Stock rally loses steam with PPI, retail in focus: Markets Wrap

by Andre Janse van Vuuren and Sagarika Jaisinghani 

US stocks were set to pause their advance as investors awaited a new round of economic data for clues on how aggressively the Federal Reserve might cut interest rates, an outlook that has fueled a risk-on rally. 

S&P 500 futures were little changed after the benchmark notched a record close for a second straight session. Europe’s Stoxx 600 rose 0.3%. Treasuries extended recent gains, with the yield on 10-year notes dropping three basis points to 4.21%. Bitcoin retreated 1% from an all-time high. 

A report on Thursday is expected to show an uptick in producer prices, while Friday’s retail sales figures will offer insight on US consumer health as the labor market shows signs of losing momentum. Traders are now fully pricing in a quarter-point cut at the Fed’s September meeting, with some bets leaning toward a larger move following this week’s benign inflation data. 

“We’re constructive about the market and that’s been backed up by data and earnings, but we’re certainly not looking to add more at these levels,” said Rory McPherson, chief investment officer at Magnus Financial Discretionary Management. “Bad news is good news as far as retail sales are concerned. But a 50-basis-point cut would seem too reactionary.” 

Short-dated US bond yields are hovering near three-month lows as traders ramp up bets on the first US rate cut this year. The two-year yield, among the most sensitive to changes in monetary policy, was trading around 3.67% on Thursday. 

Today’s data “could be make-or-break to cement a 25 basis-point rate cut from the Fed, or even to encourage the possibility of a jumbo cut,” said Andrea Gabellone, head of global equities at KBC Securities in Brussels. “People are already speaking of a 50 basis-point cut, but I think we will need further labor data to shift the narrative.” 

San Francisco Fed President Mary Daly pushed back against calls for a half-point cut next month, telling the Wall Street Journal the move “would send off an urgency signal that I don’t feel about the strength of the labor market.” 

In currency markets, the yen rose 0.5%, the most in almost two weeks, after US Treasury Secretary Scott Bessent said he expected Japan to raise interest rates to tame inflation. Bessent said the Bank of Japan is falling behind the curve in addressing prices and he expected it to hike rates.  

The pound inched higher as the UK economy fared better than expected in the second quarter, raising the bar for further rate cuts from the Bank of England. 

“Hopes of a sharp rebound are likely to be dashed,” said George Brown, senior economist at Schroders. “The labor market has softened and capacity constraints mean even tepid growth is generating inflation pressures. With this in mind, we expect the Bank of England to keep rates on hold for the remainder of the year.” 

Oil steadied near a two-month low as traders monitor the lead-up to Friday’s summit between the US and Russian leaders. US President Donald Trump cautioned he would impose “very harsh consequences” if Vladimir Putin didn’t agree to a ceasefire in the country’s war with Ukraine. Brent crude traded near $66 a barrel. 

Corporate News: 

• Adyen NV slide 20% after the payments firm dimmed its outlook for the year, saying net revenue growth is unlikely to accelerate this year after US tariffs weighed on the payment processing company’s customers. 
• Swiss Re AG’s half year profit beat estimates, with the reinsurer’s property and casualty division providing a boost to the results. 
• CK Hutchison Holdings Ltd.’s profit fell 92% in the first half of the year, due to a one-time and non-cash loss from the merger of its telecommunications arm with Vodafone Group Plc. 
• Carlsberg A/S narrowed its full-year profit guidance to the upper end, as the brewer benefited from warm summer weather and a pickup in demand for premium beer including in China. 
• Apple Inc. is plotting its artificial intelligence comeback with an ambitious slate of new devices, including robots, a lifelike version of Siri, a smart speaker with a display and home-security cameras. 
• Thyssenkrupp AG lowered its annual profit and revenue guidance after posting a deeper third-quarter loss, hit by sluggish demand and falling prices. 
• Hon Hai Precision Industry Co. posted a better-than-projected 27% rise in quarterly earnings, reflecting how AI demand is helping the Taiwanese company weather a moribund global consumer electronics market. 
• Short sellers are betting against Greggs Plc at levels not seen since the global financial crisis, as the UK bakery chain struggles to convince investors that opening more shops will boost lackluster sales. 
• Standard Bank Group Ltd., Africa’s biggest lender by assets, reported first-half profit climbed to a record as fee growth and trading revenue helped offset a slowdown in interest income. 
• HelloFresh SE slides 16% after the meal-kit firm lowered its earnings guidance and delivered what analysts described as a soft topline performance in the second quarter. 

Some of the main moves in markets: 

Stocks 

• S&P 500 futures were little changed as of 5:51 a.m. New York time 
• Nasdaq 100 futures were little changed 
• Futures on the Dow Jones Industrial Average were little changed 
• The Stoxx Europe 600 rose 0.3% 
• The MSCI World Index was little changed 

Currencies 

• The Bloomberg Dollar Spot Index was little changed 
• The euro fell 0.2% to $1.1684 
• The British pound was little changed at $1.3583 
• The Japanese yen rose 0.5% to 146.59 per dollar 

Cryptocurrencies 

• Bitcoin fell 1% to $121,661.95 
• Ether rose 0.9% to $4,761.12 

Bonds 

• The yield on 10-year Treasuries declined three basis points to 4.21% 
• Germany’s 10-year yield declined one basis point to 2.67% 
• Britain’s 10-year yield was little changed at 4.59% 

Commodities 

• West Texas Intermediate crude rose 0.5% to $62.97 a barrel 
• Spot gold was little changed 

This story was produced with the assistance of Bloomberg Automation. 

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