The futures markets are in the green before the opening bell, following a day of record highs in the S&P 500 and NASDAQ. Few economic reports are expected to be released this morning. Overall, the market appears poised for a strong start to the trading day.
The stock market got off to a fast start yesterday, as traders priced in better odds of a coming interest rate cut as Chairman Jerome Powell gave testimony to the U.S. Senate. Most traders came away with expectations that a rate cut may well occur in September, should inflationary data continue to improve. Mr. Powell also stated that further deterioration of the labor market could prompt a cut. The major market indices then trended sideways through much of the afternoon, giving back only a portion of the gains in the trading session. Overall, the S&P 500 rose four points (up 0.07%), the NASDAQ increased 26 points (up 0.14%), with both indices finishing at all-time highs. However, the Dow Jones Industrial Average declined 53 points (down 0.13%) on the day. Moreover, market breadth favored the downside, as decliners outpaced advancers by a 1.7-to-1.0 ratio. Financial stocks were among the best performers, while materials stocks were the weakest. Chairman Powell will appear before the U.S. House of Representatives Financial Services Committee later today.
In commodity news, oil prices fell on Tuesday as traders priced in fewer supply disruptions from Hurricane Beryl, which swept over the Texas production area without causing major damage, although residential power outages impacted millions of individuals. Elsewhere, the U.S. Treasury bond yields were mixed, with short-term rates moving very little while long-term yields trended higher. The Chicago Board Options Exchange Volatility Index, or VIX, also known as the fear index, inched upward as traders priced in a higher level of future price volatility.
Several economic reports will be released in the days ahead, providing insights into the state of the economy, inflation in particular. These include the core and noncore CPI (Consumer Price Index) for June on Thursday. On Friday, the core and noncore PPI (Producer Price Index) for June and the preliminary University of Michigan Consumer Sentiment Index for July are on the docket. These reports should give further insight into the inflation picture and will likely be key inputs into the Federal Reserve’s interest rate policy decisions. Additionally, several regional Fed Presidents will give remarks on the domestic economy in the days ahead. Elsewhere, earnings season is set to kick off as many major companies will start reporting quarterly results, including several large banks on Friday. – John E. Seibert III
At the time of this article’s writing, the author held positions none of the companies mentioned.
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