Aug 15 2024: Wall Street is poised for a higher open on Thursday, though U.S. retail sales data could shift the current optimism. Cisco’s restructuring plan and the U.K.’s economic growth are also key highlights influencing markets.
- Focus on Economic Data U.S. economic data will be in the spotlight on Thursday as investors assess the likelihood of Federal Reserve interest rate cuts. Recent inflation data has bolstered expectations for a September rate cut, though there is debate about the size—whether a standard 25 basis points or a more substantial 50 basis points.The probability of a 50 basis point cut has dropped to 36% from 50% a day earlier, following the latest CPI data. The data slate includes weekly jobless claims, the Philadelphia Fed manufacturing index for August, and July retail sales, which are expected to show a 0.4% monthly increase, a slight improvement from the previous month.The Fed has held its benchmark rate steady at 5.25%-5.50% since last July, after increasing it by 525 basis points since 2022.
- Stock Futures Rise Ahead of Data U.S. stock futures were higher, with optimism that benign inflation will prompt the Federal Reserve to lower interest rates next month. As of 04:20 ET (08:20 GMT), Dow futures were up 0.3%, S&P 500 futures increased by 0.1%, and Nasdaq 100 futures rose by 0.3%.Wall Street indices closed higher on Wednesday, buoyed by the July CPI, which showed a 2.9% annual inflation rate, the lowest since 2021. The retail sales data and corporate earnings reports, including those from Walmart, Ulta Beauty, and Nike, will be crucial for market sentiment.
- Cisco Surges on Restructuring Plan Cisco Systems saw its stock rise more than 6% in premarket trading after reporting better-than-expected fourth-quarter earnings and unveiling a restructuring plan. Cisco reported Q4 revenue of $13.64 billion and adjusted earnings per share of 87 cents. The company plans to cut 7% of its workforce, expecting a pretax charge of up to $1 billion for severance and related costs.Chuck Robbins, Cisco’s CEO, highlighted strong demand and order growth as key factors driving the company’s performance.
- UK Economy Shows Growth in Q2 The U.K. economy grew by 0.6% in Q2, following a 0.7% increase in Q1. This marks a cautious rebound from recession, though growth was flat in June and industrial and manufacturing production fell sharply year-over-year. The Bank of England’s stance on interest rates remains uncertain, adding to market volatility.
- Crude Prices Up on Rate Cut Hopes Crude oil prices rose on Thursday, supported by hopes that U.S. rate cuts will boost economic activity and fuel demand. U.S. crude futures (WTI) rose 0.3% to $77.19 per barrel, while Brent increased by 0.43% to $79.97 per barrel. Despite the rise, gains are tempered by a surprise increase in U.S. stockpiles and concerns about weaker demand as the summer driving season ends.U.S. crude inventories rose by 1.4 million barrels for the week ending August 9, raising concerns about future demand.
