The Market News Today: April PCE Report Set to Reveal Small Inflation Drop

Modest Inflation Decline Expected in April PCE Report

April’s PCE report is anticipated to show a slight reduction in inflation, with an annual rate forecast at 2.7%. Core inflation is expected to slow to 0.2%. This incremental progress aligns with the Federal Reserve’s goal of reaching a 2% target. Economists do not foresee significant surprises, highlighting steady but challenging progress in controlling inflation amidst ongoing economic uncertainties. The report, due Friday, is crucial for assessing the Fed’s future interest rate decisions.

Eurozone CPI Expected to Influence Rate Cut Expectations

Eurozone Headline CPI is forecasted at 2.5% Y/Y, up from 2.4%, and Core CPI at 2.8% Y/Y, up from 2.7%. This inflation data could shape market expectations for rate cuts beyond the June meeting. If inflation remains high following robust PMIs, wage growth, and labor market reports, a hawkish shift in interest rate expectations may occur, altering the current 55 bps easing anticipated by year-end.

Dell and Gap Show Diverging Earnings Results

Dell forecasts lower profit and annual margin decline due to rising AI server costs, leading to a 17% drop in shares. The company expects a Q1 revenue rise of 6% to $22.24 billion but lower adjusted profit at $1.65 per share. Conversely, Gap raised its annual sales forecast and saw a 23% surge in shares after Q1 results beat expectations, driven by strong sales in Old Navy and Gap brands, with net sales rising to $3.39 billion.

Mixed U.S. Stock Futures as Investors Digest Earnings and Inflation Data

U.S. stock futures are mixed but mostly lower as investors review corporate earnings and await a key inflation report. Dell dropped 16% despite strong results, while Gap surged 21%. The major benchmarks are headed for a losing week, with the Dow down 0.9%, S&P 500 down 0.6%, and Nasdaq down 1.1%. Concerns over market choppiness and rising Treasury yields weigh on sentiment, with recent gains driven by a few large-cap tech stocks.

Oil Falls on Fed Comments; Gold Gains Amid Inflation Uncertainty

Oil prices dropped as Fed officials signaled it’s too soon for rate cuts and due to a surprise rise in U.S. gasoline stocks. U.S. crude inventories fell by 4.2 million barrels. Meanwhile, OPEC+ plans to extend oil production cuts into 2025. Gold prices marked a fourth consecutive monthly gain, with investors cautious ahead of key U.S. inflation data. Traders have reduced rate-cut expectations following recent hawkish Fed remarks, impacting gold’s momentum as an inflation hedge.