U.S. Stock Futures Rise Following Record Highs on Mild Inflation Data
In a bullish turn, U.S. stock futures pointed higher on Thursday, riding the wave of record highs achieved in the previous session. This surge followed a mild monthly inflation report that hinted at a potential shift in Federal Reserve policy.
On Wednesday, data revealed that consumer price growth slowed to 3.4% annually in April, fueling expectations that the Federal Reserve might ease interest rates from their two-decade highs later this year. Market sentiment swiftly adjusted, with traders now anticipating two rate cuts in 2024, up from just one earlier this week.
The report sparked a significant rally across major indices: the S&P 500 climbed 1.2%, the Nasdaq Composite rose 1.4%, and the Dow Jones Industrial Average advanced 0.9%. Meanwhile, the rate-sensitive 2-year U.S. Treasury yield dipped to its lowest point since early April, and the dollar weakened to multi-week lows against other currencies.
Bitcoin Gains Amid U.S. Dollar Weakness
Bitcoin saw a boost on Thursday, benefiting from the dollar’s decline, although it remained within its recent trading range due to subdued market sentiment towards cryptocurrencies. The leading digital currency surged 6.7% over the past 24 hours, reaching $66,159 by early morning. It briefly touched $66,600 before losing some momentum, having dropped as low as $60,000 earlier in the week.
Despite the Federal Reserve’s inflation target being well above 2%, and with officials expressing the need for more assurance that prices are sustainably easing before reducing rates, Bitcoin’s gains were tempered. This cautious outlook kept Bitcoin trading within a $60,000 to $70,000 range, a pattern maintained over the past two months. Furthermore, stagnation in capital flows and trading activity in spot exchange-traded funds, which previously fueled a March rally, has also limited major upward movement.
Walmart Set to Report Earnings Amidst Competitive Retail Landscape
Walmart is set to release its earnings report on Thursday, facing intense competition to attract budget-conscious consumers amid high inflation. According to Adobe Analytics, online retail spending in the U.S. increased by 7% from January to April, driven by strong demand for lower-priced items. While this trend should benefit Walmart, e-commerce giants like Amazon and PDD Group’s Temu are offering stiff competition in the bargain hunting market for electronics and clothing.
Reuters reported that Walmart is replenishing its inventories at a slower pace than its peers, a strategy that could increase costs and affect profit margins. Despite these challenges, Walmart shares have risen by 12.7% this year, trading at approximately 25 times expected earnings, reflecting investor optimism about the upcoming quarterly results. The earnings release before the bell on Thursday will be a crucial test of this confidence.
Chubb Shares Surge on Berkshire Hathaway Stake Revelation
Shares of Chubb Ltd soared to record highs in after-hours trading on Wednesday, following the disclosure that Warren Buffett’s Berkshire Hathaway had acquired a $6.72 billion stake in the insurance company. Chubb’s stock jumped 7.5%, reaching an all-time high of $271.84 after Berkshire’s filing revealed ownership of 25.9 million shares as of March 31.
Berkshire Hathaway began purchasing Chubb shares in the third quarter of 2023 and had received temporary permission from the SEC to keep these acquisitions confidential. This practice mirrors Berkshire’s previous undisclosed purchases in companies like Chevron, Exxon Mobil, IBM, and Verizon Communications. Chubb reported strong first-quarter earnings in 2024, with gross premiums surpassing $14 billion and net income increasing to $5.23 billion from $4.54 billion the previous year.
Crude Prices Edge Up After Inflation Data and Inventory Reports
Crude oil prices ticked higher on Thursday following the release of U.S. consumer inflation data and a larger-than-expected draw in U.S. oil inventories. The inflation report raised hopes for lower interest rates, potentially boosting future global economic activity and oil demand.
Data on Wednesday indicated that U.S. oil inventories fell by 2.5 million barrels in the week ending May 10, exceeding expectations and suggesting improving demand in the world’s largest oil consumer, particularly as the summer travel season approaches.
If you want to get the plays of the day then signup for Gold, and get a FREE TRIALIf you want to get the plays of the day then signup for Gold, and get a FREE TRIAL
Responses