Markets will open almost flat after the core personal consumption expenditures price index – core PCE – increased by 0.1% for the month. Core CPE is up 3.2% from last year, the Commerce Department reported.
The lighter inflation data further supports the stock market’s expectations that interest rates will fall in 2024. Investors may continue trading with financial companies like Royal Bank (RY), Citigroup (C), Bank of America (BAC), and JP Morgan (JPM).
In retail, Nike (NKE), which traded at a 32.9 times forward price-to-earnings multiple, tumbled by 11.48% in early morning trade. Revenue grew by 1%, below the inflation rate. Nike’s products are too expensive for consumers, hurting demand.
Nike spent heavily on promotional advertising. In its FQ2, it issued a cautious guidance, forecasting negative revenue growth for FQ3 and revenue growth in the low single-digit percentage in FQ4. Markets are selling NKE stock to re-value the company as a slow-growth firm.
Outside of the U.S., China's technology stocks plunged. The Chinese government unexpectedly announced new draft rules for the online gaming industry. Once again, it wants to curb the amount of money and time players consume playing games. Bears may bet against the gaming stocks. TCEHY stock dropped 12% in pre-market trade. Bililbili (BILI) -11%, JD -2%, PDD -4%, and Baidu (BIDU) -3%.
Netease (NTES), a gaming China, dropped by 21.31%.
