Yahoo Finance Pre-Markets in the Green Ahead of CPI, PPI Data Release
Pre-market futures are up modestly at this hour, following a solid day in the green across the board, which has helped win back some of the gains we saw last week. The small-cap Russell 2000 index, in particular, made notable improvements yesterday on its way to matching one-month gains on the Nasdaq and S&P 500. Only the Dow lags over the past 30 days, and it’s in the green as of this morning, as well.
Earlier today, we received a new report from the National Federation of Independent Business (NFIB) Optimism Index. A seven-month high of 91 (above the 89.9 estimated) is, nevertheless, below the half-century average of 98 on this index. Sales totals, inflation and labor issues are all weighing on small businesses through last month; we’ve not seen a 98 or higher on this print for a year and a half. And even though we saw a nice bounce-back in small business jobs totals in last week’s labor reports, these are still considered headwinds going forward.
Today also kicks off Amazon Prime Day, which goes through tomorrow in no fewer than 24 countries. This will the 9th annual Prime Day, which offers short-term discounts on a wide range of e-commerce goods. It was partly modeled by Amazon.com (AMZN) after the very successful Singles Day in China, which will celebrate its 30th year this November. Together, these commercial “holidays” bring in billions more in revenues concentrated over select days (11/11 in Singles Day’s case) that tend to help all e-commerce retailers participating.
Analysts estimate a +10% increase year over year for this year’s Prime Day to north of $8 billion in the U.S., nearly $13 billion worldwide. This is off the record highs we saw back in 2020 at the peak of the Covid pandemic, where 82% of American consumers had access to Prime subscriptions. This has fallen to 73% this year, for the lowest level of Prime-accessed U.S. households in five years. Reports are that the consumer has become price-conscious in recent months, which would seemingly provide a boost for Amazon today — but it also may have caused the drop in subscriptions due to a higher yearly price-point ($139 versus $119 previously).
The big inflation numbers this week don’t come until tomorrow, with a new Consumer Price Index (CPI) report for June out ahead of Wednesday’s opening bell. What we expect to see is a continuing disparity between the Inflation Rate (CPI year over year on headline) and core CPI year over year, which is predicted to be nearly 200 basis points (bps) apart: +3.1% for the former, +5.0% for the latter. This is a pretty clear example of how “sticky” inflation remains in our economy, even as headline CPI begins to approach a 2-handle, bringing it closer in line with the Fed’s optimum inflation metric. But the core print — subtracting volatile food and energy costs — is expected to be still more than double the Fed’s preferred rate.
Currently, pre-markets continue to ride the wave: the Dow is +125 points at this hour, the S&P 500 is +10 and the Nasdaq +40. Year to date, the tech-heavy Nasdaq still rules the roost — it’s roughly double the second-place S&P index for gains thus far in 2023. And the Russell is as yet the year-to-date laggard, but a few more trading days like we saw yesterday and this will turn around. The question this morning is: with impactful economic and earnings reports not happening until later this week, can the markets keep this rally going on fumes today?
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