Morning Market Brief for OptionsPlayers.com Members
U.S. stock futures are pointing broadly higher this Friday as investors anticipate the release of the Federal Reserve’s preferred gauge of inflation. This data could significantly influence the central bank’s strategy regarding potential interest rate reductions later this year.
Wall Street’s Muted Gains
Thursday’s trading session saw modest gains for major indices as the market awaited the May personal consumption expenditures (PCE) price index. The benchmark S&P 500 edged up 0.1%, the tech-heavy Nasdaq Composite increased by 0.3%, and the blue-chip Dow Jones Industrial Average rose by 0.1%.
PCE Data Anticipation
Today’s PCE data is expected to show a deceleration in U.S. inflation for May, potentially supporting the Fed’s case for rate cuts in 2024. Projections indicate that headline PCE will slow to 0.0% monthly, down from April’s 0.3% increase. Annually, the figure is expected to cool to 2.6% from 2.7%. The “core” PCE, which excludes volatile items like food and fuel, is anticipated to ease to 0.1% month-on-month and 2.6% year-on-year.
“In our view, both readings would be acceptable for the Fed’s cutting narrative to build further,” noted analysts at ING.
Nike Shares Slump
Nike’s shares plunged over 12% in after-hours trading following its projection of a 10% revenue decline for the current quarter. The sports apparel giant also expects mid-single-digit percentage drops in sales for the ongoing fiscal year. This guidance, announced by CFO Matthew Friend, reflects aggressive actions in managing classic footwear products, challenges in its digital business, and muted wholesale order books. Additionally, the outlook for its key Chinese operations remains soft.
Despite these challenges, Friend expressed confidence in Nike’s long-term growth strategy. Fourth-quarter net revenue dropped by 17% to $12.61 billion, missing Wall Street expectations of $12.84 billion, although earnings per share of $0.99 exceeded projections.
Biden vs. Trump Debate Recap
Thursday night’s debate saw U.S. Democratic President Joe Biden struggling against Republican challenger Donald Trump. The 90-minute debate, marked by Biden’s hoarse voice and long pauses, overshadowed his critiques of Trump’s recent criminal conviction and democratic norms stance. Trump focused on Biden’s economic and foreign policy records. Media reports post-debate indicate rising concerns among Democrats about Biden’s campaign viability ahead of November’s election.
Crude Oil on Track for Weekly Gains
Crude prices are on course for their third consecutive winning week. As of 03:31 ET, U.S. crude futures (WTI) were up 0.8% at $82.36 per barrel, while the Brent contract rose 0.7% to $85.84 per barrel. Both benchmarks have gained nearly 2% this week and are on track for approximately 6% gains in June.
Geopolitical tensions, including fears of a wider conflict between Israel and Lebanon’s Hezbollah and attacks on Russian fuel refineries by Ukraine, have pushed a higher risk premium on oil prices. These fears countered the impact of increased U.S. crude oil stocks, which raised concerns about cooling American fuel demand amidst persistent inflation and high interest rates.
Today will be interesting as data will likely determine the direction. I’ll be looking to scalp TSLA puts again and stay patient while waiting for the next alert play setup. See you all in chat where I posted todays upgrades and downgrades.
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