US Market Preview | USA's May Core PCE +2.6% YoY, Meets Expectations; Apple's iPhone Shipments Surge 40% in China in May; Trump's Debate Boosts Market Confidence
NIKE, Inc. Class B NKE | 78.91 79.00 | +0.08% +0.11% Pre |
Microsoft Corporation MSFT | 426.59 427.01 | -0.36% +0.10% Pre |
Apple Inc. AAPL | 233.40 232.06 | +0.86% -0.57% Pre |
Berkshire Hathaway Inc. Class A BRK.A | 688354.00 688354.00 | +0.93% 0.00% Pre |
Cosmos Holdings, Inc. COSM | 0.78 0.78 | +1.25% 0.00% Pre |
Key Takeaways
- Trump's Debate Boosts Market Confidence;
- EU Scrutinizes Microsoft-OpenAI Deal;
- Apple's iPhone Shipments Surge 40% in China in May Amid Discount Offers: Report;
I. Market Report
S&P 500 index(SPX.US) futures climbed Friday as traders digested fresh personal consumption expenditures price index data, the Federal Reserve’s preferred inflation measure. They are also counting down to the end of what has been a strong first half of the year.
Futures tied to the broad market index ticked up 0.4%, while NASDAQ(IXIC.US)-100 futures gained 0.5%. Dow Jones Industrial Average(DJI.US) futures added 30 points, or 0.1%.
II. Flash Headlines
PCE data just released:
The USA's core PCE price index for May increased by 2.6% year-over-year, matching expectations and down from 2.8% previously, marking the smallest rise since March 2021. The month-over-month increase was 0.1%, the lowest since November 2023. Following the data release, traders increased bets on a Federal Reserve rate cut
Flat May PCE Expected, Markets Speculate Rate Cuts
The Commerce Department's data is expected to show the PCE price index remained flat in May, with the core figure rising 0.1%, according to Reuters. Year-on-year PCE is forecasted at a three-year low of 2.6%. Despite the Fed's guidance, markets anticipate two interest rate cuts starting in September, with a 60% chance for a 25-basis-point cut.
Fed Officials Cautious on Interest Rate Cuts
Fed officials remain cautious about easing interest rates. Raphael Bostic suggests one rate cut this year as inflation "appears to be narrowing," while Michelle Bowman highlights ongoing upside risks to inflation, indicating it’s not yet appropriate to lower the policy rate.
Economists Predict Potential Fed Rate Cuts by December
Economists forecast easing price pressures in the upcoming PCE figures. Angelo Manolatos of Wells Fargo Securities notes more positive inflation reports are needed for a rate cut in September. Bloomberg Economics and Bank of America Corp. suggest potential rate cuts by December, contingent on improved labor market data and inflation trends.
Trump's Debate Boosts Market Confidence
Market reactions suggest increasing odds of Trump defeating Biden after Thursday’s debate, where Biden's performance raised age concerns. Stock-index futures and the USA dollar rose. Goldman Sachs forecasts a stronger dollar with a Republican victory.
III. Stocks To Watch
Nike Hammered by Analysts After Disappointing Guidance, Shares Down 15% Pre-market
NIKE, Inc. Class B(NKE.US) fell sharply 15% pre-market as of 07:40 am ET, after sales and FQ1 guidance landed short of expectations. The report raised concerns with analysts about consumer demand in North America, the China recovery, macro factors, and the impact of competition. During the earnings call (transcript), Nike CEO John Donahoe said FY25 will be a transition year for the company and revenue is anticipated to fall at mid single-digit clip.
Microsoft, OpenAI Deal to Face Additional Scrutiny from EU Over Exclusivity: Report
Microsoft Corporation(MSFT.US) multi-billion dollar investment into generative artificial intelligence company OpenAI may face additional scrutiny from the European Union's antitrust chief over its use of Microsoft's cloud technology, Bloomberg reported. Margrethe Vestager, the Executive Vice President of the European Commission, is likely to unveil an initiative where the agency will ask Microsoft customers and rivals about its deal with OpenAI to use Microsoft Azure and whether it hampers competition, the news outlet added, citing people familiar with the matter.
Apple's iPhone Shipments Surge 40% in China in May Amid Discount Offers: Report
Apple Inc.(AAPL.US)'s iPhone shipments in China soared 40% in May amid retail partners cutting prices of the device by offering attractive discounts ahead of the country's June shopping festival, Bloomberg News reported. Figures showed that smartphone shipments rose more than 13% in the Asian nation, but foreign brands, of which Apple consists the majority, grew almost four times faster, the report added citing the news agency's calculations of official data.
Berkshire Hathaway Chief Buffett to Donate Shares to Five Foundations
Berkshire Hathaway Inc. Class A(BRK.A.US)'s chief Warren Buffett will convert 8.67K A shares into 13.01M B shares as he looks to donate 13M shares of the firm's “B” stock to five foundations. The five foundations include: Bill & Melinda Gates Foundation Trust, Susan Thompson Buffett Foundation, the Sherwood Foundation, Howard G. Buffett Foundation and NoVo Foundation. Buffett’s ownership of Berkshire now consists of ~208K A shares and 2.6K B shares.
IV. Market Movers
As of 08:10 am, ET (or 15:10 in Riyadh), top pre-market movements are as follows:
Ticker | Chg. | Company |
COSM | 73.78% | Cosmos Holdings, Inc.(COSM.US) |
AAGR | 65.27% | African Agriculture Holdings Inc. - Common Stock(AAGR.US) |
OPTT | 45.93% | Ocean Power Technologies, Inc.(OPTT.US) |
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