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Why Soft Landing Hopes Powered Thursday’s Rally

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What’s in Today’s Report:

  • Why Soft Landing Hopes Powered Thursday’s Rally

Futures are modestly lower following Thursday’s rally as markets digest disappointing earnings and economic data.

AMZN results beat estimates but warned on cloud growth while Capital One (COF) cautioned on rising credit card delinquency rates.

Economically, French CPI came in much hotter than expected at 0.6% m/m vs. (E) 0.3% m/m.

Today focus will be on inflation, and specifically the Core PCE Price Index (E: 0.3% m/m, 4.5% y/y) and the Employment Cost Index (E: 1.0%).  If both numbers come in under expectations and imply disinflation has returned and is gaining momentum, then markets can add to yesterday’s gains.   However, hotter than expected numbers will weigh on markets because at these levels, the S&P 500 is already pricing in ongoing disinflation,

On the earnings front, some reports we’re watching this morning include:   XOM ($2.65), CVX ($3.36), CL ($0.70).