MARKET WRAPS

Watch For:

Producer Price Index for July; Weekly Jobless Claims

Opening Call:

Stock futures rose on Thursday, potentally pushing the major indexes to their highest in three months, as hopes that inflation may have peaked continued to power the risk asset rally.

Hopes that the pace of price rises has hit a peak encouraged investors to believe the Federal Reserve can be less aggressive in hiking borrowing costs and that consumer confidence can improve.

"The softer than expected inflation reading pushed the market odds narrowly back in favor of a +50 basis point Fed hike in September...and delivered a significant boost to long-duration assets," said Ian Williams, economics and strategy research analyst at Peel Hunt.

Alex Pelle, U.S. economist at Mizuho, said in a note to clients: "We do have some very preliminary evidence that inflation may be taking a step down from an underlying pace around 8% to the something closer to the 5% level. This is a level that will still keep the Fed hiking, but the July round of data--taken as given--gives the bulls an early win."

Fed officials, however, were quick to note that inflation remains "unacceptably high." Chicago Fed President Charles Evans said he expects the central bank "will be increasing rates the rest of this year and into next year to make sure inflation gets back to our 2% objective."

Jeffrey Roach, chief economist at LPL Financial said the Fed "still has a lot of work to in tightening financial conditions," and that inflation "is clearly still the primary concern for policy makers."

But Roach said that as inflation slows the Fed could revert to raising rates by 0.5 a percentage point at its next meeting in September. Ahead of the inflation print on Wednesday, Fed watchers were forecasting the central bank would raise rates for the third straight time by 0.75 a percentage point.

"Traders are growing confident that if the next inflation report on Sep. 13 confirms this softening pricing pressure trend, the Fed may seriously consider a smaller pace of tightening," said Edward Moya, senior market analyst at Oanda.

"It is too early to say that the Fed will only raise rates by a half-point in September, but if inflation keeps on cooling sharply the Fed's dovish tendencies will return."

Forex:

The dollar continued to lose ground in Europe after it slumped on Wednesday, with the ICE Dollar Index down by the most since June and earlier in the day had traded at its lowest levels since March 2020.

Evidence that price pressures might have peaked could convince the Fed to deliver smaller interest-rate rises, said Ebury.

"At the time of writing, markets are now pricing in not much more than a one-in-three chance of a 75 basis point rate increase at the Fed's September meeting, down from almost 70% prior the inflation number."

Bonds:

Bond yields barely moved in Europe, after they fell on Wednesday as investors increased their bets on a less hawkish Fed next month, reducing the inverted spread to its lowest point in five days.

But some pundits warned it is too early to call victory over inflation. Amherst Pierpont said that CPI analysis by the Cleveland and the Atlanta Fed show inflation's underlying trend well above target. PPI due later Thursday is forecast to slow down, and jobless claims are expected to be slightly higher.

Asset manager Louis Navellier said that concerns for an even more hawkish Fed are easing, which is "best reflected by the shift in expectations for the next Fed increase in September from 75bps to 50bps, with 50bps now considered a 2/3 likelihood from 1/3 before the CPI numbers."

Energy:

Oil prices turned higher after the IEA said that demand would be stronger than expected due to increased power generation.

The agency said heatwaves were driving more demand for electricity to power fans and air conditioning units. With natural gas prices so high and supplies scarce, power plants--particularly in Europe--were switching to oil as an alternative fuel source.

The IEA raised its demand forecasts for 2022 by 500,000 barrels a day.

Read: European Heatwaves Boost Demand for Oil, IEA Says

Read: European Natural Gas Prices Rise as Rhine River Levels Pose Fresh Bottleneck

Metals:

Base metals were higher in Europe while gold dipped, with investors more confident about the global economy following the latest U.S. inflation data.

"Investors are gaining confidence that the Fed finally has inflation under control," Peak Trading Research said, adding that risk assets like commodities were now more appealing.

TODAY'S TOP HEADLINES

Sonos Loses Its CFO as the Speaker Maker Faces Economic Headwinds

Sonos Inc. is losing its chief financial officer as the company faces economic challenges and has cut its outlook for the fiscal year.

The Santa Barbara, Calif.-based maker of smart speakers said Wednesday that Brittany Bagley will resign effective Sept. 1 after more than three years as CFO. Chief Legal Officer Eddie Lazarus will serve as interim finance chief.

Disney Barely Hedges Its Streaming Bet

Disney sure isn't playing it safe with streaming.

The entertainment giant's fiscal third-quarter results late Wednesday were largely a hit. Revenue and operating income surpassed Wall Street's expectations, thanks mostly to strength in its domestic theme parks, where operating profits are now exceeding prepandemic levels. The company's cable TV and broadcast business held steady, and it managed to add 14.4 million net new subscribers to its Disney+ streaming service-well over the 10 million additions expected by analysts and the best growth the service has seen in six quarters. Disney's share price jumped nearly 7% following the results.

Walgreens Helped Fuel San Francisco Opioid Epidemic, Judge Rules

A federal judge found Walgreen Co. helped exacerbate the opioid epidemic in San Francisco, the latest decision in opioid-related lawsuits aimed at pharmacy chains around the U.S.

Walgreens, the largest retail pharmacy in San Francisco, for more than a decade failed to adequately halt suspicious orders of opioids that could be used illegally, U.S. District Judge Charles R. Breyer said in an opinion issued Wednesday. He found the company liable "for substantially contributing to the public nuisance," the opioid epidemic, in San Francisco, he wrote.

Bumble Sales Rise On Higher User Spending

Bumble Inc. sales climbed in the latest quarter, driven by higher spending by users on its dating apps as prepandemic conditions have largely returned.

But the online dating company trimmed its 2022 revenue range to $920 million to $930 million, down from its prior forecast of $934 million to $944 million, largely due to a higher impact from foreign currency movements. Its outlook for sales in the current quarter also fell short of Wall Street expectations.

Ex-JPMorgan Traders Convicted in Federal Fraud Trial

A federal jury in Chicago convicted two former traders of JPMorgan Chase & Co.'s precious metals desk who had been charged with manipulating gold prices, finding they used misleading orders to rig prices.

The convictions are the capstone of a seven-year Justice Department campaign to punish a style of deceptive trading in futures markets known as spoofing. The rapid-fire strategy was prevalent at some Wall Street banks before Congress outlawed spoofing in 2010, and persisted even after its prohibition, according to prosecutors. JPMorgan paid $920 million in 2020 to settle regulatory and criminal charges against the bank over the traders' conduct.

Siemens Swung to Loss in 3Q on Impairment Charge; Cut EPS Target for FY 2022

Siemens AG cut the outlook for earnings per share for the full fiscal year after it swung to a loss in its third quarter due to an impairment on its investment in Siemens Energy AG.

The German industrial conglomerate said Thursday that its net loss was 1.66 billion euros ($1.71 billion) for the period ended June 30, compared with a profit of EUR1.35 billion a year earlier. Analysts had forecast a loss of EUR532 million, according to consensus estimates provided by Siemens.

Daimler Truck 2Q Profit, Revenue Rose

Daimler Truck Holding AG on Thursday posted an increase in sales and net profit in the second quarter and confirmed its previously given full-year revenue guidance.

The German commercial-vehicles maker said quarterly net profit was 922 million euros ($949.6 million), compared with EUR601 million a year earlier.

European Heat Waves Boost Demand for Oil, IEA Says

Summer heat waves in Europe and scarce supplies of pricey natural gas are boosting demand for oil as power stations look for alternative fuels to meet the surging demand for electricity, the International Energy Agency said.

Unprecedented temperatures across the continent have put an unexpected strain on the region's power grids, lifting demand for electricity to power fans and air-conditioning units in what is typically a quiet period for energy demand.

Fed Likely to Want Further Evidence of Inflation Slowdown

A slowdown in inflation last month, following recent indications of a robust labor market, complicates the Federal Reserve's decision on how much to raise interest rates next month.

Data on inflation and economic activity are likely to guide whether central bank officials lift their benchmark federal-funds rate by a half-percentage point or three-quarters of a point at their Sept. 20-21 policy meeting. They have said they want to see evidence that price pressures and economic growth are cooling before they moderate their pace of rate increases.

Federal Trade Commission Expected to Launch Effort to Expand Online Privacy Protection

WASHINGTON-The Federal Trade Commission is expected to begin writing federal rules to expand online privacy protections as soon as Thursday, according to people familiar with the matter.

If adopted, the rules could impose significant new responsibilities on businesses that handle consumer data, including potentially barring certain kinds of data collection practices, the people said.

FBI's Trump Search Stirs Talk, Except by Those Who Conducted It

The FBI search of former President Donald Trump's Mar-a-Lago home Monday was unprecedented, prompting days of global news coverage and commentary on motivations, implications and ramifications.

Key players no one has heard from: the Justice Department or the Federal Bureau of Investigation.

Write to paul.larkins@dowjones.com TODAY IN CANADA

Earnings:

2Q unless stated otherwise

Algonquin Pwr & Utilities

Altus Grp Limited

Brookfield Asst Mgmnt

Canacol Energy

Canada Goose Hldgs (1Q)

Canadian Tire

CES Energy Solutions

CI Fincl

Cineplex

Computer Modelling (1Q)

Docebo

ECN Capital

Exchange Income

Farmers Edge

Fiera Capital

GCM Mining

Gogold Resources (4Q)

Guardian Capital

Hardwoods Distrib

HLS Therapeutics

Hut 8 Mining

IMV

Knight Therapeutics

KP Tissue

mdf commerce (1Q)

Mogo

Northland Power

Oncolytics Biotech

Park Lawn

Primo Water

Quarterhill

Sandstorm Gold

Shawcor

Sierra Metals

Sierra Wireless

Silvercorp Metals (1Q)

Tidewtr Midstrm & Infr

Tidewater Renewbls

Timbercreek Fincl

Vermilion Energy

WELL Health Tech

Wheaton Precs Mtls

Xebec Adsorption

Economic Indicators:

None scheduled

Stocks to Watch:

Africa Oil 2Q EPS 1c; Net $5.65M

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AutoCanada 2Q EPS C$1.33; Net C$39.1M; Rev C$1.69M

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Badger Infrastructure Solutions 2Q Rev $144.2M; EPS 14C

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Enerflex 2Q EPS C$0.15; Net C$13.4M; Rev C$372.1M; Underlying Driver of Enerflex's Business Is the Demand for Natural Gas, the Outlook for Which Is Robust; Continued Growth of Liquefied Natural Gas Exports Off the US Gulf Coast and Need for Reliable Power Generation in Regions Like Latin Amer and the Middle East Present Strong Demand Fundamentals

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Fortuna Silver Mines 2Q EPS 1c; Net $1.7M; Sales $167.9M; Inflation Situation Remains Dynamic and Company Expects Higher Input Costs to Remain for 2H of Yr and Beyond; To Mitigate Inflationary Pressure on Cost Structure the Co Will Continue to Focus on Operational Efficiencies and Cost Optimization Across All Mining Ops; Even With These Efforts It Is Expected the Continued Cost Pressure Will Push the San Jose and Lindero Mines Toward Upper End of Our Cost Guidance

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Mandalay Resources 2Q Rev $50.1M; EPS 3C

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Pan American Silver 2Q Rev $340.47B; Loss/Shr 83c

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VIQ Solutions 2Q Loss/Shr 11c; Loss $3.2M; Rev $12.4M

Expected Major Events for Thursday

08:00/FRA: Aug IEA Oil Market Report

08:30/UK: 2Q Mortgage and landlord possession statistics

08:30/UK: 2Q Mortgage Arrears and Possessions data

12:30/US: Jul PPI

12:30/US: 08/06 Unemployment Insurance Weekly Claims Report - Initial Claims

12:30/US: U.S. Weekly Export Sales

13:00/RUS: Weekly International Reserves

14:30/US: 08/05 EIA Weekly Natural Gas Storage Report

16:59/GER: Jun Balance of Payments

20:30/US: Foreign Central Bank Holdings

20:30/US: Federal Discount Window Borrowings

All times in GMT. Powered by Onclusive and Dow Jones.

Expected Earnings for Thursday

Aravive Inc (ARAV) is expected to report $-0.59 for 2Q.

Axcella Health Inc (AXLA) is expected to report for 2Q.

Bellerophon Therapeutics Inc (BLPH) is expected to report for 2Q.

CI Financial Corp (CIFAF,CIX.T) is expected to report $0.74 for 2Q.

Cabaletta Bio Inc (CABA) is expected to report for 2Q.

Cardinal Health Inc (CAH) is expected to report $0.77 for 4Q.

Catalyst Biosciences Inc (CBIO) is expected to report $-0.25 for 2Q.

Computer Modelling Group Ltd (CMG.T) is expected to report $0.05 for 1Q.

CorEnergy Infrastructure Trust Inc (CORR) is expected to report for 2Q.

Dentsply Sirona Inc (XRAY) is expected to report $0.39 for 2Q.

Evelo Biosciences Inc (EVLO) is expected to report $-0.51 for 2Q.

Fulcrum Therapeutics Inc (FULC) is expected to report for 2Q.

Golden Minerals (AUMN,AUMN.T) is expected to report for 2Q.

HLS Therapeutics Inc (HLS.T) is expected to report for 2Q.

Hanesbrands Inc (HBI) is expected to report $0.32 for 2Q.

Hudson Global Inc (HSON) is expected to report for 2Q.

Kala Pharmaceuticals Inc (KALA) is expected to report $-0.39 for 2Q.

La Jolla Pharmaceutical (LJPC) is expected to report $-1.04 for 2Q.

Latham Group Inc (SWIM) is expected to report for 2Q.

Liquidia Corp (LQDA) is expected to report $-0.24 for 2Q.

Luna Innovations (LUNA) is expected to report $0.00 for 2Q.

Marinus Pharmaceuticals Inc (MRNS) is expected to report for 2Q.

Matinas BioPharma Holdings Inc (MTNB) is expected to report $-0.03 for 2Q.

McEwen Mining (MUX,MUX.T) is expected to report for 2Q.

ModivCare Inc (MODV) is expected to report for 2Q.

Neonode (NEON) is expected to report for 2Q.

ONEX Corp (Canada) (ONEX.T) is expected to report for 2Q.

Oncolytics Biotech Inc (ONC.T,ONCY) is expected to report $-0.11 for 2Q.

OptiNose Inc (OPTN) is expected to report $-0.24 for 2Q.

Orgenesis Inc (ORGS) is expected to report $-0.02 for 2Q.

Primo Water Corp (PRMW,PRMW.T) is expected to report for 2Q.

Privia Health Group Inc (PRVA) is expected to report for 2Q.

Quarterhill Inc (QTRH,QTRH.T) is expected to report $-0.01 for 2Q.

RGC Resources Inc (RGCO) is expected to report $0.48 for 3Q.

ReShape Lifesciences Inc (RSLS) is expected to report for 2Q.

Rogers Sugar (RSGUF,RSI.T) is expected to report for 3Q.

Six Flags Entertainment Corp (SIX) is expected to report $1.02 for 2Q.

Synthetic Biologics Inc (SYN) is expected to report for 2Q.

US Foods Holding Corp (USFD) is expected to report $0.57 for 2Q.

UroGen Pharma Ltd (URGN) is expected to report $-1.34 for 2Q.

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ANALYST RATINGS ACTIONS

Allbirds Cut to Equal-Weight From Overweight by Morgan Stanley

Allogene Therapeutics Cut to Market Perform From Outperform by Raymond James

Altice USA Cut to Hold From Buy by HSBC

Amyris Cut to Neutral From Buy by Roth Capital

Berkeley Lights Cut to Neutral From Buy by BTIG

Berkeley Lights Cut to Neutral From Overweight by JP Morgan

Berkeley Lights Cut to Underweight From Equal-Weight by Morgan Stanley

BigBear.ai Cut to Perform From Outperform by Oppenheimer

Boxed Cut to Neutral From Buy by Citigroup

Cerence Cut to Hold From Buy by Craig-Hallum

Cerence Cut to Market Perform From Outperform by Raymond James

CF Industries Raised to Overweight From Equal-Weight by Barclays

ChemoCentryx Cut to Hold From Buy by Stifel

Coinbase Cut to Underperform From Market Perform by Keefe, Bruyette & Woods

Emcore Cut to Market Perform From Outperform by Northland Capital Markets

Energizer Holdings Cut to Equal-Weight From Overweight by Morgan Stanley

Equitrans Midstream Raised to Overweight From Equal-Weight by Wells Fargo

iHeartMedia Cut to Neutral From Buy by Goldman Sachs

Invitae Cut to Underweight From Neutral by JP Morgan

LivePerson Cut to Hold From Buy by Loop Capital

Micron Technology Cut to Outperform From Strong Buy by Raymond James

Minerva Surgical Cut to Underweight From Overweight by JP Morgan

Moody's Cut to Hold From Buy by Deutsche Bank

Okta Cut to Neutral From Buy by DA Davidson

Par Technology Cut to Hold From Buy by Jefferies

Quotient Technology Cut to Hold From Buy by Craig-Hallum

Rackspace Technology Cut to Market Perform From Outperform by Raymond James

RealReal Cut to Underperform From Buy by B of A Securities

Repay Holdings Cut to Neutral From Buy by Citigroup

Roku Cut to Underperform From Market Perform by MoffettNathanson

ShotSpotter Raised to Buy From Hold by Lake Street

Singular Genomics Shares Slide as Supply-Chain Woes crimp Shipments

Singular Genomics Systems Cut to Neutral From Buy by Goldman Sachs

Singular Genomics Systems Cut to Underperform From Buy by B of A Securities

Take-Two Interactive Cut to Hold From Buy by DZ Bank

TaskUs Cut to Neutral From Buy by Goldman Sachs

UWM Holdings Cut to Underperform From Neutral by Credit Suisse

V2X Raised to Buy From Hold by Stifel

Vertex Energy Cut to Perform From Outperform by Oppenheimer

WM Technology Cut to Hold From Buy by Stifel

WM Technology Cut to Neutral From Buy by BTIG

WM Technology Cut to Neutral From Overweight by Piper Sandler

Workhorse Group Cut to Neutral From Buy by Roth Capital

This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

August 11, 2022 05:32 ET (09:32 GMT)

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