Morning in New York: inflation statistics will curb buying

Daily review and forecast of events on the U.S. stock market from Mikhail Denislamov, Deputy Director of Freedom Capital Markets Research.

The main event of the macroeconomic calendar on July 16 will be the publication of the Producer Price Index (PPI) for June. The consensus assumes a 0.2% m/m increase in total and core indicators. Their more active growth may increase concerns about the persistence of high inflation and force traders to revise their forecasts for the timing of the Fed rate cut, which could put pressure on stock markets. After the release of June CPI data, the market estimates the probability of monetary policy easing in September at about 50% against 60% earlier. In our view, this trend may continue today;

In addition, today will be released the index of industrial production for June (consensus: +0.1% mom), which may confirm the stability of the sector. The Fed's Beige Book will also be published with up-to-date assessments of the economic situation in the regions. This release will provide investors with guidance on business and consumer sentiment ahead of the regulator's next meetings;

The focus of attention remains on the US foreign trade policy, which continues to have a significant impact on the dynamics of stock markets. Against the backdrop of recent reports about the introduction of a 19% duty on imports from Indonesia with zero counter tariffs, there was information about reaching a preliminary trade agreement, but there are no details yet. In parallel, the White House is minimizing risks around the deadline for negotiations with China, while progress in dialogues with the EU, Japan and India remains limited. Heightened trade tensions are complemented by Beijing's restrictions on the export of important battery technology for electric vehicles, reinforcing China's dominance in this area. All these factors add to the uncertainty and lead to increased volatility on the US stock exchanges;

Bank of America (BAC), Goldman Sachs (GS), Johnson & Johnson (JNJ) and Morgan Stanley (MS) will release their quarterly reports before the opening of the main session. In the post-market, United Airlines (UAL) and Kinder Morgan (KMI) will release their financial results;

Futures on S&P 500 shows moderately negative dynamics. ASML results were met with a sell-off at the trades in Europe, which may additionally limit the demand for shares of semiconductor manufacturers. For the upcoming session, we forecast an average level of volatility with a negative balance of risks. We focus on S&P 500 movements in the range of 6180-6280 points (from -1% to +0.6% relative to the closing level of the previous session);

- ASML Holding (ASML) shares fell 7%, although the company reported a successful second quarter, with revenue of €7.69 billion and orders reaching €5.5 billion. Management reiterated its outlook for 2025, but warned of the risks of no growth in 2026 amid macroeconomic instability and uncertainty around tariffs;

- Brighthouse Financial (BHF) shares rose 10% in the aftermarket after reports of acquisition talks by Aquarian Holdings. 

- Effective July 18, Victory Capital (VCTR) will replace Schlumberger's (SLB) takeover of AeroVironment (AVAV) in the S&P SmallCap 600 index and ChampionX (CHX) in the S&P MidCap 400. 

- Global Payments (GPN) shares were up 6% after the close of major trading amid reports that Elliott Management has formed a large equity stake in the company. 

July 15 trading on the U.S. stock exchanges ended mostly with a decline. S&P 500 lost 0.4%, Dow Jones dropped by 0.98%, Russell 2000 fell by 1.99%, only Nasdaq 100 rose by 0.13% on the background of Nvidia (NVDA) shares increase by 4%.  The "Magnificent Seven" mainly demonstrated positive dynamics. Almost all sectors included in the broad market index closed in the negative. Only technology companies (XLK: +0.89%) remained on the positive territory. The list of outsiders was headed by the basic materials sector (XLB: -2.05%);

Inflation in the United States in June amounted to the maximum since February 2.7% in annual terms, exactly in line with the average forecasts. Price growth in the country has accelerated for two months in a row. Food prices rose by 3% y/y after 2.9% in May, transportation services - by 3.4% against 2.8% a month earlier, used cars - by 2.8% against 1.8% in May. The decline in energy spending slowed to 0.8% from 3.5%. Gasoline prices fell 8.3% after 12% in May, and gas prices rose 14.2% versus May's 15.3%. Meanwhile, home and new car prices slowed. Core CPI (excluding food and fuel) rose 2.9% y/y at 3% consensus and 0.23% m/m, which was in line with average market expectations but below Freedom Broker's forecast of 0.38% m/m. Overall CPI increased by a five-month peak of 0.3%. A model overlaying the CPI report with June PCE-deflator forecasts yields an estimate of +0.32% mom for the core index and +0.29% mom for the core index. If these benchmarks are realized, there will be a significant acceleration in growth after May's 0.14% and 0.18%, respectively. 

- Apple will invest $500 mln in MP Materials (MP: +20%). $200m of this amount will be prepaid for the purchase of rare earth magnets from MP's Texas plant. The deal includes the development of processing in California. 

- Citigroup (C: +3.7%) second-quarter earnings and revenue came in above consensus. The full-year earnings forecast was pushed to the upper end of the previous range;

- BlackRock's (BLK: -5.9%) profit beat average expectations, while revenue underperformed consensus. Assets under management and inflows were pressured by a one-time withdrawal of $52 billion from the fund by an institutional investor. 

- Wells Fargo's (WFC: -5.5%) April-June net income came in above forecasts thanks to lower impairment provisions and high fees. Net interest income guidance is lower due to falling market returns. 

- Tesla (TSLA: -1.9%) North American sales chief Troy Jones has left the company. This is the second top manager fired or stepping down in recent weeks. 

- Advanced Micro Devices (AMD: +6.4%) is preparing to resume shipments of MI308 chips to China after easing license restrictions. In April, the company's management warned about possible losses of $800 mln due to the export ban.

This article was AI-translated and verified by a human editor