December S&P 500 E-Mini futures (ESZ24) are trending down -0.32% this morning as market participants awaited crucial U.S. producer inflation data and earnings reports from some of the biggest U.S. banks.

In yesterday’s trading session, Wall Street’s major indexes ended in the red. PayPal Holdings (PYPL) slid over -3% after Bernstein downgraded the stock to Market Perform from Outperform. Also, chip stocks lost ground, with Advanced Micro Devices (AMD) slumping -4% to lead losers in the Nasdaq 100 and Intel (INTC) dropping more than -1%. In addition, Delta Air Lines (DAL) fell over -1% after the airline posted downbeat Q3 results and issued soft Q4 adjusted EPS guidance. On the bullish side, MongoDB (MDB) climbed more than +6% and was the top percentage gainer on the Nasdaq 100 after Piper Sandler listed ten reasons to buy the stock.

The U.S. Bureau of Labor Statistics report released on Thursday showed that consumer prices rose +0.2% m/m in September, stronger than expectations of +0.1% m/m. On an annual basis, headline inflation cooled to +2.4% in September from +2.5% in August, stronger than expectations of +2.3%. Also, the core CPI, which excludes volatile food and fuel prices, unexpectedly strengthened to +3.3% y/y in September from +3.2% y/y in August, stronger than expectations of no change at +3.2% y/y. In addition, the number of Americans filing for initial jobless claims in the past week increased by +33K to a 14-month high of 258K, compared with the 231K expected.

“The Fed said the last mile getting toward their inflation target is going to be tough, and that is what we are seeing,” said David Donabedian at CIBC Private Wealth US. “But we still expect the Fed to cut rates by a quarter point in November, and likely a similar cut at the December meeting.”

Chicago Fed President Austan Goolsbee stated on Thursday that he wasn’t overly concerned with a hotter-than-expected September inflation report and maintained his stance that the Fed has moved beyond focusing solely on price pressures. “The overall trend over 12 to 18 months is clearly that inflation has come down a lot and the job market has cooled to a level which is around where we think full employment is,” Goolsbee said. Also, New York Fed President John Williams said, “Looking ahead, based on my current forecast for the economy, I expect that it will be appropriate to continue the process of moving the stance of monetary policy to a more neutral setting over time.” At the same time, Atlanta Fed President Raphael Bostic said he would be “totally comfortable” skipping a rate cut at the next Fed meeting, noting that the “choppiness” in recent inflation and employment data might justify keeping rates unchanged in November.

U.S. rate futures have priced in an 84.4% probability of a 25 basis point rate cut and a 15.6% chance of no rate change at the next central bank meeting in November.

Meanwhile, the third-quarter corporate earnings season gets underway, with some of the biggest U.S. banks, including JPMorgan Chase (JPM) and Wells Fargo (WFC), slated to report their quarterly results today. According to Bloomberg Intelligence, companies in the S&P 500 are expected to post an average +4.7% increase in quarterly earnings for Q3 compared to the previous year, down from +7.9% growth projected in July.

On the economic data front, all eyes are focused on the U.S. Producer Price Index, which is set to be released in a couple of hours. Economists, on average, forecast that the U.S. September PPI will come in at +0.1% m/m and +1.6% y/y, compared to the previous figures of +0.2% m/m and +1.7% y/y.

The U.S. Core PPI will also be closely watched today. Economists expect September figures to be +0.2% m/m and +2.7% y/y, compared to the previous numbers of +0.3% m/m and +2.4% y/y.

The U.S. Michigan Consumer Sentiment preliminary reading will be reported today as well. Economists estimate this figure to arrive at 70.9 in October, compared to 70.1 in September.

In addition, market participants will be looking toward speeches from Dallas Fed President Lorie Logan, Chicago Fed President Austan Goolsbee, and Fed Governor Michelle Bowman.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.092%, down -0.07%.

The Euro Stoxx 50 futures are down -0.02% this morning as investors digested British growth figures and looked ahead to key U.S. bank earnings later today as well as updates on fiscal stimulus from Beijing this weekend. Mining stocks outperformed on Friday, while telecom stocks lost ground. The Office for National Statistics reported Friday that the U.K. economy returned to growth in August, driven by robust retail trade and a partial recovery in industrial production. Separately, final data from the Federal Statistical Office showed that Germany’s annual inflation rate eased to 1.6% in September from 1.9% in August, confirming preliminary estimates. Meanwhile, France’s 10-year bond yield fell following the government’s announcement of next year’s budget, which includes plans for 60.6 billion euros ($66.2 billion) in spending cuts and tax increases targeting the wealthy and large companies. In corporate news, Sainsbury [J] Plc (SBRY.LN) slumped over -4% after the Qatar Investment Authority, the largest shareholder in the British supermarket group, sold 306 million pounds worth of shares.

U.K.’s GDP and Germany’s CPI data were released today.

U.K. August GDP has been reported at +0.2% m/m and +1.0% y/y, compared to expectations of +0.2% m/m and +1.4% y/y.

The German September CPI arrived at 0.0% m/m and +1.6% y/y, in line with expectations.

Asian stock markets today closed mixed. China’s Shanghai Composite Index (SHCOMP) closed down -2.55% and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.57%.

China’s Shanghai Composite Index closed lower today as caution prevailed ahead of a key weekend briefing that could provide further details on Beijing’s fiscal stimulus. Semiconductor and healthcare stocks led the declines on Friday. The benchmark index clocked a weekly decline as earlier excitement about economic stimulus shifted to doubts over whether the policy measures would be substantial enough to rejuvenate growth. All attention is on a Saturday briefing, where China’s finance minister is expected to announce additional support measures, potentially involving government bond sales and subsidies, aimed at revitalizing a slowing economy. Meanwhile, investors and analysts anticipate Beijing will unleash up to 2 trillion yuan ($283 billion) in fresh fiscal stimulus, according to a Bloomberg survey. In other news, overseas China funds and exchange-traded funds have received a net $13.91 billion since September 24th, bringing total inflows for 2024 to $54.34 billion, according to LSEG Lipper data. In corporate news, Haitong Securities and Guotai Junan Securities climbed +10%, extending yesterday’s gains after the companies released details of their merger deal.

Japan’s Nikkei 225 Stock Index closed higher today, hitting its highest level in two weeks, likely due to position adjustments by investors ahead of the long weekend. Retail and bank stocks led the gains on Friday. Meanwhile, Bank of Japan Deputy Governor Ryozo Himino stated on Thursday that the central bank would continue to hike its benchmark rate if the economy performs in line with projections, indicating no shift in the bank’s stance following the installation of a new government in the country. In corporate news, Fast Retailing surged more than +6% after the company reported record annual earnings, buoyed by the robust global performance of its Uniqlo clothing brand. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed flat at 28.67.

Japan’s financial markets will be closed for a public holiday on Monday.

Pre-Market U.S. Stock Movers

Tesla (TSLA) slumped over -5% in pre-market trading after unveiling its much-anticipated “Cybercab” robotaxi, with analysts pointing out that CEO Elon Musk offered few responses to key questions about the technology.

Aehr Test Systems (AEHR) surged more than +11% in pre-market trading after the company reported better-than-expected Q1 results and said it plans to expand into the artificial intelligence market.

Affirm Holdings (AFRM) gained over +3% in pre-market trading after Wells Fargo upgraded the stock to Overweight from Equal Weight with a price target of $52.

Kinder Morgan (KMI) rose more than +1% in pre-market trading after BofA upgraded the stock to Buy from Neutral with a price target of $27.

General Motors (GM) fell about -0.8% in pre-market trading after DZ Bank downgraded the stock to Hold from Buy.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Friday - October 11th

JPMorgan (JPM), Wells Fargo&Co (WFC), Bank of NY Mellon (BK), Fastenal (FAST), Bank7 (BSVN).

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