U.S. stock futures declined on Wednesday as investors anticipated the release of the August CPI report. According to economists surveyed by Dow Jones, the headline Consumer Price Index (CPI) is expected to have increased by 0.2% from the previous month and 2.6% year-over-year. Kristina Hooper, chief global market strategist at Invesco, suggested that the Federal Reserve is likely to implement a 25-basis-point rate cut next week. She noted that a larger 50-basis-point cut could trigger alarm and be perceived as an admission of economic concerns.

European stocks saw an uptick as global markets awaited the latest U.S. inflation data. The tech sector experienced a 1.1% rise, while health care stocks dipped by 0.5%. Retail stocks performed notably well, climbing 1.77%, driven by a 4.2% increase in Spanish fashion house Inditex’s shares following a sales rebound. However, the U.K.’s FTSE 100 slightly declined by 0.02%, as new data revealed the economy remained stagnant in July, missing analysts’ forecast of a 0.2% growth.

Asia-Pacific markets experienced a downturn on Wednesday, with Japan’s Nikkei index suffering the most significant losses in the region. In contrast, South Korea reported a positive economic indicator, with August unemployment dropping to 2.4%, the lowest level since the data series began in 1999, as per Statistics Korea. Meanwhile, Bank of Japan board member Junko Nakagawa announced that the central bank would persist in raising interest rates, provided that the economy and inflation align with their projections.

Economic Calendar

Earnings Calendar

Notable reports for Wednesday before the bell include OXM. After the bell include CAL, KR, LOVE, & SIG.

News & Technicals’

Shares of GameStop fell by 10% in premarket trading after the video game retailer amended an open market sale agreement with the U.S. Securities and Exchange Commission. This amendment permits GameStop to sell up to 20 million additional shares of its Class A common stock. The move likely raised concerns among investors about the potential dilution of existing shares, contributing to the drop in stock price. This development highlights the market’s sensitivity to changes in corporate financing strategies.

Chinese artificial intelligence models might currently lag behind their U.S. counterparts by at least six months, according to Kai-Fu Lee, founder of the startup 01.AI and former head of Google China. However, Lee predicts that Chinese AI applications will likely see rapid growth, potentially outpacing those in the U.S. by early next year. He attributes this anticipated surge to the significantly reduced costs of training effective AI models. This suggests a dynamic shift in the AI landscape, where the speed of application development could become a critical factor in technological leadership.

The U.K. economy remained stagnant in July, with no month-on-month growth, according to preliminary data from the Office for National Statistics. This performance fell short of the 0.2% growth forecasted by economists polled by Reuters. The services sector, which is a major component of the U.K. economy, saw a modest increase of 0.1%. However, this was offset by declines in production and construction output, which fell by 0.8% and 0.4%, respectively. These figures highlight the ongoing challenges facing the U.K. economy, particularly in its production and construction sectors.

JPMorgan Chase shares dropped by 5% on Tuesday following comments from the bank’s president, Daniel Pinto, who indicated that analysts’ expectations for net interest income and expenses in 2025 were overly optimistic. Pinto stated that the current estimate of approximately $90 billion for 2025 is unrealistic due to the Federal Reserve’s interest rate cuts. Additionally, he noted that the expense forecast of around $94 billion for next year is also too optimistic, citing ongoing inflation and new investments. This decline marked JPMorgan’s worst stock performance since June 2020, according to FactSet.

Today all eyes around the world are focused on the August CPI report that will be out before bell.  Although futures currently point to a bearish open anything is possible as the market reacts to this inflation data and what it might mean for next Wednesday’s FOMC rate decision.  Big moves are possible, and I would not rule out big point whipsaws after the open. Keep in mind that Thursday brings us the Producer Prices report as you plan forward.

Trade Wisely,

Doug