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Pre-Markets Creep Higher Ahead of Powell & Busy Late Week

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Wednesday, July 10th, 2024

We come into Hump Day riding multi-day winning streaks. It may not seem this way, as the six-straight up-days on the S&P 500 and Nasdaq indices have been very modestly incremental. Yet they have continued to set new all-time closing highs day after day. Compare this to the blue-chip Dow and small-cap Russell 2000, neither of which is currently trading at year-to-date highs, let alone all-time highs. The Dow is +20 points at this hour, the S&P is +16 and the Nasdaq up another +88 points. The Russell is up +10 an hour before the opening bell.

After the start of normal trading, we will see an economic report release. This is Wholesale Inventories for May — not exactly expected to impact trading to the extent tomorrow’s CPI report for June might, but one that illustrates the near-term supply chain effect. Advanced numbers on these metrics look toward +0.6%, following an upwardly revised +0.2% the previous month. Still, the last time we saw Wholesale rates as high as +0.6% was back in November 2022, with February of that year notching an all-time high +2.8%. Wholesale numbers are thought of as the worst sort of economic growth, in that goods that go unsold must be worked off excess inventory first.

Fed Chair Jerome Powell stays on Capitol Hill a second-straight day. Today will bring us testimony before the House Finance Committee, following yesterday’s appearance before the Senate Banking Committee. We expect Powell to hit the same points as he did a day ago, although we may expect the line of questioning to come from a different angle, as the House is run by Republicans and the Senate by Democrats. Obviously we’re also in a General Election year, so it would be fair to expect a level of grandstanding from congresspeople.

We’ve been speaking all week about the Inflation Rate. This will come Thursday morning when the full Consumer Price Index (CPI) report is out, as the Inflation Rate is headline CPI year over year. We look for this metric to come down to +3.1%, which would match January 2024 lows, but still 10 basis points (bps) above the +3.0% Inflation Rate in June of last year. We peaked at +9.1% in June of 2022, so it’s clear real progress has been made since then. But the Fed is still seeking a “2-handle.”

We also have spent some time talking about the start of Q2 earnings season. But while the big banks like JPMorgan (JPM - Free Report) , Citigroup (C - Free Report) and Wells Fargo (WFC - Free Report) report Friday, there are some big household names out with Q2 results tomorrow before the opening bell. Delta Air Lines (DAL - Free Report) , working on a string of four-straight quarterly earnings beats, is expected to post -11.5% earnings growth year over year on +4.3% revenue growth. PepsiCo (PEP - Free Report) , which hasn’t missed on earnings in more than a decade, looks for +2.9% earnings growth on +1.2% revenue gains year over year.

Intuit (INTU - Free Report) announced layoffs this morning. The business and financial software firm says it will be letting go of 10% of the company’s workforce, around 1800 employees, as advancement in A.I. better serves the needs in software development. Whole offices in Edmonton, Alberta, Canada and Noise, ID will be shuttered. The Zacks Rank #2 (Buy)-rated tech firm eventually expects to hire back 1800 employees with somewhat different capabilities. Shares are flat on the news in the pre-market.

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