Investing.com — Wall Street had an unexpected reaction to weaker-than-expected inflation data, with big technology stocks plummeting after the data was released amid growing optimism for a September rate cut.
Falling U.S. futures prices suggest the trend will continue on Friday, but key producer price index data and the start of second-quarter earnings season are likely to give the market further clues.
President Joe Biden also reiterated his intention to challenge Donald Trump in the 2024 election, dismissing calls for him to step down amid growing concerns about his mental health.
Weak September CPI, PPI data raises interest rate cut expectations
The weaker-than-expected consumer price index released on Thursday is seen as boosting market expectations that the Federal Reserve will cut interest rates in September.
Traders now see an 82% chance of a 25 basis point cut in September, up from a 64% forecast last week. The figure was lower than previously expected after June CPI data showed core inflation rose slightly but inflation fell slightly more than expected.
Inflation data due later on Friday will provide further clues on this trend, and any signs of further slowing in inflation would likely fuel expectations of a rate cut.
Wall Street hit by tech stock crash
U.S. stock index futures fell in European markets, suggesting the tech sell-off could continue into Friday.
Wall Street stock indexes fell sharply on Thursday as investors locked in recent gains, particularly in big technology stocks that have soared in recent weeks on hype around artificial intelligence.
The trend spread to Asian and European markets on Friday, with tech-heavy bourses posting big losses.
But investors also appeared to be shifting their bets to more cyclical sectors that are expected to benefit from improved growth due to lower interest rates this year.
Banks kick off second quarter earnings season
Second-quarter earnings season kicks off in earnest on Friday, with earnings reports from Wall Street’s biggest banks scheduled to be released throughout the day.
JPMorgan Chase (NYSE: Wells Fargo & Company (NYSE: Citigroup Bank of New York Mellon (NYSE:) and Bank of New York Mellon (NYSE:) are scheduled to report second-quarter results later in the day, which will focus on how corporate profits fared as the economy comes under pressure from high interest rates and persistently high inflation.
Friday’s report is followed by a string of financial giants announcing their financial results. Goldman Sachs Group Inc. (NYSE: ) and BlackRock Inc. (NYSE: ) on Monday. Morgan Stanley (NYSE:) and Bank of America Corp. (NYSE:) are scheduled to report earnings on Tuesday.
Biden announces he will run for president in 2024
US President Joe Biden has denied growing concerns about his mental health and reiterated his commitment to challenging Donald Trump in the 2024 presidential election.
Answering questions from reporters at a NATO summit on Thursday, Biden said he was “the best person ever to run for president.” He said he had beaten Trump once and would win again.
His comments came amid growing calls from several Democratic lawmakers for the president to withdraw from re-election following his disastrous performance in a debate with Trump in June.
China trade data mixed, import tariffs dampen outlook
Markets also struggled with mixed trade data from the world’s second-largest economy.
China’s trade surplus jumped to a larger-than-expected size in June, helped by solid economic growth, but an unexpected fall in imports raised concerns about weakening domestic demand.
China’s imports of key commodities such as oil and iron ore fell during the month, negatively impacting raw material prices.
Exports were strong in June but are also expected to face headwinds in the coming months, especially as the European Union joins the U.S. in imposing tariffs on key Chinese industries such as electric vehicles, which are a major market for Chinese EVs.
