Five things you need to know before the market opens on Friday July 28:
1. -- Stock Futures Higher, Bank of Japan Shocks Markets
U.S. equity futures resumed their upward march Friday, while the dollar slipped lower against its global peers and Treasury yields rose, as investors reacted to a surprise move by the Bank of Japan and braced for another key inflation reading prior to the start of trading.
Bank of Japan Governor Kazuo Ueda, who took office earlier this spring, shocked global markets with plans to loosen the central bank's grip on the bond markets, a move analysts say could be a precursor to higher interest rates in the world's third-largest economy.
The decision will allow 10-year Japanese government bond yields to rise to as high as 1%, up from a prior cap ot 0.5%, and could entice domestic investors to repatriate some of their trillions in foreign holdings -- including U.S. Treasury bonds -- for higher yields at home.
Benchmark 10-year Treasury note yields, which rose 13 basis points yesterday in the wake of stronger-than-expected second quarter GDP data, traded north of 4% in overnight dealing, while 2-year notes rose to 4.889%.
The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked just 0.04% lower at 101.727.
In the U.S., another busy session for corporate earnings continues with updates from Chevron, Exxon and consumer brands giant Procter & Gamble as well as the June reading of the Federal Reserve's preferred inflation gauge, the PCE Price index, at 8:30 am Eastern time.
Heading into the start of the trading day on Wall Street, futures contracts tied to the S&P 500 were indicating a 20 point opening bell gain while those linked to the Dow Jones Industrial Average were priced for an 88 point advance. Nasdaq futures were 130 points.
The Europe-wide Stoxx 600 was marked 0.2% lower in early Frankfurt trading while Britain's FTSE 100 gained 0.18% in London.
In overnight trading, the MSCI ex-Japan index was marked 0.15% lower into the close of trading while Japan's Nikkei 225 ended the session down 0.4% at 32,759.23 points as the yen jumped to 139.33 against the U.S. dollar.
2. -- Fed Inflation Gauge On Deck As Price Pressures Fade
The Bureau of Economic Analysis will publish its monthly inflation report Friday, including the Federal Reserve's preferred 'core prices' reading, as markets continue to test the central bank's resolve on near-term rate hikes.
Analysts see the heading reading for the May PCE Price Index slowing notably, to 3.1%, from its final April tally, with the so-called core reading easing to 4.2%. On a monthly basis, investors expect a headline reading of -0.1% with core easing to 0.2%.
CPI inflation fell for a 12th consecutive month in June, to a two-year low of 3%, with core consumers prices pegged at 4.8%.
The downside moves, which are expected to moderate over the coming months, contrasted the Fed's eleventh rate hike in sixteen months earlier this week, which took the Fed Fund rate to the highest levels in 22 years.
Fed Chair Powell, however, indicated that incoming data, including the all-important PCE prints, would inform our decision as we go into (the September) meeting," Powell told reporters in Washington. "I would say it is certainly possible that we would raise funds again at the September meeting if the data warranted and I would also say it’s possible that we would choose to hold steady at that meeting."
The CME Group's FedWatch tool suggests only a 20% chance of a follow-on hike in September, and pegs the odds of a quarter point move in November at 28.4%.
3. -- Ford Slumps As Carmaker Pivots On EV Strategy
Ford Motor (F) -) shares slumped lower in pre-market trading after the carmaker unveiled yet another strategy shift that will see it focus on hybrid vehicle production as it struggles to control costs in its upstart EV division.
Ford posted stronger-than-expected adjusted earnings of 72 cents per share for the three months ending in June, topping Street forecasts by 17 cents, with revenues rising 6.8% to $40.5 billion.
However, Ford said it sees a loss for its Model E unit of around $4.5 billion for the full year, with profits from its Ford Blue rising to around $8 billion. The contrast underscores Ford's decision to focus on ramping up hybrid production, particularly in its commercial division, over the coming years.
"Our hybrid offerings are extremely popular. F-150 is the best-selling vehicle in the U.S.," said CEO Jim Farley. We are adding hybrid options across our ICE lineup, and we expect to quadruple our hybrid sales in the next five years, and we're already number two in the market last year."
Ford shares were marked 2.05% lower in pre-market trading to indicate an opening bell price of $13.45 each.
4. -- Intel Surges After Surprise Q2 Profit, PC Sales Outlook
Intel (INTC) -) shares surged higher in pre-market trading after the PC and chipmaker post a surprise second quarter profit and forecast solid near terms sales.
Intel said adjusted earnings for the three months ending in June were pegged at 20 cents per share, well ahead of the Street consensus forecast of a 3 cent loss. Group revenues fell 15.8% to $12.9 billion, thanks to the ongoing slump in PC shipments, but topped analysts' estimates of a $12.1 billion tally.
Looking into the current quarter, Intel said sales would likely rise to between $12.9 billion and $13.9 billion, with adjusted margins improving to around 43%. Earnings were forecast flat to the current quarter at 20 cents per share.
"We continue to build out our foundry business, and we are seeing early signs of success as we work to truly democratize AI from cloud to enterprise, network, edge and client," said CEO Pat Gelsinger.
"We also saw strong momentum on our financial discipline and cost savings as we return to profitability, are executing our internal foundry model by 2024, and are leveraging our Smart Capital strategy to effectively and efficiently position us for the future," he added.
Intel shares were marked 7.1% higher in pre-market trading to indicate an opening bell price of $37.00 each.
5. -- Exxon Mobil Earnings In Focus Following Weaker Pre-Announcements
Exxon Mobil (XOM) -) shares bumped higher in pre-market trading ahead of the oil major's second quarter earnings prior to the opening bell.
The group is expected to see overall adjusted profits more than halve from last year levels amid a steep year-on-year decline in crude prices, with a bottom line forecast at $2.01 per share.
Group revenues, as well, likely fell 30.6% from last year to $80.2 billion as crude, which traded north of $100 per barrel for much of the quarter last year following Russia's invasion of Ukraine, eased to the mid-$70 per barrel range over the three months ending in June.
Earlier this month, Exxon said operating earnings will fall by around $7.8 billion compared to year's levels, with upstream profits down $2.2 billon. Rival Chevron (CVX) -) also warned of notable softer June-quarter earnings earlier this week.
Exxon shares were marked 0.46% higher in pre-market trading, indicating an opening bell price of $105.90 each
