Investors await the release of fresh economic data on Thursday, as Wall Street considers how a faster-than-anticipated measure of consumer price gains may impact future Federal Reserve policy.
Elsewhere, debate swirls around the European Central Bank’s own crucial interest rate decision later today, while British semiconductor designer Arm prices its hotly-anticipated initial public offering at the top end of its indicated guidance.
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Aflac (NYSE:AFL): Jefferies maintains its hold recommendation. Previously set at $70, the target price has been raised to $74.
Arista Networks (NYSE:ANET): Rosenblatt Securities Inc. upgrades to buy from hold. PT up 21.1% to $230.
Arthur J. Gallagh (NYSE:AJG): Goldman Sachs maintains its Buy rating on the stock. Previously set at $249, the target price has been raised to $255.
Cadence Design (NASDAQ:CDNS): KeyBanc Capital Markets upgrades to overweight from neutral. PT up 7.4% to $290.
Carrier Global (NYSE:CARR): Mizuho Securities downgrades to neutral from buy. PT reduced from $63 to $61.
Centene (NYSE:CNC): Zacks maintains a neutral recommendation on the stock, with the target price raised from $67 to $70.
Coca-Cola (NYSE:KO): Morningstar upgrades to hold from sell. PT up 3.4% to $60.
Corebridge Financial (NYSE:CRBG): Jefferies maintains its Buy rating. Previously set at $22, the target price has been raised to $23.
Darden Restaurant (NYSE:DRI): KeyBanc Capital Markets downgrades to neutral from overweight. PT down 5.4% to $175.
Dr Horton (NYSE:DHI): Zacks downgrades to neutral from outperform. PT down 17.1% to $121.
Duke Energy (NYSE:DUK): Barclays maintains an overweight rating on the stock. The target price has been raised from $96 to $97.
Enphase Energy (NASDAQ:ENPH): Goldman Sachs downgrades to hold from buy. PT reduced from $217 to $199.
Etsy (NASDAQ:ETSY): Wolfe Research upgrades to outperform from peerperform. Target price raised to $100.
FedEx (NYSE:FDX): Goldman Sachs maintains its Buy rating. Previously set at USD 269, the target price has been raised to $278.
Franklin (NYSE:BEN): Goldman Sachs downgrades to sell from neutral. PT down 2.02% to $24.
Match Group (NASDAQ:MTCH): Evercore ISI upgrades to outperform from neutral. PT up 20% to $60.
Metlife (NYSE:MET): Jefferies upgrades its recommendation from hold to buy. The target price has been raised from $58 to $72.
Moody’s (NYSE:MCO): Wolfe Research upgrades to outperform. PT remains at $390.
Palantir Technology (NYSE:PLTR): Guotai Junan Securities Co., Ltd. upgrades to overweight. Target price remains at $20.50.
Palo Alto Network (NASDAQ:PANW): Zacks maintains a neutral recommendation with the target price raised from $246 to $258.
Principal Financial (NASDAQ:PFG): Jefferies downgrades to hold. PT reduced from $69 to $66.
Prudential Financial (NYSE:PRU): Jefferies upgrades to hold from underperform. PT up 32.9% to $93.
Republic (NYSE:RSG): Zacks maintains a neutral recommendation on the stock. The target price has been revised from $159 to $160.
S&P Global (NYSE:SPGI): Wolfe Research upgrades to outperform. PT remains at $453.
Solaredge (NASDAQ:SEDG): Goldman Sachs downgrades to hold from buy. PT reduced by 11.9% to $311.
T Rowe (NASDAQ:TROW): Goldman Sachs downgrades to sell from neutral. PT reduced from $102 to $98.
Tjx (NYSE:TJX): Zacks maintains a neutral recommendation on the stock. The target price has been raised from $92 to $98.
UPS (NYSE:UPS): Cowen maintains a market perform rating. The target price has been lowered from $190 to $185.
Welltower (NYSE:WELL): Mizuho Securities maintains its Buy rating. Previously set at $86, the target price has been raised to $90.
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Futures Point Up as Investors Anticipate Economic Data and Weigh Inflation’s Impact
U.S. stock futures are trending upward on Thursday as investors eagerly await new economic data and contemplate the implications of higher-than-expected inflation figures on the Federal Reserve’s monetary policy.
As of 05:26 ET, the Dow futures contract has risen by 52 points or 0.2%, S&P 500 futures have gained 12 points or 0.3%, and Nasdaq 100 futures have climbed 64 points or 0.4%.
In the previous session, Wall Street’s major indices displayed a mixed performance as traders sought to gauge whether Fed policymakers would consider an additional interest rate hike later this year, following the release of the August Consumer Price Index (CPI). The closely monitored measure of inflation in the world’s largest economy surged to its highest level in 14 months due to rising gasoline prices, although the annual increase in underlying price growth was the lowest in nearly two years.
According to Investing.com’s Fed Rate Monitor Tool, the U.S. central bank is still widely expected to maintain borrowing costs within a range of 5.25% to 5.50% at its upcoming meeting later this month. However, with indications of persistent inflationary pressures, markets are estimating a slightly over one-in-three chance that Fed officials may choose to raise rates either in November or December.
Upcoming Inflation Data and More
On Thursday, the Fed will have more data to analyze, including the U.S. Producer Price Index (PPI) and retail sales figures for August, set to be released at 08:30 ET.
The monthly PPI, designed to measure the prices received by businesses for their goods and services, is expected to increase from 0.3% to 0.4%, mirroring the uptick in consumer prices. Economists also anticipate a slight uptick in the annual rate of increase, from 0.8% to 1.2%.
Retail sales are projected to have slowed to 0.2% month-on-month, down from 0.7% in July, potentially indicating that consumers are beginning to feel the impact of the Fed’s ongoing campaign of interest rate hikes.
Additionally, weekly initial jobless claims are predicted to have increased by 9,000 to 225,000. Jobless claims had reached their lowest levels since February in the week ending September 2, suggesting continued tightness in the U.S. labor market.
Managing labor demand and, consequently, wage growth, has been a central focus of the Fed’s long-standing efforts to control inflation.
ECB Faces Critical Rate Decision
The European Central Bank (ECB), a significant peer of the Fed, will make a crucial decision later on Thursday regarding whether to raise interest rates to a record high or maintain them at already elevated levels.
Despite the ECB’s nine consecutive rate hikes, preliminary data indicates that inflation in the 20-country eurozone now exceeds the Frankfurt-based bank’s 2% target.
However, the ECB’s tightening of monetary policy, coupled with similar moves by central banks worldwide and economic weaknesses in China, has begun to impact the broader eurozone economy. Manufacturing is experiencing difficulties, lending has declined, and services have shown early signs of strain, fueling concerns that the region may slip into a recession.
The approach that ECB officials take in their rate decision has been a subject of intense debate. Economic concerns have led many observers to predict that policymakers may opt to skip a rate increase this month. However, the case for another rate hike was bolstered after Reuters reported that the ECB intends to raise its inflation forecast for next year to over 3%.
Arm’s IPO at the High End of Pricing
Shares in Arm will begin trading in New York later today, following the British chip designer’s initial public offering at $51 per share, which is at the upper end of its indicated range and results in a fully diluted valuation of $54.5 billion.
This listing, the largest since electric-truck maker Rivian’s approximately $12 billion debut in 2021, was driven by strong demand, resulting in significant oversubscription of the stock. Many of Arm’s major clients, including Apple (NASDAQ:AAPL), Nvidia (NASDAQ:NVDA), and Google-parent Alphabet (NASDAQ:GOOGL), have already committed to being cornerstone investors.
While the IPO’s value is lower than the $64 billion that Arm owner SoftBank (TYO:9984) spent last month to acquire the 25% stake in the company that it did not already own, it still surpasses SoftBank’s $40 billion sale of Arm to Nvidia, which was abandoned in 2022 due to regulatory opposition.
Arm’s IPO is expected to serve as an indicator of the recently dormant IPO market, which has remained relatively quiet due to economic uncertainty and elevated interest rates.
Oil Prices Near 10-Month Highs
Oil prices are on the rise on Thursday, with traders closely monitoring predictions of tight supplies throughout 2023 and anticipating a positive demand outlook, despite an increase in U.S. crude inventories.
The International Energy Agency (IEA) largely maintained its estimates for demand growth this year and the next in its monthly report on Wednesday, aligning with the Organization of Petroleum Exporting Countries (OPEC) in expecting further tightening of oil markets this year.
Supported by recent extensions of oil output cuts by Saudi Arabia and Russia, both oil benchmarks reached 10-month highs in the previous session. Markets largely shrugged off a 4 million-barrel increase in U.S. crude inventories last week, contrary to analysts’ expectations of a 2 million-barrel decrease.
As of 05:27 ET, U.S. crude futures were trading 0.5% higher at $88.97 per barrel, while the Brent contract had risen 0.5% to $92.38.