US stock index futures are gradually recovering ahead of the release of US inflation data, which will shape investors' expectations for a further increase in interest rates by the Federal Reserve. S&P 500 futures rose 0.3% after the fourth session of decline. Nasdaq 100 futures also gained about 0.3%. The Dow Jones is trading without much change.
Some stabilization is also observed in the bond market: a two-year treasury bond exceeds a 10–year one by almost 50 basis points, which indicates an inversion of the yield curve - now, it is the highest since 2000. This all points to a recession in the economy, which is exacerbated by the Fed's campaign to tighten monetary policy to curb inflation. If today's data on US prices for July of this year again indicate growth, and it is expected that overall consumer price inflation in the US has declined, then, most likely, the Fed will continue to adhere to the policy of aggressively raising interest rates – not very good for the stock market. How these numbers affect views on Fed tightening will be key to risk attitudes.
As I have repeatedly noted, today's inflation data may set the tone for the markets before the end of the month. Lower-than-expected inflationary pressure may become a serious tailwind for the markets. At the same time, figures near the June indicator or even higher may cause a big reversal and risk rejection, as expectations will again shift to 75 or 100 basis points of increase in September this year.
Recently, the president of the Federal Reserve Bank of St. Louis, James Bullard, said that the US Central Bank would be ready to keep interest rates "at a higher level for longer" if inflation rises unexpectedly. Federal Reserve Governor Michelle Bowman also said that she supports the recent significant interest rate hike by the Central Bank and believes that it is necessary to continue this way until inflation is suppressed. At its last two monetary policy meetings, the Fed raised borrowing rates by 0.75 percentage points, which was the biggest increase since 1994.
Yesterday it became known that Elon Musk sold another $ 6.9 billion worth of Tesla shares, which was the largest sale of a billionaire in history. The CEO of Tesla said he needed money if he was forced to continue his aborted deal to buy Twitter Inc. In the premarket, Tesla rose 2.7%.
Coinbase — shares of the cryptocurrency exchange fell by 5% in the premarket after the company reported a larger-than-expected quarterly loss, as the business was affected by a drop in cryptocurrency prices. Coinbase volumes dropped, and the number of active traders decreased during the quarter.
Twitter shares gained 3.6% in the premarket after the news that Elon Musk sold Tesla shares. It is unclear whether the court will force Musk to fulfill his deal to buy Twitter for $ 44 billion.
Shares of Roblox, a gaming company, fell 15.1% in premarket trading after the quarterly report reported losses that turned out to be larger than expected. Orders — a key sales indicator — did not meet analysts' forecasts.
As for the technical picture of the S&P500
Nervousness in the market is growing, and buyers who missed $4,150 yesterday have not yet returned to this level. At the moment, we need to try very hard to offer something in the area of the nearest support of $4,116, which will somehow even out the situation with short positions and stop the panic. It will be possible to talk about the growth of the index only after the return of the new resistance of $ 4,150 under control. This is the only way we will see fairly active growth in the $4,184, where large sellers will return to the market again. At least there will be those who want to fix profits on long positions. A more distant target will be the $4,234 level. In the case of new weak corporate reports and a breakdown of $4,116, buyers will have to defend the support of $4,091. A breakthrough in this area will push the trading instrument back to $4,064 and $4,038. Having missed this level, the S&P 500 will sink into the area and $4,003. The longer-range target remains the $3,968, where buyers will start acting more aggressively again.