4.15pm: Eyes on upcoming inflation report, presidential debate
Stocks remained relatively stable by Thursday’s close as investors digested new economic data ahead of a crucial inflation reading that could impact Federal Reserve policy.
The S&P 500 advanced towards a new all-time high with a modest gain of 0.1% on the day to close at 5,483. The Dow posted a similar rise to close at 39,164 while the Nasdaq had a good day with a 0.3% increase to finish at 17,859.
Micron's shares finished 7% lower, pulling down chip stocks, including Nvidia, which fell nearly 2%.
Meanwhile, economic data showed initial weekly jobless claims decreased to 233,000, while recurring claims rose to their highest level since late 2021, and GDP growth for Q1 2024 was revised slightly upward to 1.4%.
Investors will be eyeing this evening’s first debate between President Joe Biden and former president Donald Trump, who are both vying for office in November.
12.15pm: Micron, Walgreens dent investor confidence
Markets saw minimal movement as investors digested mixed economic data and reacted to Micron's cautious sales forecast, which tempered optimism in the tech sector.
At midday, the S&P 500 hovered near unchanged levels after a recent climb, while the Dow Jones Industrial Average edged up 0.2% and the Nasdaq gained 0.1%.
Micron's subdued outlook, coupled with concerns over high expectations for AI-driven companies, weighed on tech stocks like Nvidia, contributing to early losses. And Walgreens stock plummeted 24% to its lowest level since 1997 after lowering its fiscal 2024 earnings outlook due to challenging industry trends and a weaker-than-expected US consumer environment, prompting plans to close a substantial number of underperforming stores.
Investors are looking out for Friday's PCE inflation data, which is pivotal for Federal Reserve policy decisions. Meanwhile, economic reports showed modest GDP growth and mixed signals from jobless claims and home sales, underscoring lingering uncertainties in the market.
10.02am: Nasdaq and S&P open higher, Dow flat
Wall Street stock market benchmarks have mostly started higher, confounding those futures market predictions.
More predictably, the Nasdaq exchange is leading the way, with the composite index up 0.28%, while the S&P 500 has risen 0.11% and the Dow Jones is just below flat. The small-cap Russell 2000 index is up 0.50%.
Nvidia and Tesla are both in the red, but the rest of the US tech giants are moving higher.
Walgreens Boots is the biggest Nasdaq faller, down 22.3%, followed by Micron Technology Inc, down 5.7%.
9.31am: Data does not bode well
The earlier macro data indicates could be the beginning of a downturn in economic activity, say commentators.
Chris Zaccarelli, chief investment officer for the Independent Advisor Alliance, the final GDP estimate "indicates that economic growth is slowing, although still comfortably above recession levels", while personal consumption data shows a slowing in the consumer environment that "is a cause for concern".
"The cycle that we’re in has been led by consumer spending and if that slows then it could be the beginning of a downturn in economic activity, which would have negative implications for corporate profits and the stock market," Zaccarelli adds.
The net trade and durable goods data is set to drag on second quarter growth too, says Oliver Allen at Pantheon Macroeconomics.
"This is a downbeat report; ignore the overshoot to the consensus in headline durable orders," he says.
If real shipments are unchanged in June, they will fall at an annualized rate of about 4% in Q2, consistent with a similar-sized drop in private equipment investment.
"We find it hard to envisage a meaningful recovery in equipment investment anytime soon, given that long-term rates remain very high and credit conditions are tight, especially for smaller companies."
Elsewhere, after widening unexpectedly in April, the advanced goods trade deficit rose again in May and the overall trade deficit in Q2 "will almost certainly be much larger than in Q1" Allen says.
"Predicting the impact of net trade on overall GDP growth is an imprecise exercise, given the still-large gaps in the data, and all the numbers are erratic. But even on the generous assumption that the goods deficit falls sharply in June, and using conservative numbers for the other missing components, we reckon that net trade will knock around 1.5 percentage points from quarterly annualized growth in Q2.
"Expect sharp downgrades to GDP trackers such as the Atlanta Fed’s GDPNow on the back of today’s numbers."
9.15am: Mixed macro data
US futures are also pointing to a smaller dip at the open after the release of some lackluster US macroeconomic data.
The S&P 500 and Nasdaq 100 are now poised to open roughly flat, with Dow Jones futures still down 0.2%.
US gross domestic product grew 1.4% in the first quarter of 2024, revised up from the second estimate of 1.3% annualised growth.
The data from the Bureau of Economic Analysis was slightly lacklustre and was partly due to a smaller drag external trade.
Real consumption growth was revised down to 1.5% from 2.0%, as the PCE deflator was estimated to have increased by 3.4% annualised, rather than 3.3%.
"The full implications for the second quarter of those revisions to consumer spending and prices won’t become clear until we have the monthly breakdown available tomorrow morning," said Thomas Ryan at Capital Economics.
"Nevertheless, with first-quarter real personal disposable income growth also revised down, by 0.6% points to only 1.3%, this adds to the evidence that consumers are now struggling a little more under the weight of higher rates and prices."
There was also a 0.1% fall in durable goods orders and a larger fall in underlying capital goods shipments.
Non-defence aircraft orders fell 2.8% on the month despite Boeing reporting new orders for just four aircraft, more than offset by a 0.7% rise in motor vehicle and parts orders, meaning overall transportation equipment orders were up by 0.6%. Excluding transport, core orders rose edged down 0.1% due to modest falls in primary metal and machinery orders.
In company news Walgreens Boots Alliance Inc (NASDAQ:WBA, ETR:W8A) stock has plunged 17% after the retailer’s quarterly earnings fell short of estimates and it lowered guidance again.
Levi Strauss & Co (NYSE:LEVI) also ripped 15% lower after quarterly earnings disappointed.
Blackberry (TSX:BB) Ltd shares pointed higher after the telecoms tech company reported better-than-expected financials for its first quarter.
8.05am: Wall Street futures point to losses
US stock markets are expected to head lower when trading begins in an hour and a half.
Futures for the Dow Jones are pointing to a 0.19% fall, while Nasdaq 100 and S&P 500 heading down 0.18% and Russell 2000 futures down 0.22%.
This follows an uneventful session yesterday, when the major indices closed little-changed.
Investors are holding fire ahead of tomorrow’s key US inflation release, says market analyst David Morrison at Trade Nation.
Core personal consumption expenditure (PCE) inflation is the Federal Reserve’s preferred measure of the cost of living, against which the Fed measures its 2% inflation target.
"It is a significant release, even if it’s the CPI which tends to garner most of the headlines," says Morrison.
Today we have US GDP, durable goods, the goods trade balance, retail inventories and jobless claims.
Looking at individual stocks, International Paper Co (NYSE:IP, ETR:INP) (International Paper Co (NYSE:IP, ETR:INP)) is down 11% premarket after Brazilian suitor Suzano walked away.
Nvidia is down 1.8% premarket, Microsoft is flat and Apple is up 0.4%.