Stocks are set for a weak start on Thursday due to growing inflation concerns leading up to the Sept. 19-20 Federal Reserve meeting. Weak Chinese economic data have raised worries about a global economic impact. Additionally, China’s ban on iPhones in sensitive government offices could weigh on the tech sector, affecting companies that depend on China for production or sales.
However, there is some relief with lower bond yields and oil prices. Traders will also pay attention to second-quarter productivity and costs data, weekly jobless data, and various Fed speeches throughout the day.
Cues From Past Week’s Trading:
Mixed service sector readings and their implication for inflation and in turn the Fed rate weighed down on trader sentiment, as they sent stocks lower for a second straight session on Wednesday. The major averages opened lower and fell through the morning and then consolidated around these lower levels.
The price component of the Institute for Supply Management’s service sector survey particularly worried investors as it pointed to inflationary pressure that stayed stubbornly high. Bond yields rose in reaction to the data, aggravating the weakness.
Most sector stocks moved to the downside, led by IT and consumer discretionary stocks, while energy and utility stocks bucked the downtrend.
US Index Performance On Tuesday
| Index | Performance (+/-) | Value |
| Nasdaq Composite | -1.06% | 13,872.47 |
| S&P 500 Index | -0.70% | 4,465.48 |
| Dow Industrials | -0.57% | 34,443.19 |
| Russell 2000 | -0.33% | 1,874.28 |
Analyst Color:
September is the worst-performing month for the stock market historically, down on average 1.1% since 1928, and rising less than 45%of the time but this year could be different, said Kevin Philip, Partner at Bel Air Investment Advisors
“With such a strong run in returns this year, a market correction of anything less than 5% seems reasonable, and a true stock market correction around 10% sets us up for the next leg up,” the analyst said.
Regardless of what exactly occurs in stock prices for September, looking out to 2024 and beyond, we will have a Fed no longer raising rates, and likely lowering them, earnings growth still positive, and a US consumer that has held steady, he noted.
“From our perspective, we have a favorable economic and monetary backdrop for rising stock market prices over that time period,” Philip said.
“I would hold steady, see any dip in the markets as a buying opportunity, and would not be surprised if this September countered the historic trend and offered us a positive return.”
Futures Today
Futures Performance On Thursday
| Futures | Performance (+/-) |
| Nasdaq 100 | -0.64% |
| S&P 500 | -0.33% |
| Dow | +0.01% |
| R2K | -0.12% |
QQQ) retreated 0.60% to $372.51, according to Benzinga Pro data.
Upcoming Economic Data:
The Labor Department is due to release the weekly jobless claims data at 8:30 a.m. EDT. Economists, on average, expect the number of individuals claiming unemployment benefits to come in at 234,000 for the week ended Sept. 2 compared to 228,000 in the previous week.
The Labor Department will release the revised second-quarter productivity and costs data at 8:30 a.m. EDT. A preliminary report released in early August showed quarter-over-quarter non-farm productivity growth of 3.7% for the second quarter compared to a 2.1% drop in the first quarter. Unit labor cost growth decelerated from 4.2% to 1.6%.
The Energy Information Administration will release its weekly petroleum status report at 11 a.m. EDT.
The Treasury is due to auction four- and eight-week bills at 11:30 a.m. EDT.
The following is the itinerary for the Fed speeches scheduled for the day:
- Philadelphia Fed President Patrick Harker, a member of the FOMC: 10 a.m. EDT
- Chicago Fed President Austan Goolsbee: 11:45 a.m. EDT
- Fed Governor Michelle Bowman, a FOMC member: 4:55 p.m. EDT
- Dallas Fed President Lorie Logan: 7:05 p.m. EDT
See also: Best Futures Trading Software
Stocks In Focus:
- GameStop Corp. (NYSE:PATH) rose over 5% each in premarket trading following their respective earnings announcement.
- C3.ai, Inc. (NYSE:CHPT) plunged nearly 10% each in reaction to their quarterly reports.
- Apple, Inc. (NASDAQ:AAPL) fell about 2.70% amid fears of setbacks in China following the launch of a competing smartphone by Huawei and China’s decision to ban iPhones in government offices.
- ABM Indusries, Inc. (NYSE:SAIC) are among the companies due to report their quarterly results ahead of the market open.
- Those reporting after the close include DocuSign, Inc. (NASDAQ:ZUMZ).
Commodities, Bonds, Other Global Equity Markets:
Crude oil futures fell 0.62% to $87 in early European session on Thursday following Wednesday’s nearly 1% rally.
The benchmark 10-year Treasury note fell 0.014 percentage points to 4.276% on Thursday.
Most Asian markets declined sharply on Thursday, led by the Chinese, Hong Kong, and Australian markets, although the Singaporean and Indian markets bucked the downtrend.
The decline was partly due to he negative sentiment on Wall Street overnight. Also, soft economic data from Japan and China also impacted market mood. China’s trade surplus declined in August, with both imports and exports declining year-over-year.
European stocks were higher by late-morning trading on Thursday, as they recovered from early weakness.
