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Briefing.com Summary:
*August retail sales activity reflects consumer spending at a good clip.
*Solid retail sales and the nonfuel import price increase in August will temper calls for a 50-basis-point cut.
*Oracle up 4% in association with TikTok news.
With the run the stock market has had since its April lows, one can make a case that it has some house money to play with, and it keeps winning with that house money. Yesterday produced another round of record highs for the S&P 500 and Nasdaq Composite.
It is unclear which way today's hand will break, but money is on the table, and the table stakes are again flowing to the mega-cap stocks.
Currently, the S&P 500 futures are up five points and are trading 0.1% above fair value, the Nasdaq 100 futures are up 47 points and are trading 0.2% above fair value, and the Dow Jones Industrial Average futures are down 62 points and are trading 0.1% below fair value.
Most mega-cap stocks are up in pre-market action, with modest gains on the tape. Oracle (ORCL), however, has moved beyond modest and is up a showy 4.0% on the news that it will enable TikTok's U.S. operations to keep running.
These moves helped put a bid in the equity futures market, which has been sustained after the release of the retail sales and import-export price index reports at 8:30 a.m. ET.
Total retail sales increased 0.6% month-over-month in August (Briefing.com consensus: 0.3%) following an upwardly revised 0.6% (from 0.5%) in July. Excluding autos, retail sales jumped 0.7% month-over-month (Briefing.com consensus: 0.3%) following an upwardly revised 0.4% increase (from 0.3%) in July.
The key takeaway from the report is that it reflects a consumer still spending at a good clip. The retail sales data are not adjusted for price changes. Granted, higher prices accounted for some of the increased sales activity in August, but they didn't account for all of it.
Separately, Import prices increased 0.3% month-over-month in August following a downwardly revised 0.2% (from 0.4%) in July. Excluding fuel, import prices were up 0.4% month-over-month following a revised unchanged (from 0.3%) in July. Export prices rose 0.3% month-over-month following an upwardly revised 0.3% (from 0.1%) in July. Excluding agricultural products, export prices were also up 0.3% following an upwardly revised 0.3% (from 0.1%) in July.
The key takeaway from the report, or really, the key focal point, is the 0.4% increase in nonfuel import prices. That increase will continue to stoke concerns about tariff-driven inflation pressures.
The 2-yr note yield is up one basis point to 3.54%, and the 10-yr note yield is up three basis points to 4.06%.
Today's data won't change the market's expectation that the Fed will vote tomorrow to cut the target range for the fed funds rate by 25 basis points to 4.00-4.25%, but it will presumably temper calls for a 50-basis-point cut.
On a related note, the Senate confirmed Stephen Miran to the Fed Board of Governors, and he will attend this week's meeting. An appeals court, however, rejected the plan to remove Lisa Cook from the Fed Board, so she, too, will be casting a vote at the FOMC meeting.
