Economic Outlook Takes Center Stage as Investors Await Fresh Data
As the market gears up for a fresh batch of economic data, investors are holding their breath, awaiting clues on the economy’s trajectory and the Federal Reserve’s next move on monetary policy. The spotlight shines bright on today’s producer price index (PPI) reading for October and weekly jobless claims data, set to be released at 8:30 a.m. ET.
Corporate Pricing Power Under Scrutiny
According to Paul Donovan, chief economist at UBS Global Wealth Management, the PPI numbers better reflect corporate pricing power than consumer price data. He expects the tone to be consistent with a December rate cut. This sentiment is echoed by traders, who are broadly pricing in an 82.3% chance of a 25-basis point interest rate cut at the Fed’s December meeting, according to CME FedWatch.
Fed Chair Jerome Powell Takes the Stage
Later today, Fed Chair Jerome Powell will provide an update on his economic outlook to business leaders in Dallas. This comes on the heels of some Fed policymakers shifting their attention back to inflation risks as they weigh when, and how fast and far, to cut interest rates. The backdrop is set against the policies of President-elect Donald Trump’s administration, which are widely expected to add to inflationary pressures.
Inflation Expectations on the Rise
Changing inflation expectations are clearly visible in the bond market, where the U.S. 10-year Treasury yield has ticked up to its highest since July. This could limit gains for rate-sensitive equities. The Republican Party’s control of both houses of Congress, projected by Edison Research, enables Trump to push an agenda of slashing taxes and shrinking the federal government.
Market Snapshot
At 5:25 a.m. ET, Dow E-minis were up 47 points, or 0.11%, S&P 500 E-minis were up 3.75 points, or 0.06%, and Nasdaq 100 E-minis were up 8 points, or 0.04%. Futures tracking the small-cap Russell 2000 jumped 0.7% after the index closed down nearly 1% on Wednesday.
Cryptocurrency Focus
Shares of cryptocurrency-focused companies rose on Thursday as bitcoin continued to climb on hopes of favorable policies under Trump. Coinbase Global gained 4.2%, miner MARA Holdings rose 3.3%, and bitcoin buyer MicroStrategy was up 3.7% in premarket trading.
Earnings in Focus
Earnings from Walt Disney and semiconductor company Applied Materials are due before the bell, with the company’s shares up 2% and 1.2%, respectively, on Thursday. Cisco dipped 4.6% after the computer networking equipment maker forecast annual revenue broadly in line with estimates after the bell on Wednesday. Remarks from Fed officials Adriana Kugler, Thomas Barkin, and John Williams are expected later on Thursday.
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