US stocks are primed for a modestly higher start to Thursday’s session, building on the remarkable rebound witnessed in the previous day’s trading. The focus of attention is squarely on the producer price inflation report for August, as traders eagerly seek confirmation of a sustained downward trajectory in inflation. The weekly jobless claims report is also set to generate some ripples in the market.
Meanwhile, across the Atlantic, the European Central Bank’s interest rate decision will be closely watched. The ECB is widely anticipated to implement a rate cut, potentially triggering a coordinated reduction by global central banks amidst a slowdown in inflation and economic growth.
However, some negative developments in the tech space could lead to some selling pressure.
In pre-market trading, the SPDR S&P 500 ETF Trust (SPY) gained 0.22% to reach $555.64, while the Invesco QQQ ETF (QQQ) rose 0.16% to $469.37, according to Benzinga Pro data.
Looking Back at Wednesday’s Session
Wall Street ended Wednesday on a positive note, although the session was marked by volatility, with the 30-stock Dow Jones Industrial Average fluctuating within a 910-point range. The averages initially dipped in response to the August consumer price inflation report, which was perceived as not entirely benign, and the overnight presidential debate.
The technology sector, and the broader market, experienced a rally fueled by optimistic comments from Nvidia Corp. (NVDA) CEO Jensen Huang at an industry conference. Huang highlighted the potential of artificial intelligence technology.
IT stocks surged, leading the market higher. Communication services and consumer discretionary stocks also attracted buying interest.
Defensive consumer staples and real-estate stocks lost ground, while financial and energy stocks extended their declines.
Analyst Insights
Carson Group’s Chief Market Strategist Ryan Detrick pointed to a promising data point. While acknowledging that the S&P 500 Index recovered from an intraday loss of 1.5% to close higher by over 1%, he noted that the last time this happened was precisely at the end of the severe bear market in October 2022. He added, “Looking at previous big reversal days like this shows better than average returns across the board.”
Upcoming Economic Data
The Labor Department is scheduled to release the weekly jobless claims report at 8:30 a.m. EDT. Economists are expecting the number of individuals claiming unemployment benefits to reach 225,000 for the week ending September 7, slightly lower than the previous week’s 227,000.
The Bureau of Labor Statistics will release its August producer price inflation report, also at 8:30 a.m. EDT. Consensus estimates anticipate the following:
* PPI (m-o-m): 0.1%, flat with the July rate
* PPI (y-o-y): 1.8%, down from 2.2% in July
* Core PPI (m-o-m): 0.2% versus unchanged prices in July
* Core PPI (y-o-y): 2.5%, up from 2.4% in July
The Treasury will conduct auctions of four- and eight-week notes at 11:30 a.m. EDT and 30-year bonds at 1 p.m. EDT. The Treasury will also release the federal budget balance report for August at 2 p.m. EDT, with expectations of a deficit of $285.7 billion compared to a July deficit of $244 billion.
Stocks in Focus
Oxford Industries, Inc. (OXM) plummeted over 10% in pre-market trading following the release of the company’s quarterly results. Kroger Co. (KR) and Signet Jewelers Limited (SIG) are scheduled to announce their quarterly results before the market opens, while Adobe Inc. (ADBE) is due to release its results after the market closes.
Micron Technology, Inc. (MU) declined over 2% on negative analyst action. Moderna, Inc. (MRNA) slumped over 7% after the company unveiled cost-cutting initiatives.
Commodities, Bonds, and Global Equity Markets
Crude oil futures rallied for a second consecutive session, and gold futures traded flat around the $2,550 level. Bitcoin (BTC/USD) surged back above $58,000. The 10-year yield climbed 2.3 basis points to 3.676%.
Most Asian markets advanced, mirroring the stronger close seen in Wall Street stocks. However, China ended modestly lower. European stocks rose significantly in early trading, reflecting the post-noon recovery witnessed by U.S. stocks on Wednesday and fueled by optimism about an ECB rate cut. The ECB’s decision is due at 8:15 a.m. EDT.
Photo via Shutterstock
