Wall Street Aims for a Rebound as Key Inflation Data Looms

Wall Street appears ready to end a challenging week on a positive note, with some relief possibly on the horizon. However, the release of crucial inflation data from the Federal Reserve could sway market sentiment. Additionally, Apple's market share struggles in China and the ongoing European earnings season add layers of complexity to the current financial landscape.

Futures Climb Amidst Weekly Losses

U.S. stock futures edged higher on Friday as investors awaited the inflation data, but Wall Street is set to end the week with notable losses, driven primarily by the tech sector.

As of 06:21 AM EDT, Dow futures were up 187 points, or 0.47%, S&P 500 futures gained 40.25 points, or 0.75%, and Nasdaq 100 futures rose by 193.75 points, or 1.02%. Despite this uptick, all three major indices are on track to post weekly declines—1.9% for the S&P 500, nearly 3.1% for the Nasdaq, and around 0.9% for the Dow Jones Industrial Average.

Friday will also see earnings reports from companies like Bristol Myers (NYSE: BMY), 3M Company (NYSE: MMM), and Colgate-Palmolive (NYSE: CL), adding more data points for investors to consider.

Key PCE Inflation Data on the Horizon

Today’s focus is on the Federal Reserve’s preferred inflation gauge—the Personal Consumption Expenditures (PCE) price index. This key indicator could impact market expectations about a potential interest rate cut by the Fed in September.

For June, economists predict a modest 0.1% increase in the PCE price index, bringing the annualized figure close to the Fed’s target of 2%. The core PCE inflation report is anticipated to show a 0.2% month-over-month rise, keeping the year-over-year increase steady at 2.6%.

This follows a drop in the consumer price index in June, which had cemented expectations for a potential rate cut. However, the timing of such a move remains uncertain, with next week’s meeting possibly coming too soon for a decision.

Apple’s Market Share Takes a Hit in China

Apple (NASDAQ: AAPL) is grappling with increased competition in China, its third-largest market. The tech giant has dropped out of the top five smartphone vendors in the region.

In the second quarter of 2024, Apple’s smartphone shipments in China decreased by 6.7%, totaling 9.7 million units, down from 10.4 million units in the same quarter last year. This decline follows a significant 25% drop in shipments from the previous quarter.

The competitive landscape is shifting as Chinese consumers increasingly favor local brands, which are aggressively integrating generative AI into their products. As a result, Apple’s market share in China has fallen to 14% from 16% a year ago, dropping its ranking from third to sixth place. Vivo leads with a 19% share, followed by Oppo, Honor, and Huawei.

Crude Prices Struggle Amid Weak Demand

Crude oil prices stabilized on Friday but are set to close the week with declines, marking a third consecutive week of downturns. Weak demand from China, the world’s largest crude importer, has been a significant factor.

As of 06:21 EDT, U.S. crude futures (WTI) remained steady at $78.28 a barrel, while Brent crude edged up 0.1% to $82.39 a barrel. Despite the slight recovery, both benchmarks have fallen about 5% over the past three weeks.

Recent data shows a sharp 8.1% drop in China’s oil demand to 13.66 million barrels per day in June. Coupled with disappointing GDP growth figures and recent cuts in lending rates by Beijing, concerns over China’s economic slowdown are weighing heavily on oil prices.