Nasdaq Index, Dow Jones, S&P 500 News: Meme Stocks Surge, Home Depot Drops Ahead of PPI Data

Stock Market Stability Awaits Inflation Reports

Stock futures exhibited a steady to positive trend prior to Tuesday’s market open, fueled by anticipation for imminent inflation data and notable volatility in meme stocks like GameStop and AMC. Market focus is intensely set on today’s Producer Price Index (PPI) and tomorrow’s Consumer Price Index (CPI) reports, which are critical for gauging inflation and potential shifts in Federal Reserve policies.

At 11:34 GMT, Dow futures are trading 39589.00, up 30.00 or +0.08%. S&P 500 Index futures are at 5247.75, up 2.25 or +0.04% and Nasdaq 100 Index futures are trading 18296.00, up 0.50 or unchanged.

Volatility in Meme Stocks and Home Depot’s Earnings Disappointment

GameStop and AMC stocks displayed substantial price swings, reigniting the meme stock phenomenon. Meanwhile, Home Depot reported earnings that fell short of expectations, with a quarterly revenue of $36.42 billion versus the anticipated $36.66 billion. The company noted a downturn in large discretionary projects due to higher interest rates, although it reaffirmed its full-year guidance with a slight sales growth projection.

Inflation Expectations and Federal Reserve’s Stance

The New York Federal Reserve’s recent survey revealed increasing consumer inflation expectations, exerting additional pressure on stock valuations. However, Federal Reserve Chair Jerome Powell previously indicated that rate hikes are unlikely in the near term despite recent high inflation figures. This has kept investor sentiment hopeful, maintaining the major stock indexes near their recent highs.

Market Impact and Outlook

The PPI report is expected to show a 0.3% increase for April, while the CPI is anticipated to rise by 0.4% month-over-month. These figures will be pivotal for future monetary policy decisions. Despite a challenging economic backdrop marked by high interest rates affecting consumer spending, particularly in sectors like home improvement, the markets have shown resilience.

Short-Term Forecast

With critical inflation data on the horizon, traders should prepare for heightened volatility. The outcome of these reports could sway the Federal Reserve’s upcoming decisions, impacting market sentiment and direction. A stronger-than-expected inflation report might tilt the balance towards bearish territory due to fears of continued tight monetary policy, whereas lower figures could bolster market confidence, leaning towards a bullish outlook for the near term.

Technical Analysis

E-mini S&P 500 Index futures are flat for a third session on Tuesday, indicating trader indecision and impending volatility. Bullish traders are eyeing 5264.00 as the potential trigger point for an acceleration to the upside. Currently, the index is within striking distance of its record high at 5333.50.

On the downside, the major support is the 50-day moving average at 5192.20. This indicator is controlling the intermediate trend. Buyers are likely to come in on the first test of this moving average, however, it’s also the trigger point for an acceleration to the downside.