Dow Jones futures rose slightly Wednesday night, along with S&P 500 futures and Nasdaq futures. The stock market rally fell slightly Wednesday, while Treasury yields touched recent lows ahead of key inflation data. GME stock and RH earnings were in focus after the close.
GameStop (GME), the original meme stock, topped Q1 earnings forecasts and named a new CEO and CFO, adding to its stable of former ex-Amazon.com (AMZN) executives. The company also said it plans to sell up to 5 million shares “at the market” and announced an SEC probe into the trading of its shares. GME stock fell solidly overnight.
That followed a generally weak session for Reddit-fueled stocks. Clover Health (CLOV) reversed lower and AMC Entertainment (AMC), Wendy’s (WEN) and Bed Bath & Beyond (BBBY) all retreated. Lordstown Motors (RIDE) whipsawed to unchanged. Some new meme stocks took off including already-hot steelmaker Cleveland-Cliffs (CLF).
RH (RH) nearly quadrupled earnings in the first quarter, with sales soaring. RH stock jumped, flashing early buy signals.
CPI Report On Tap
The Labor Department will release the May consumer price index at 8:30 a.m. ET. Economists expect a 0.4% rise in consumer prices overall and excluding food and energy, following big spikes in April. Consumer inflation is expected to climb to 4.6%, up from April’s 4.2%. Core inflation should hit 3.4%, up from April’s 3%. Both would be long-term highs.
The Federal Reserve has said it expects an inflation spike to be transitory, cooling down next year. The next Fed meeting is June 15-16. Investors will be waiting for any signs that Fed policymakers are starting to talk about tapering asset purchases, though actually curbing bond buys may not occur until year-end.
The 10-year Treasury yield fell four basis points on Wednesday to 1.49% after matching a three-month low of 1.47% intraday.
A hot inflation report has the potential for pushing up the 10-year yield, if only as a reversion to the mean.
Why have Treasury yields fallen sharply over the past week and month? Wall Street is lowering expectations for how much extra spending Congress may approve in the coming months. Also, job growth, while improving in May, still isn’t rip-roaring. Job openings are skyrocketing, but employers are struggling to find workers even with substantial pay hikes. Generous jobless benefits, desire to continue staying at home and structural shifts in the jobs available are all possible factors.
Dow Jones Futures Today
Dow Jones futures rose 0.1% vs fair value. S&P 500 futures advanced 0.15% and Nasdaq 100 futures climbed 0.1%.
The CPI report and Treasury yield response will likely influence Dow Jones futures just before Thursday’s market open.
Stock Market Rally
The stock market rally faded into Wednesday’s close but the major indexes are still at record highs.
The Dow Jones Industrial Average fell 0.4% in Wednesday’s stock market trading, its third straight modest decline. The S&P 500 index dipped 0.2%. The Nasdaq composite edged down 0.1% after being slightly higher for most of the day. The Russell 2000 pulled back 0.7%.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) dipped 0.3%, while the Innovator IBD Breakout Opportunities ETF (BOUT) sank 0.8%. The iShares Expanded Tech-Software Sector ETF (IGV) was essentially flat. The VanEck Vectors Semiconductor ETF (SMH) retreated 0.3%.
SPDR S&P Metals & Mining ETF (XME) lost 0.4% and Global X U.S. Infrastructure Development ETF (PAVE) gave up 0.8%. U.S. Global Jets ETF (JETS) descended 0.6%. SPDR S&P Homebuilders ETF (XHB) fell 1.5%, continuing to struggle despite sliding Treasury yields.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) edged down 0.25% and ARK Genomics ETF (ARKG) rose 1.2%. ARKK remains below its 50-day and 200-day lines while ARKG reclaimed both Wednesday.
RH earnings shot up 385% while…