the resignation of its CEO. However, HP Inc. (HPQ) stood out with a surge in its stock price after reporting better-than-expected Q2 results.
Furthermore, market sentiment was impacted by economic data released during the previous session. The second estimate of Q1 GDP growth was revised downward, the core PCE price index was unexpectedly revised lower, pending home sales sank, and initial jobless claims rose slightly, contributing to an overall negative sentiment among investors.
Comments from New York Fed President John Williams and Dallas Fed President Lorie Logan provided some insight into the Federal Reserve’s stance on monetary policy. Williams anticipated a decline in inflation in the second half of the year and highlighted the restrictive nature of current monetary policy. However, he emphasized the need for data-driven decisions regarding rate cuts. Similarly, Logan suggested that high interest rates might not be as restrictive to the economy as previously thought, underscoring the importance of flexibility in policy decisions.
Looking ahead, investors awaited the release of key economic indicators such as the core Personal Consumption Expenditures price index, the U.S. Chicago PMI, Personal Spending, and Personal Income data. Additionally, a speech from Atlanta Fed President Raphael Bostic was anticipated.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note edged up, while in Europe, the Euro Stoxx 50 futures were down slightly as investors awaited the U.S. inflation report. Retail sales data from Germany and inflation data from Eurozone countries influenced market sentiment in the region. Asian stock markets closed mixed, with China’s Shanghai Composite Index declining while Japan’s Nikkei 225 Stock Index rose, fueled by expectations of Fed rate cuts and domestic economic data.
In pre-market trading, significant stock movers included Dell Technologies (DELL), MongoDB (MDB), Marvell Technology (MRVL), Gap (GPS), and Zscaler (ZS), with each experiencing notable price fluctuations based on their respective earnings reports and guidance.
Overall, market participants remained cautious amid ongoing uncertainties surrounding corporate earnings, economic data, and Fed policy, highlighting the need for vigilance and adaptability in navigating current market conditions.