By Peter Bergman (MoneyAmped.com)
Wall Street is expected to trade with gains on Friday as investors anticipate the release of the Federal Reserve’s preferred inflation gauge. Intel is exploring different possibilities for restructuring, while Dell has delivered impressive quarterly results and provided optimistic forecasts.
The PCE Price Index Is of Significant Concern
Investors are primarily concerned with the timing and extent of Federal Reserve interest rate reductions throughout the year. Additionally, there is essential inflation data set to be released later in the session, which will provide further insight.
It is anticipated that the Personal Consumption Expenditures price index, which is the Federal Reserve’s preferred measure of inflation, will indicate a slight increase in inflation during July.
The index is projected to increase by 0.2% in July, resulting in a yearly growth of 2.6%, slightly surpassing the 2.5% recorded in the previous month.
During the Fed’s annual Jackson Hole symposium last week, Fed Chair Jerome Powell recognized the recent advancements in inflation and expressed the need for policy adjustments.
The markets have interpreted this as almost sure to result in a rate cut at the upcoming policy meeting, marking the first reduction in over four years.
Nevertheless, a reasonably robust economy, with second-quarter gross domestic product adjusted slightly upwards earlier this week, and persistent inflation would give the Fed less reason to reduce interest rates significantly.
Futures Climb in Anticipation of PCE Data
U.S. stock futures experienced an upward movement on Friday, concluding a week filled with fluctuations on a positive tone as investors awaited the unveiling of a crucial inflation report.
At 04:00 ET (08:00 GMT), the Dow futures contract saw an increase of 85 points, equivalent to a 0.2% rise. S&P 500 futures experienced a climb of 25 points, or 0.5%, while Nasdaq 100 futures rose by 145 points, indicating a 0.8% increase.
The market’s attention is focused on the upcoming release of the Federal Reserve’s preferred measure of inflation, which is scheduled for later in the session. This data is particularly significant as it precedes the central bank’s next policy meeting in September.
As August comes to a close, the S&P 500 index is set to finish the month with a solid gain of nearly 1.3%, while the Dow Jones Industrial Average is also on course to increase by 1.2%. The Nasdaq Composite is the only one among the three significant averages that has experienced a decline of nearly 0.5% this month.
In the corporate world, Dell (NYSE:DELL) is poised to experience a premarket increase of approximately 3% following its upward revision of annual forecasts.
In another location, During after-hours trading, Ulta Beauty (NASDAQ:ULTA) stock experienced a decline of approximately 7% before the market opened as the company revised its annual sales and profit projections. This adjustment was prompted by a decrease in demand for more expensive cosmetics and fragrances at its retail locations.
Shares of Lululemon Athletica (NASDAQ:LULU) surged 4% in premarket trading following an impressive earnings report, despite the company revising its annual sales and profit forecasts due to a slowdown in consumer spending in North America.
Intel Explores Potential Reorganization Strategies
According to a report by Bloomberg, Intel (NASDAQ:INTC) is exploring the possibility of separating its foundry business and abandoning its plans for new factories. This strategic move comes as the chipmaker navigates through a significant downturn in the industry.
The chip manufacturer is currently engaged in discussions with investment bankers to explore various possibilities, as reported by Bloomberg. The information comes from individuals who are familiar with the situation.
Intel, once the dominant player in the chipmaking industry, has faced challenges in recent times due to growing competition from companies like Advanced Micro Devices (NASDAQ:AMD), Nvidia (NASDAQ:NVDA), and Taiwan’s TSMC.
Intel made the decision to suspend its dividend and reduce its workforce by approximately 15% in August.
According to the Bloomberg report, Intel is currently exploring the possibility of dividing its product design and foundry business, while also abandoning expansion plans in order to streamline its operations.
Dell Increases Its Yearly Predictions
Dell Technologies (NYSE:DELL) revised its yearly revenue and profit projections, driven by strong demand for its AI-optimized servers, increasing its premarket trading shares.
On Thursday, the tech giant announced an upward revision of its annual revenue outlook. The new projected range is now between $95.5 billion and $98.5 billion, surpassing the previous estimate of $93.5 billion and $97.5 billion. In addition, the company has revised its projected annual adjusted earnings per share to $7.80, with a potential variance of 25 cents.
In the second quarter, there was a significant increase in the demand for AI-optimized servers, reaching a total of $3.2 billion. This represents a sequential growth of approximately 23%.
Revenue for the second quarter ended Aug. 2 increased by approximately 9% to $25.03 billion, surpassing the average estimate of $24.14 billion, as reported by LSEG data. The reported adjusted profit per share was $1.89, which exceeded the estimated value of $1.71.
Crude Receives Boost From Worries Over Libya’s Oil Supply
Oil prices experienced an increase on Friday due to ongoing worries about the oil supply in Libya. However, gains were limited due to indications of decreased demand.
At 04:00 ET, the U.S. crude futures (WTI) saw a 0.6% increase, reaching $76.33 per barrel, while the Brent contract experienced a similar 0.6% rise, reaching $79.32 per barrel.
Both benchmarks are poised to experience increases of over 1% as a result of more than half of Libya’s oil production, approximately 700,000 barrels per day, being temporarily offline and exports being halted at multiple ports due to political disruptions in the country.
Nevertheless, the benchmarks continue to indicate declines of approximately 2% in August, marking their second consecutive monthly drop. This is due to ongoing worries that the slowdown in economic growth in both the U.S. and China will have a negative impact on demand in the upcoming months.
Concerns persist about a potential slowdown in China, as recent economic data has been less than promising. Additionally, some worries demand for oil in the U.S. may decrease as the summer season, which typically involves more travel, draws to a close.
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