Wall Street had an unexpected reaction to softer-than-expected inflation data, with significant losses in heavyweight technology stocks, despite growing optimism for a September interest rate cut. If you missed the live session last night, don’t worry—you can watch the recording today.
September Rate Cut Bets Swell After Soft CPI, PPI Data Awaited
Markets are ramping up bets on a September interest rate cut by the Federal Reserve following softer-than-expected consumer price index (CPI) data on Thursday. Traders are now pricing in an 82% chance for a 25 basis point cut in September, up from 64% last week. This shift comes as CPI data showed inflation cooled slightly more than expected in June, with core inflation only marginally increasing.
Producer price index (PPI) data, due later today, will offer more insights. Any further signs of cooling inflation are likely to bolster expectations for rate cuts.
Wall Street Battered by Tech Rout
U.S. stock index futures fell during European trade, with losses in Nasdaq 100 Futures suggesting a continued rout in technology stocks into Friday. Wall Street indexes fell sharply on Thursday as investors locked in profits from recent gains in heavyweight technology stocks, especially those buoyed by artificial intelligence hype.
This trend spilled over into Asian and European markets, causing significant losses in tech-heavy bourses. However, investors are pivoting to more economically sensitive sectors expected to benefit from improved growth as interest rates fall.
Banks Kick Off Q2 Earnings Season
The second quarter earnings season begins in earnest today, with major Wall Street banks like JPMorgan Chase, Wells Fargo, Citigroup, and Bank of New York Mellon set to report earnings. Focus will be on how corporate profits fared under high interest rates and sticky inflation.
Financial heavyweights Goldman Sachs and BlackRock will report on Monday, followed by Morgan Stanley and Bank of America on Tuesday.
Biden Reaffirms 2024 Presidential Run
President Joe Biden reiterated his commitment to run against Donald Trump in the 2024 presidential elections, dismissing concerns over his mental state. Biden declared himself the “most qualified person to run for President” during a NATO summit on Thursday, addressing calls from some Democratic members for him to withdraw his reelection bid.
China Trade Data Mixed, Outlook Dulled by Import Tariffs
Markets are also dealing with mixed trade data from China. The country’s trade balance surged to a bigger-than-expected surplus in June due to strong exports, but an unexpected drop in imports raised concerns over domestic demand. Imports of key commodities like oil, iron ore, and copper fell, negatively impacting their prices.
While exports were strong, they are expected to face challenges as the European Union joins the U.S. in imposing tariffs on key Chinese industries, such as electric vehicles.
Reminder: If you missed last night’s live session, the recording will be available today. Greg discussed the market and his secret sauce—don’t miss out on the insights!
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