US stock futures tread water before key inflation data; meme stocks rally
U.S. stock index futures moved little in evening deals on Monday, as investors hunkered down ahead of key inflation readings that are likely to factor into interest rates, although a rally in so-called memestocks extended into aftermarket trade.
Sideways trading in U.S. futures followed a similar session on Wall Street, in anticipation of more cues on interest rates from inflation readings on Tuesday and Wednesday.
But the so-called meme stocks were an exception, rising sharply after Keith Gill, who goes by the social media tag Roaring Kitty and was a figurehead in the 2021 meme stock frenzy, made a social media post for the first time in three years. Still, their gains had little bearing on the overall market.
S&P 500 Futures fell slightly to 5,243.50 points, while Nasdaq 100 Futures fell 0.1% to 18,282.25 points by 19:13 ET (23:13 GMT). Dow Jones Futures were flat at 39,556.0 points.
Wall Street moves little with PPI, CPI data on tap
Wall Street indexes kept to a tight range on Monday, with focus squarely on producer price index and consumer price index data.
PPI data is due on Tuesday, while the more closely watched CPI reading is due on Wednesday. The readings come after inflation remained largely sticky through the first quarter, dashing expectations of interest rate cuts by the Federal Reserve this year.
Any signs of inflation remaining sticky through April are likely to further diminish expectations of rate cuts- a trend that could spark losses in stocks.
A string of Federal Reserve officials also warned in recent weeks that the central bank was in no hurry to begin cutting rates, and needed more confidence that inflation was moving back towards its 2% annual target.
The S&P 500 closed flat at 5,221.42 points on Monday. The NASDAQ Composite rose 0.3% to 16,388.24 points, while the Dow Jones Industrial Average fell 0.2% to 39,431.51 points.
Gamespot, meme stocks extend rally
Shares of so-called meme stocks AMC Entertainment Holdings Inc (NYSE:AMC) and GameStop Corp (NYSE:GME) extended gains into aftermarket trade after rising sharply during the session.
Videogame retailer GME rose nearly 24% after a 74% rally during the session, while theater chain operator AMC also rose 24% after a nearly 80% spike during the session.
Buying spilled over into other companies with relatively poor fundamentals, which retail traders had piled into in 2021 to boost their share prices.
U.S. shares of BlackBerry Ltd (NYSE:BB) rose 12%, headphones maker Koss Corporation (NASDAQ:KOSS) rose 9.2%, while Reddit Inc (NYSE:RDDT), which was the platform where a bulk of the meme stock frenzy was fostered, rose nearly 2%.
Gill, who also goes by the monikers RoaringKitty and DeepF***ingvalue, posted a series of cryptic images and clips on the social media platform X- his first posts after nearly three years of silence. None of the posts were related to GME.
Gill had inspired the meme stock rally in 2021 after his posts on Reddit’s wallstreetbets forum went viral, sparking retail buying into heavily-shorted stocks such as GME initially, and then AMC. The buying triggered exponential, albeit brief gains in stock prices.
Demand for US stocks can be a bit complex, but it boils down to investors’ expectations of future corporate profits. Here’s a quick rundown:
Factors affecting demand:
- Economic data: Strong economic data suggests companies will make more money, which increases demand for their stocks. Investopedia – Law of Supply and Demand
- Interest rates: Higher interest rates make bonds more attractive compared to stocks, potentially lowering demand for stocks.
- Corporate earnings: If companies are reporting strong profits, it generally increases investor confidence and demand for their stocks.
Current demand (as of May 14, 2024):
- Stocks are coming off a strong week, with the S&P 500 and Nasdaq both up (AP News).
- This could indicate some optimism about the future of corporate earnings.
- However, investors are also cautious as they await key inflation reports (CNBC).
Resources to stay informed:
- CNBC: https://www.cnbc.com/
- Nasdaq: https://www.nasdaq.com/
I can’t offer financial advice, but these resources can help you stay up-to-date on factors affecting US stock demand.