US stock futures trudged higher Wednesday before a significant day for the US economy that will provide the latest snapshot of the state of inflation and the latest signal on the path of interest rates.
S&P 500 futures (ES=F) built on its 27th record close of the year, rising 0.1%. Futures on the tech-heavy Nasdaq 100 (NQ=F) rose 0.2%, also pointing to gains after a record close for the index. Dow Jones Industrial Average futures (YM=F) gained 0.1%.
The pace of inflation is expected to have eased last month after some hotter-than-expected surprises in the first half of 2024. The Consumer Price Index is expected to show headline inflation of 3.4%, which would match April, according to estimates from Bloomberg. On a “core” basis, which strips out food and gas, prices in May are expected to have risen 3.5% over last year — a slight slowdown from April.
Meanwhile, the Fed’s decision is all but certain — the central bank is expected to keep rates at their current 23-year-high levels. Investors will be more closely watching the release of the Fed’s updated economic projections in its “dot plot” — specifically, how many rate cuts it projects for the rest of the year.
Last we heard, in March, it was three. Policymakers are almost certain to slash that, thanks in part to the aforementioned inflation’s stickiness to start this year. Those projections, along with what Fed Chair Jerome Powell says in his press conference, could be the last market-moving events in an extraordinarily busy day.
In corporates, Apple (AAPL) shares cooled off after surging to a record high on Tuesday. Shares fell 0.4% premarket.
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Nvidia as the sun…
A tip of the hat to Apollo chief economist Torsten Slok for this vibe check on the S&P 500.
Clearly, Nvidia (NVDA) is the sun that 499 other companies revolve around.
Note: Apollo is the parent company of Yahoo Finance.
It’s an Nvidia market. (Apollo)
JP Morgan weighs in on the Musk pay package vote
The Tesla (TSLA) shareholder vote on Elon Musk’s $56 billion pay package is coming down to the wire.
Ahead of the vote on Thursday, Tesla just dropped this post on Musk owned X detailing its CEO’s accomplishments (note this is weird to see from a corporate X account, but hey, this is Musk we are talking about here).
A new Yahoo Finance poll is currently showing 96% of the people that have voted think Musk’s pay package shouldn’t be approved.
Meantime, JP Morgan analyst Ryan Brinkman is weighing in with a note this morning:
“While both ISS and Glass Lewis, as well as several prominent institutional and retail shareholders, have voiced opposition to the 2024 ratification of Mr. Musk’s 2018 compensation plan, we rather suspect it will pass, albeit with a lesser approval rate than in 2018 and perhaps by a lesser margin than popularly imagined. We base this expectation on anecdotal evidence of strong retail shareholder support and based on our conversations with institutional investors whose reasoning, on the whole, seems similar to when asked to vote in favor of the Solar City acquisition. Investors we spoke with then largely did not support the Solar City acquisition, but worried there would be a more negative share price reaction in the event the transaction were voted down, given the perception of a vote of no confidence.”
Brinkman reiterated an underweight rating (sell equivalent) on Tesla shares and a $115 price target, which assumes about 32% downside from current price levels.
Read more here on the Musk vote and key CEO pay package votes from Yahoo Finance senior legal reporter Alexis Keenan.
Affirm still on the move after big Apple deal
Affirm (AFRM) is still one of the hotter tickers on the Yahoo Finance platform after news dropped Tuesday of an integration into Apple (AAPL) Pay. Shares are up 1.5% pre-market following an 11% pop yesterday.
I caught up last night with Affirm’s founder and CEO Max Levchin for a new taping of my ‘Opening Bid‘ podcast. The full episode (which goes into Levchin’s views on AI and the political vibes in Silicon Valley) will release on Friday morning on Yahoo Finance and major podcast platforms.
But I put a clip below of Levchin’s comments on the tie-up below for you to check out.
Levchin stops short of sharing how this deal will financially impact Affirm (could be big given the 1.4 billion iPhones out in the wild worldwide), but hinted it could be a strong top- and bottom-line contributor over time.
He did acknowledge the deal “validates” the buy now, pay later space — which has been under siege from regulators and other parties almost since inception.
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