US Futures Stay in Holding Pattern Before CPI Data: Markets Wrap

(Bloomberg) — US equity-index futures were steady on Thursday as traders awaited inflation data for reassurance that bets on Federal Reserve interest rate cuts are warranted.

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Contracts on the S&P 500 and Nasdaq 100 were little changed after the underlying gauges each gained more than 1% to fresh all-time highs, spurred by the likes of Nvidia Corp. and Apple Inc. Fed Chair Jerome Powell told Congress Wednesday that the central bank doesn’t need inflation below 2% before cutting rates, and noted the labor market has cooled “pretty significantly.”

The core CPI reading Thursday is expected to rise 0.2% in June for a second month. That would mark the smallest back-to-back gains since August — a pace seen as palatable for Fed officials. Swaps are pricing in two Fed cuts in 2024, with a strong chance of the first coming in September.

“June’s CPI report looks to be another ‘very good’ report that should boost the FOMC’s confidence about the inflation trajectory,” said Anna Wong at Bloomberg Economics. “That should set the stage for the Fed to start cutting rates in September.”

The Bloomberg Dollar Spot Index fell for a second day to a one-month low. Treasury yields were little changed.

Among individual share moves in US premarket trading, Costco Wholesale Corp. climbed more than 3% after hiking its membership fee for the first time since 2017. PepsiCo Inc. slipped after reporting weaker-than-expected revenue.

Investors will also eye earnings Thursday from Delta Air Lines Inc. for signals about the health of the US consumer, ahead of reports from JPMorgan Chase & Co., Wells Fargo & Co. and Citigroup Inc. to cap off the week.

Meanwhile, Goldman Sachs Group Onc. strategists said investors are growing increasingly concerned that US technology megacaps are spending too much on artificial intelligence. Valuations could be due for a de-rating unless revenue and earnings rise to justify the capex spending, they said.

Investors broadly expect the frenzy to remain a key feature of a rally in the second half, although some are betting on sectors such infrastructure providers and utilities to lead gains for the remainder of 2024, the Goldman strategists said.

One measure, though, signals that the rally may be losing momentum: market breadth has contracted in recent months, with the share of S&P 500 members trading above their 200-day moving average hovering around its lowest in 2024.

Europe’s Stoxx 600 advanced 0.4%, led by utilities and consumer products and services. DNB Bank ASA surged the most since Nov. 2020 after the Norwegian lender reported earnings that beat analysts’ estimates. Swiss chocolate maker Barry Callebaut AG dropped more than 10% after disappointing results affected by high cocoa-bean prices.

The British pound rose to its strongest level against the dollar since March after data showed the UK economy expanded in May at twice the pace expected.

In Asia, Taiwan Semiconductor Manufacturing Co. traded at record levels after the sole supplier of the most-advanced chips for Nvidia Corp. and Apple said second-quarter sales grew the fastest since 2022. Sony Group Corp., Tencent Holdings Ltd. and Korean chipmaker SK Hynix Inc., which traded at its highest levels since 2000, were among top contributors to the climb in the regional stock index.

The iPhone maker said it aims to ship 10% more new devices after a bumpy 2023. The S&P 500 has advanced in each of the past seven sessions, its longest winning streak since November. MSCI Inc.’s global stocks index is at a record high.

Oil climbed for a second day as a decline in US crude inventories countered the IEA’s call that demand growth is slowing. Gold edged higher for a third day.

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