Pre-Markets Muted to Open Out Big Data Week

We’re quiet today ahead of the opening bell. I’ll stop short of calling this the “quiet before the storm,” though this week does bring us key market nutrients: Consumer Price Index (CPI) and Producer Price Index (PPI) reports on Wednesday and Thursday, respectively. Last month, we were greeted with a +3.4% Inflation Rate and +3.6% on core CPI year over year. These are far better numbers than we were seeing in post-pandemic inflation, but still notably higher of where the Fed wants to be — which is likely 90-140 basis points (bps) lower than where we are currently.

There’s also a new Federal Open Market Committee (FOMC) meeting this week. In it, there is basically a 0% chance the Fed moves from its ongoing 5.25-5.0% Fed funds rate, which has been in place since the FOMC’s July 2023 meeting. What we’ll see plenty of, however, is reading of tea leaves regarding what’s to come: is the Fed more amenable to a 25 bps cut at its July meeting? What about September — only weeks away from the General Election? In the interest of an apolitical Fed stance, is a cut then already off the table?

PPI numbers are expected to drop notably month over month. This metric tracking wholesale inflation has been the most consistent toward shrinking inflation over the past year or so; it was also among the highest prints depicting runaway inflation prior to that. Analysts are looking for +0.1% growth month over month, down from the +0.5% posted for April. Year over year, we saw +2.2% on headline and +3.1% core. Consider receiving these new numbers as forward glimpses into future CPI data.

Tomorrow is the NFIB Optimism Index for May. The NFIB, the “voice of small business,” is expected to show a slight uptick in current-climate optimism among small business owners. Just shy of 90, we’re back down to levels we haven’t seen since the build-out from the Great Recession a decade ago. More recently — pre-Covid, more specifically — we were nearly touching 110 on small-business-owner confidence. We know the small-cap Russell 2000 has struggled to keep up with the rest of the market. Can we expect the same here?

Oracle ORCL reports earnings this week. While we’re not accustomed to look at times like these in the calendar earnings cycle as still part of earnings season, it’s still a fairly consequential period, relatively: Casy’s General Stores CASY comes out after the close tomorrow, chip major Broadcom AVGO reports Wednesday (so far doubling the S&P 500 year to date) and Adobe ADBE Thursday, which is expecting double-digit estimates for both quarterly revenues and earnings.

Pre-market futures are down at this hour. The Dow is down -64 points, -0.16%, while the S&P is -0.14% at this hour and the Nasdaq -0.21%. Both the S&P and Nasdaq have enjoyed six up weeks in the last seven, and are thus back trading near all-time highs. The blue-chip Dow and the small-cap Russell (which looks to open -0.95% currently) are down month to date. High-flying A.I. plays are likely making a big difference here; it’s still a big part of out current investment environment.

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