S&P 500, Nasdaq Climb to Records as Inflation Cools; Nike Tumbles

What Friday’s Inflation Report Tells Us About Future Interest Rate Cuts

53 minutes ago

The Federal Reserve’s preferred measure of inflation slowed down in May, buoying hopes of interest rate cuts.

Prices as measured by the Personal Consumption Expenditures (PCE) index, rose by a negligible amount over the month. It was the slowest pace of inflation since November.

“It is just additional news that monetary policy is working—inflation is gradually cooling,” said San Francisco Federal Reserve Bank President Mary Daly in an interview on CNBC after the numbers were released.

The new PCE data supports economists’ and traders’ view that a central bank rate cut is imminent. Traders are still firm in their belief that a rate cut is likely in September, pricing in a 68% chance, according to the CME Group’s FedWatch tool. The chances were up slightly from the week before and up more than 20 percentage points from a month ago.

“Officials will want to see a few more encouraging inflation reports before beginning to cut interest rates, but they will not wait until inflation falls to their 2% target,” wrote Michael Pearce, Deputy Chief U.S. Economist at Oxford Economics. “We still expect the Fed to begin cutting rates in September, and once per quarter thereafter.”

–Taylor Tompkins

Watch for These Levels as Nike Shares Plummet

1 hr 48 min ago

Nike (NKE) shares dropped more than 19% to about $76 Friday morning after the athletic apparel and equipment maker reported weaker-than-expected quarterly revenue and cut its sales outlook.

Nike shares trended sharply lower between late February and early April after the 50-day moving average (MA) crossed below the 200-day MA to form a bearish death cross signal. Since that time, the stock has oscillated within a rising wedge, a chart pattern that indicates a continuation of the current longer-term downtrend. 

Investors can use the measured move technique to project where Nike shares may be headed after their post-earnings slump.

To do this, we calculate the distance in dollars of the most recent downtrend preceding the rising wedge and deduct that amount from the pattern’s lower trendline. In this case, we subtract $18 from $93 to arrive at a price target of $75. 

This provides a possible area on the chart where bargain hunters may look for buying opportunities. Amid further weakness, it’s also worth monitoring if a prominent swing low that formed on the chart in October 2022 provides support around $82.

–Timothy Smith

Stocks Making the Biggest Moves in Early Trading

2 hr 52 min ago

Gains:

• Trump Media & Technology Group (DJT): Shares of the former President’s media company, which operates the social media platform Truth Social, gained about 3% Friday morning following the first presidential debate of 2024.
• Infinera (INFN): Shares jumped 18% after Finnish telecommunications company Nokia (NOK) announced plans to buy the semiconductor manufacturer for $2.3 billion.
• UnitedHealth Group (UNH): The healthcare giant’s stock rose 2% after announcing a $20 million settlement with the Department of Justice Thursday over claims that OptumRx, one of United’s subsidiaries, illegally filled opioid prescriptions that should have raised red flags over potentially not being for medical use.

Losses:

• Nike (NKE): The apparel giant’s stock slumped 18% after earnings released after the bell Thursday contained revenue below expectations and a subpar outlook for fiscal 2025. Other apparel stocks like Skechers (SKX), Under Armour (UA), and Lululemon (LULU) were also lower.
• Rocket Pharmaceuticals (RCKT): Shares of the drugmaker fell 6% after the company said the FDA had turned away one of its products, requesting more information on the drug meant to treat an immunodeficiency disorder in children.
• Chewy (CHWY): The pet-focused e-commerce company’s shares fell 10%, coming back down to earth after getting caught in the meme stock craze and skyrocketing Thursday when Keith Gill, also known as “Roaring Kitty,” posted a dog-related meme on X.

Stock Futures Remain in Green Despite PCE Drop

3 hr 57 min ago

Futures contracts connected to the Dow Jones Industrial Average were up less than 0.1% in premarket trading on Friday.

S&P 500 futures were up 0.2%.

Nasdaq 100 futures gained 0.3%.