The Market News Today: Will PCE Signal a Turning Point in Inflation Control?

Inflation Report Could Signal Milestone for the Fed

The Commerce Department is set to release the personal consumption expenditures (PCE) price index on Friday. The report is expected to show minimal monthly increases for May, marking the first time since November 2023. The core PCE, excluding food and energy, is anticipated to show its lowest annual reading since March 2021, signaling potential progress in controlling inflation. Dow Jones forecasts a flat headline PCE and a 0.1% rise in core PCE, both expected at 2.6% year-over-year.

Nike Shares Plunge on Cut Guidance and Weak Sales

Nike shares dropped 11% after the company slashed its full-year guidance, projecting a 10% decline in first-quarter sales due to weak performance in China and uneven global trends. This forecast contrasts sharply with the expected 3.2% drop. Fiscal 2025 sales are now expected to decrease mid-single digits, with a challenging outlook for the next few quarters. Despite beating earnings estimates, revenue fell short, and Nike’s Converse brand significantly underperformed.

S&P 500 Futures Rise Ahead of Key Inflation Data

S&P 500 futures climbed on Friday as traders awaited crucial inflation data and the end of a strong first half of the year. The Nasdaq led June gains with a 6% rise, while the S&P 500 and Dow added over 3% and 1%, respectively. Investors anticipate May’s core PCE index, along with spending, personal income, and consumer sentiment data. The Nasdaq’s 19% first-half surge, driven by AI enthusiasm, contrasts with the Dow’s modest 4% gain.

Treasury Yields Rise, Gold Eases, Oil Prices Climb

U.S. Treasury yields inched higher as investors awaited the PCE price index. Gold prices eased but were set for a third straight quarterly rise, driven by expectations of U.S. monetary easing and China’s gold purchases. Oil prices rose, marking a third consecutive weekly gain, as geopolitical tensions and weather-related disruptions outweighed weak U.S. demand. The conflict between Israel and Lebanon’s Hezbollah fueled concerns about potential disruptions from major oil exporter Iran.

IMF Recommends Fed Delay Rate Cuts Until Late 2024

The International Monetary Fund advises the Federal Reserve to delay interest rate cuts until at least the end of 2024, citing robust U.S. economic growth and ongoing inflation risks. IMF Managing Director Kristalina Georgieva emphasized the need for clear evidence of inflation decline before reducing rates. The IMF forecasts core PCE inflation will reach the Fed’s 2% target by mid-2025, suggesting a more optimistic outlook than the Fed’s projection for 2026.