Morning Brief
Headline News:
Equity futures are mixed this morning, following yesterday’s trade that saw the market retreat from opening highs after interest rates rose following the release of the June CPI.
The main catalysts for today’s session are similar to those of yesterday; the market awaits the release of a key piece of inflationary data (today’s June PPI) while a slate of large banks has reported their earnings before the open.
Yesterday’s CPI release provided the markets with an initial boost, as the Core CPI number was lower than expected. However, a closer look at the report revealed pockets of inflation in several areas, which stirred concerns about tariff-driven inflation. In turn, interest rates rose throughout the day, most stocks slipped, and the chance of a September rate cut decreased to 54%.
Today’s release of the June PPI could be even more influential, as the report will inform the PCE Price Index, which is the Fed’s preferred measure of inflation.
Tariff headlines are relatively subdued this morning, with President Trump stating that a tariff on pharmaceuticals will likely begin on August 1, although it will likely start at a lower rate than the 200% figure to give companies time to adjust. A tariff on semiconductor imports is also likely, according to a Bloomberg report.
(Michael Gibbs, Managing Director, Lead Portfolio Manager )
Markets:
The S&P 500 attempted to break out of its current trading range but encountered selling pressure at 6,305.04, ultimately closing lower at 6,243.76. The RSI has also moved lower and fallen below the 70 level, which typically signals the potential for continued selling. We believe the key support level at 6,201.00 could hold if tested today.
Notably, the 10-year Treasury yield has surged and is now just below potential resistance at 4.52%. A breakout above this level could trigger further selling in the equity markets.
We are currently Intermediate-term bullish and short-term bullish.
John N. Lilly III CPFA
Accredited Portfolio Management Advisor℠
Accredited Asset Management Specialist℠
Portfolio Manager, RJFS
Partner, DJWMG
Windsor Wealth Planners & Strategists
Futures trading is speculative, leveraged, and involves substantial risks. Investing always involves risk, including the loss of principal, and futures trading could present additional risk based on underlying commodities investments.
The Relative Strength Index (RSI), developed by J. Welles Wilder, is a momentum oscillator that measures the speed and changes of price movements.
The percentage of stocks trading above a specific moving average is a breadth indicator that measures internal strength or weakness in the underlying index. The 50-day moving averages are used for short-to-medium-term timeframes, while the 150-day and 200-day moving averages are used for medium-to-long-term ones. Signals can be derived from overbought/oversold levels, crosses above/below 50%, and bullish/bearish divergences.
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The Russell 2000 Index is a stock market index that measures the performance of the 2,000 smaller companies included in the Russell 3000 Index. It is managed by London’s FTSE Russell Group and is widely regarded as a bellwether of the U.S. economy because it focuses on smaller companies that focus on the U.S. market.