Five things you need to know before the market opens on Friday August 11:
1. -- Stock Futures Lower As Markets See 'Higher For Longer' Fed Rates
U.S. equity futures edged lower Friday, while the dollar extended its recent run of weekly gains, as investors prepped for a subdued Friday session following yesterday's July inflation report.
Wall Street's early Thursday rally, sparked by a modestly softer-than-expected reading for both headline and core inflation over the month of July, faded into the close of the session -- on relatively heavy volumes -- as investors worried that the Federal Reserve will likely need to keep rates higher, and for a longer period of time, in order to fully tame consumer price pressures in a hot economy.
"Whether we raise another time, or hold rates steady for a longer period - those things are yet to be determined," San Francisco Fed President Mary Daly told Yahoo Finance. "It would be premature to project what I think would happen because there's a lot of information coming in between now and our next meeting."
The Atlanta Fed's GDPNow tool, a real time indicator of U.S. growth, suggests the economy is growing at a 4.1% clip, up from its 3.9% estimate earlier in the month. Weekly jobless claims data, meanwhile, suggest a labor market that remains historically tight, adding to concerns that wage pressures will re-accelerate into the final months of the year.
The CME Group's FedWatch, while suggesting a 90.5% chance that the Fed holds its benchmark lending rate steady at between 5.25% and 5.5% next month in Washington, is also pricing in at 25% to 30% chance of a final rate hike in either November or December.
Treasury yields were higher in the overnight session, as well, following a soft auction of $23 billion in 30-year bond yesterday that drew disappointing demand from both domestic and international investors, despite a yield of nearly 4.2%.
Benchmark 10-year notes were marked at 4.09%, around 3 basis points higher compared to last night's close, while 2-year paper traded at 4.814%.
The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.08% higher at 102.602 and on pace for its fourth consecutive weekly gain.
Heading into the start of the trading day on Wall Street, futures contracts tied to the S&P 500 are indicating a 6 point opening bell dip while those linked to the Dow Jones Industrial Average are priced for a 15 point decline. Futures tied to the tech-focused Nasdaq futures were down 20 points.
In Europe, the region-wide Stoxx 600 was marked 0.6% lower in early Frankfurt trading while Britain's FTSE 100 fell 1.1% lower in London
Overnight in Asia, the MSCI ex-Japan index was marked 0.93% lower into the close of trading, with sentiment dented by comments from President Joe Biden describing China as a "ticking time bomb" of economic weakness that could lead to social upheaval.
"So they got some problems,” Biden said during a fundraising event in Utah. “That’s not good because when bad folks have problems, they do bad things.”
2. -- Factory Gate Inflation In Focus After Softer CPI Reading
The Bureau of Labor Statistics will publish its second key inflation reading Friday with its July estimate of factory gate prices as investors look for further evidence of easing supply chain and input cost pressures in the world's biggest economy.
Economists expect the headline producer price index to have risen just 0.7% from last year, with a monthly advance of 0.2%, thanks in part to lower annual energy prices, slowing wage growth an improved productivity.
The data will build upon yesterday's CPI reading, which showed core consumer prices accelerating at 4.7%, the slowest pace in two years, with only modest monthly gains.
A softer PPI reading could also provide further evidence that the Federal Reserve has reached the end of its rate-hike cycle, as investors fate bets on any increases at the central bank's next three policy meetings.
3. -- News Corp Shares Slip After Q4 Earnings Beat, Ad Market Optimism
News Corp. (NWSA) -) shares edged lower in pre-market trading after the media group controlled by billionaire Rupert Murdoch posted stronger-than-expected fourth quarter earnings and indicated ad spending could be starting to recover.
News Corp said adjusted earnings for the three months ending in June, the group's fiscal fourth quarter, fell 62% from last year to 14 cents per share, topping Street forecasts by 5 cents. Group revenues were down 9% at $2.43 billion.
CEO Robert Thompson said the group, which owns and operates the Wall Street Journal, Barron's and the online real estate group Realtor.com, was seeing improvements in the digital ad market, adding he has "sound optimism about the coming quarters" for the broader business.
News Corp shares were marked 0.15% lower in pre-market trading to indicate an opening bell price of $20.28 each.
4. -- California Officials Give Nod To Full Robo Taxi Service in San Francisco
The California Public Utilities Commission has agreed to allow tech giants such as Google parent Alphabet GOOGL and General Motors GM to run driverless taxis throughout the city of San Francisco, marking the first major U.S. city to allow for the unrestricted use of autonomous vehicles.
The Commission's 3 to 1 vote allows Google's Waymo, as well as GM's Cruise, to operate their cars without a driver in larger areas of San Francisco -- at any time of the day or night -- against the objections of many city residents and officials, some of whom argued in the Thursday hearing that the new technology has yet to be fully tested for safety.
“Today’s permit marks the true beginning of our commercial operations in San Francisco,” said Waymo's Co-CEO Tekedra Mawakana. “We’re incredibly grateful for this vote of confidence from the CPUC, and to the communities and riders who have supported our service.
5. -- Supreme Court Allows Challenge to Purdue Bankruptcy That Shields Sackler Family
The U.S. Supreme Court ruled late Thursday that the Biden Administration can challenge the legality of Purdue Pharma's Chapter 11 bankruptcy settlement that shields the Sackler family from litigation linked to the nation's opioid crisis.
The Court said it would hear arguments against the $6 billion settlement in December, following a challenge by U.S. Trustee, a division of the Justice Department.
Purdue Pharma filed for Chapter 11 protection in 2019, citing billions in debt linked to litigation from its production of OxyContin, a drug tied to more than 500,000 deaths in the U.S. and elsewhere over the past ten years.
The U.S. Trustee, however, objected to the settlement on the grounds that some $11 billion in personal wealth from the drugmaker's Sackler family was left out of the bankruptcy petition.
