Wall Street is showing caution as stock futures dip ahead of April’s crucial PCE inflation data, a key gauge for the Federal Reserve. Geopolitical tensions in the Middle East led to a surge in oil prices, while corporate earnings provided mixed signals with Snowflake soaring on a major AWS deal and Nio jumping after an SUV launch. Investors are closely monitoring inflation figures, upcoming corporate reports, and broader economic data for market direction.
Wall Street braced for a volatile Thursday as stock futures edged lower, with traders keenly awaiting April's critical inflation figures. The broad market saw S&P 500 futures dip 0.35%, Nasdaq 100 futures shed 0.76%, and Dow Jones Industrial Average futures fall by 104 points, signaling investor caution.
Geopolitical developments added to market jitters as West Texas Intermediate crude oil futures surged 2% overnight, topping $90 a barrel. This spike followed reports of new U.S. military strikes targeting a site in Iran. This contrasted with Wednesday's session, where oil prices initially fell on diplomatic progress with Iran, only to rebound as the White House denied reports of a memorandum of understanding regarding the Strait of Hormuz.
Corporate news offered some bright spots, with cloud data platform Snowflake soaring an impressive 36% in after-hours trading Wednesday. The jump came after the company announced a massive $6 billion spending plan with Amazon Web Services over five years, coupled with a robust first-quarter earnings and revenue beat.
Wednesday's session had seen the blue-chip Dow and S&P 500 clinch new intraday and closing records, gaining 0.36% and 0.02% respectively, while the Nasdaq Composite edged up 0.07%. These gains were largely fueled by a rally in the technology sector, though analysts like Adam Crisafulli of Vital Knowledge suggest investors should diversify beyond tech, which he believes is 'very, very stretched'.
Spencer Platt | Getty Images
The primary focus for investors today is the release of April's personal consumption expenditure (PCE) price index at 8:30 a.m. ET. This index, the Federal Reserve's preferred inflation gauge, holds particular significance under the new Fed Chair, Kevin Warsh. Economists anticipate a 0.5% month-over-month increase and a 3.8% year-over-year rise for the headline index. Excluding volatile food and energy prices, core PCE is expected to show gains of 0.3% and 3.3% respectively.
Federal Reserve officials have recently reiterated their hawkish stance on inflation. Minneapolis Fed President Neel Kashkari emphasized that lowering inflation remains his 'top priority', while Governor Lisa Cook noted that inflation is 'clearly moving in the wrong direction' and expressed readiness to raise rates if disinflation doesn't materialize promptly.
A flurry of corporate earnings reports is also on tap, with Royal Bank of Canada, Dollar Tree, Hormel Foods, Burlington Stores, and Kohl's scheduled to release results before the market opens. Additionally, traders will be analyzing key economic data, including weekly jobless claims, April's new home sales, personal income, and preliminary durable goods orders reports.
Market Movers and Updates:
- Nio Surges: Shares of Chinese EV maker Nio jumped over 10% in Hong Kong trading (and 9.32% for its U.S.-listed stock) following the launch of its new ES9 SUV. The vehicle's competitive pricing underscores intensifying market competition.
- LG Energy Solution's Major Deal: LG Energy Solution saw its shares surge over 16% after its U.S. unit secured a $1.6 billion deal to supply battery cells for DTE Energy's significant battery storage projects in Michigan, totaling 1.5 gigawatts (6 gigawatt-hours).
- Asia Markets Lower: Asia-Pacific markets opened Thursday with declines across the board, including South Korea's Kospi (-0.36%) and Kosdaq (-2.61%), Japan's Nikkei 225 (marginally lower) and Topix (-0.23%), Australia's S&P/ASX 200 (-0.79%), China's CSI 300 (-0.38%), and Hong Kong's Hang Seng (-0.69%). This reflected ongoing uncertainty from U.S.-Iran negotiations.
- After-Hours Stock Action: Beyond Snowflake's jump, Marvell Technology slipped over 1% despite a positive outlook, while Agilent Technologies popped nearly 8% after raising its full-year adjusted earnings guidance.
- FedEx Spin-off to Join S&P 500: FedEx Freight, a spin-off from FedEx, is set to join the S&P 500 and Dow Jones Transportation Average on June 2, replacing EPAM Systems and American Airlines Group, respectively. EPAM Systems will move to the S&P SmallCap 600.
- Burger King's Mandalorian Boost: Wolfe Research analysts noted Burger King's Mandalorian kids meal is gaining traction, aiding performance. However, higher gas prices are seen as a potential drag on lower-income consumers affecting restaurant traffic.
