Here are five things you must know for Thursday, August 11:
1. — Stock Futures Higher As Fed Rate Bets Fade
U.S. equity futures bumped higher again Thursday, with the dollar nursing its biggest one-day decline in five months, as investors looked to re-set rate expectations from the Federal Reserve following yesterday’s softer-than-expected July inflation reading.
Plunging gas prices helped produce a flat month-on-month CPI tally in July, while the annual rate of inflation slowed to 8.5%, according to data from the Bureau of Labor Statistics, with economists now forecasting a series of slower readings over the autumn months.
The pullback in consumer price pressures triggered a sharp rally on Wall Street, with the tech-focused Nasdaq rising 2.9% to help it to a 20% gain from its mid-June lows.
Rate bets were also tempered, with the CME Group’s FedWatch now suggesting on a 37.5% chance of another 75 basis point hike in September, down from around 66.5% prior to the inflation release.
Fed officials were more tempered, with Minneapolis Federal Reserve Bank President Neel Kashkari telling the Aspen Ideas Conference in Colorado that the central bank is “”far, far away from declaring victory”, and still sees the need of a Fed Funds rate approaching 4% by the end of the year.
Broader markets, however, are re-setting for less aggressive approach: the dollar index, which tracks the greenback against a basket of six global currencies, fell the most in five months yesterday and was marked another 0.17% lower in overnight trading at 105.024.
U.S. Treasury bond trading was essentially muted overnight amid a market holiday in Japan, but yesterday’s $35 billion 10-year note auction saw the best domestic and foreign demand in five months as investors snapped-up the longer-dated paper amid lessening inflation fears.
In overseas markets Thursday, European stocks were only modestly higher, with Stoxx 600 rising 0.08% in early Frankfurt trading, as investors exited for the traditional August holiday following yesterday’s CPI data. With the Nikkei 225 closed in Tokyo, Asia markets rode last night’s rally on Wall Street to lift the region-wide MSCI ex-Japan index to a 1.7% gain heading into the close of trading.
On Wall Street, futures tied to the S&P 500 are indicating a 5 point opening bell gain while those liked to the Dow Jones Industrial Average are priced for a 65.5 point bump. Futures linked to the tech-focused Nasdaq are indicating a 21 point advance.
2. — Disney Soars As Streaming Tally Tops Netflix, Q3 Earnings Impress
Walt Disney (DIS) – Get The Walt Disney Company Report powered higher in pre-market trading after the media and entertainment giant posted stronger-than-expected third quarter earnings while overtaking Netflix as the world’s biggest media streaming platform.
Disney said adjusted diluted earnings for the three months ending in June, the group’s fiscal third quarter, rose 36% from last year to a Street-beating $1.09 per share, as Parks and Experiences revenues helped drive an overall topline gain of 26% to just over $21.5 billion.
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Disney also said it added 14.4 million subscribers over the whole of the quarter, with ESPN+ totaling 22.8 million paid subscribers and Hulu rising to 46.2 million. Disney’s total subs of 221.1 million are now narrowly ahead of the 220.67 million last tallied by Netflix.
Disney shares were marked 7.6% higher in pre-market trading to indicate a Thursday opening bell price of $121.00 each.
3. — Jobs Data In Focus As Cooling Inflation Eases Recession Fears
Weekly jobless claims data will put the employment picture back in the spotlight Thursday as investors put aside concerns for a near-term recession following last month’s blowout non-farm payroll report and softer inflation figures.
The number of Americans filing new claims for unemployment benefits is holding new the highest levels in eight months, with last week’s tally rising by 6,000 to 260,000. That contrasts sharply with the July employment report showing 528,000 new hires and average hourly wage increases of around 5.2%.
This week’s total, which is expected to bump to around 263,000, may not provide the clarity investors need to unpack the broader economy’s inconsistent performance, but it should suggest whether summer layoffs are accelerating, which gives solid vision into the pace of hiring heading into the autumn.
4. — Bumble Tumbles After Clipping Full-Year Revenue Forecast
Bumble (BMBL) – Get Bumble Inc. Report shares slumped lower in pre-market trading after the online dating app maker slashed its full-year revenue forecasts amid increasing competition and economic uncertainty in western European markets.
Bumble said revenues for its flagship app rose 33.2% from last year to $169.6 million, but sales from its other apps, including Badoo, which is popular in western Europe, fell 13.7% to just $50.8 million.
Looking into the second half of the year, Bumble said it sees overall revenues in the region of $920 million to $930 million, down from its prior forecast of between $934 million and $944 million.
Bumble shares were marked 9% lower in pre-market trading to indicate an opening bell price of $31.39 each.
5. — Gas Prices Slide Below $4 A Gallon To Early March Lows
Gas prices fell below $4 a gallon around the nation last night, according to data from the AAA motor club, pulling pump costs to the lowest levels since early March.
The national average cost for a gallon fell 2 cents to $3.99 per gallon as of this morning, a move that takes down around 21.9% from their record highs in early June. The year-on-year costs remain 25.2% higher, however, but the fifty-two day decline, as well as an ongoing pullback in both gasoline demand and crude prices, should mean lower pump costs by the end of the Labor Day weekend.
The reduction has also come at a cost, however, as much of the decline in global oil prices has been linked to President Joe Biden’s decision to release around 180 million barrels of crude from the U.S. Strategic Petroleum Reserve. That’s put a drain on emergency stockpiles, which the Energy Department said yesterday are now sitting at the lowest levels since April of 1985.