Morning in New York: inflation statistics will set the vector for trading

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

The key macro event of the day will be the publication of the July consumer spending index (PCE) report. It is the most representative indicator of inflation for the Fed. Economists expect the core index to rise by 0.3% mom, the same as in June. At the same time, growth in household income and personal spending is forecast to accelerate to 0.4% and 0.5% after 0.3% for both metrics a month earlier.

If the actual results exceed the consensus, it will strengthen the hawks' position in the regulator's leadership and may put pressure on the market. Conversely, weaker inflation data on the back of stable expenditures and incomes will strengthen the favorable macro scenario and will be positively perceived by investors. The spending item is particularly important as consumption activity has been declining recently.

On the previous day, Christopher Waller, a member of the Fed's Board of Governors, said that he was in favor of a rate cut back in July and would support a 25bp cut at the September meeting, and expects further steps to ease monetary policy in the next 3-6 months. His comments confirm the presence of a rather strong "dovish" lobby in the FOMC, but the final decision, as before, will depend on macro statistics.

The conflict between the White House and the Fed moves into the active legal phase today. At 10:00 a.m. Eastern Time (ET) in the District Court of Washington will begin the first hearing in the lawsuit of Fed Governor Lisa Cook, who is trying to block President Trump's order to fire her. The situation escalated the night before when it was revealed that Cook had been indicted on charges related to alleged violations in ethics filings. This unprecedented judicial confrontation poses serious long-term risks to the independence of the Fed, so the situation remains in the center of investors' attention.

Separately, the Chinese companies segment will be in focus today amid market reaction to the Alibaba (BABA) report.

Futures on US indices demonstrate near-zero dynamics on the eve of the publication of PCE statistics. We assess the balance of risks for the upcoming session as neutral with average volatility. We focus on the S&P 500 fluctuations in the range of 6460-6540 points (from -0.6% to +0.6% to the closing level of previous trades).

- Shares of Dell Technologies (DELL) fell 6% despite strong second-quarter results in which its revenue grew 19% YoY to $29.78 billion and adjusted EPS was $2.32, exceeding analysts' expectations. The quotes were pressured by a cautious outlook for the third quarter and management's indication of weakness in the PC division, despite continued strong revenue growth in the AI infrastructure segment.

- Marvell Technology (MRVL) shares collapsed 15% in the premarket following the report. While second-quarter revenue of $2.01 billion was in line with estimates, revenue from the company's key data center segment came in below expectations. This and a weak guidance for the third quarter disappointed the investment community.

- Quotes of retailer Ulta Beauty (ULTA) rose after the release of strong quarterly results. The company's revenues reached $2.79 billion and comparable sales climbed 6.7%, significantly beating analysts' expectations. The increase in the company's full-year revenue and earnings guidance was seen by the market as a sign of resilient demand for cosmetics.

- Successful results for the fourth fiscal quarter and the achievement of operating profitability led to a 16.7% surge in Affirm Holdings (AFRM) stock price. The company's revenue for the period grew 33% YoY to $876 mln, while gross transaction volume (GMV) increased 43% to $10.4 bln, well above consensus.

August 28 trading on American stock exchanges ended in the plus. The S&P 500 added 0.32%, setting a new all-time high and closing above 6500 points. The Nasdaq 100 rose 0.58%, the Dow Jones gained 0.16%, and the Russell 2000 gained 0.19%. Shares of the Magnificent Seven were mostly trading in the green, although Nvidia (NVDA) remained under pressure following the report. The technology sector (XLK: +0.79%) led the gains, while utility providers (XLU: -0.76%) were the outsiders.

The main event of the day, which determined the activity of buyers, was the revision of the US GDP growth estimate for the second quarter from 3% to 3.3%. Exceeding the consensus is explained by stronger consumer demand and lower imports. The market also positively perceived the weekly data on the number of initial and repeated applications for unemployment benefits, which were below average forecasts, indicating the continued stability of the labor market.

Against this backdrop, even Nvidia's (NVDA) strong but underwhelming report did not spoil investor sentiment. Although the company beat revenue and profit forecasts and raised its guidance, disappointment was caused by the results of Nvidia's key data center segment and continued uncertainty about shipments to China. However, management statements about strong demand for AI computing and sales momentum for the latest Blackwell chips were seen as positive.

The news that the EU proposed to remove duties on industrial goods from the U.S. and the White House administration extended exemptions on some tariffs for China until the end of November helped reduce uncertainty.

- Hormel Foods (HRL: -13.1%) reported quarterly revenue and earnings below estimates. Management cited a sharp rise in raw material costs and warned that these pressures will continue into the next quarter.

- Shares of successfully reported retailer Urban Outfitters (URBN: -10.7%) were pressured by its management's warnings about the negative impact of import tariffs on second-half results, including gross margin.

- A strong second quarter report, in which the company significantly beat earnings estimates and comparable sales were better than expected, was a growth driver for shares of discounter Burlington Stores (BURL: +5.3%). Investors were positive on the company's full-year guidance increase and management's announcement of a strong start to the third quarter.

- Shares of Veeva Systems (VEEV: -7.2%) came under pressure despite strong second-quarter financial results and an increased full-year outlook. Investors focused on operational performance: normalized billings came in below consensus, which may signal some slowdown in future growth.

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