September rate cut, bank earnings, Biden presidential bid - what’s moving markets

Investing.com-- Wall Street marked an unexpected reaction to softer-than-expected inflation data, with heavyweight technology stocks logging steep losses after the reading even as optimism over a September interest rate cut grew. 

Losses in U.S. futures suggested that this trend was set to continue on Friday. But key producer price index data, and the onset of the second quarter earnings season, are set to offer more cues to markets. 

President Joe Biden also reiterated his intention to run against Donald Trump in the 2024 elections, dismissing calls for him to pull out amid growing concerns over his mental state. 

September rate cut bets swell after soft CPI, PPI data awaited 

Markets were seen ramping up bets on a September interest rate cut by the Federal Reserve, following softer-than-expected consumer price index data on Thursday.

Traders were pricing in an 82% chance for a 25 basis point cut in September, up from expectations of a 64% chance seen last week, CME Fedwatch showed. This came last as CPI data showed inflation cooled a smidge more than expected in June, while core inflation increased only slightly.

Producer price index inflation data, which is due later on Friday, is now set to offer more cues on this trend. Any more signs of cooling inflation will likely factor into increased expectations of rate cuts.

Wall Street battered by tech rout

U.S. stock index futures fell in European trade, with losses in Nasdaq 100 Futures suggesting that a rout in technology stocks was set to extend into Friday.

Wall Street indexes had fallen sharply on Thursday as investors locked-in recent profits in heavyweight technology stocks, especially those that saw a stellar melt-up in recent weeks on hype over artificial intelligence.

This trend spilled over into Asian and European markets on Friday, with tech-heavy bourses clocking steep losses. 

But investors were also seen pivoting into more economically sensitive sectors, which are expected to benefit from improved growth as interest rates fall this year. 

Banks to kick off Q2 earnings season 

The second quarter earnings season is set to begin in earnest on Friday, with reports from a slew of major Wall Street banks on tap through the day.

JPMorgan Chase&Co (NYSE:JPM), Wells Fargo &Company (NYSE:WFC), Citigroup Inc (NYSE:C), and Bank of New York Mellon (NYSE:BK) are set to report earnings for the second quarter later in the day, with focus squarely on how corporate profits fared as the economy came under increasing pressure from high interest rates and sticky inflation. 

Friday’s reports will be followed by earnings from financial heavyweights Goldman Sachs Group Inc (NYSE:GS) and BlackRock Inc (NYSE:BLK) on Monday, while Morgan Stanley (NYSE:MS) and Bank of America Corp (NYSE:BAC) are set to report on Tuesday.

Biden says will still run in 2024 presidential race 

U.S. President Joe Biden reiterated his commitment to run against Donald Trump in the 2024 presidential elections, dismissing mounting concerns over his mental state. 

Biden said he was the “most qualified person to run for President,” while fielding questions from the press at a NATO summit on Thursday. Biden said that he had beaten Trump once and would do so again.

His comments came amid growing calls from several Democratic party members for the President to withdraw his reelection bid, in light of a seemingly disastrous performance in a debate with Trump in June. 

China trade data mixed, outlook dulled by import tariffs 

Markets were also grappling with mixed trade data from the world’s second largest economy. 

China’s trade balance surged to a bigger-than-expected surplus in June, underpinned by strong exports. But an unexpected drop in imports raised concerns over dwindling domestic demand.

Chinese imports of key commodities such as oil, iron ore and copper fell during the month, which set a negative tone for prices of the materials.

While exports were strong in June, they are also expected to face some headwinds in the coming months, especially as the European Union joined the U.S. in imposing tariffs on key Chinese industries, such as electric vehicles. The EU is a major EV market for China.