S&P500 and Nasdaq 100: Stock Futures Rise as Inflation Eases Below 3%

Stock Futures Edge Higher as Inflation Eases Below 3%

Stock futures climbed as investors responded to the latest inflation data, which showed the annual rate falling below 3%. This marks the lowest inflation reading since 2021 and has fueled optimism in the markets, especially after a challenging start to August. All major indexes have now recovered to levels seen before the global sell-off on August 5, which was driven by concerns over Japan’s market and broader economic growth.

Inflation Data Bolsters Rate Cut Expectations

The Consumer Price Index (CPI) rose 2.9% year-over-year in July, slightly below the 3% figure from June, according to the Bureau of Labor Statistics. On a month-over-month basis, prices edged up by 0.2%, matching economists’ expectations. Core inflation, excluding volatile food and energy prices, also increased by 0.2%. These inflation figures have reinforced expectations that the Federal Reserve might consider cutting interest rates at its upcoming September meeting.

Corporate Movers: Kellanova, Alphabet, and Flutter

In corporate news, Kellanova shares surged over 6% in premarket trading following an announcement that the company would be acquired by Mars for $83.50 per share, valuing the deal at $36 billion. Alphabet’s stock, however, dipped by more than 1% on reports that U.S. regulators are considering a breakup of the tech giant, with potential divestitures including Google’s Chrome browser and Android operating system.

Meanwhile, Flutter, the parent company of FanDuel, saw a 6.3% increase in its share price after reporting better-than-expected second-quarter revenue and raising its full-year guidance. The sports betting company’s strong performance was well received by the market, highlighting its growth potential in the competitive betting industry.

Mixed Results in Earnings Season

Brinker International’s shares plummeted 15% after the company posted disappointing fiscal fourth-quarter earnings and issued weaker-than-expected guidance for the year. On the other hand, Cardinal Health experienced a 6.3% jump in its stock price after beating earnings expectations and raising its full-year outlook, signaling strong performance in the healthcare sector.

Market Forecast

With inflation easing and markets recovering, investor sentiment is cautiously optimistic. However, the upcoming Federal Reserve meeting looms large. If economic data over the next few weeks points to further cooling, the Fed may opt for a more aggressive rate cut. In the short term, expect volatility as traders weigh these factors, with a slight bullish tilt as inflation concerns ease.

Technical Analysis

E-mini S&P 500 Index futures are edging higher on Wednesday, trading on the strong side of a key pivot at 5420.50. This level is new support. A failure to hold this level could trigger the start of a 50% correction of the rally from the 5120.00 bottom.

The upside target is the 50-day moving average at 5507.37. Sellers could come in on the intial test, but it could also fuel another surge into the main top at 5600.75.