Producer Inflation Cools in June

Pre-market futures are gathering steam following this morning’s slew of economic data, which was quite encouraging overall. Wholesale inflation and another round of Q2 earnings results, along with a New York manufacturing index, has seen the blue-chip Dow up from +99 points to +140 at this hour. The S&P 500 is +10 at this hour, and the Nasdaq is +150. The small-cap Russell 2000 is +4 points.

PPI for June Better than Expected: -0.3%, +5.5%

Following Tuesday’s retail inflation numbers from the Consumer Price Index (CPI), which showed pressures on the economy abating, this morning’s Producer Price Index (PPI) for June — the wholesale inflation print — brings us more of the same: -0.3% on month-over-month headline, lower than both the 0.0% expected, and the half-point downward revision for May to +0.6%. This is the steepest drop since August of last year, which is the last negative print on month-over-month PPI.

We know that the easing of oil prices last month has pushed both PPI and CPI inflation numbers lower for June. But stripping out volatile food and energy costs, we only swing up to +0.2% for the month, 10 basis points (bps) below expectations, with the prior month’s revisions ratcheting down considerably, as well.

Year over year PPI pulls back to +5.5% — 100 bps lower than last month’s initial print, which has been revised down another half a point to +6.0%. Core year over year reduces to +4.7%, further demonstrating less of an inflationary strain on the economy than we saw a month ago. Ex-food, energy and trade was still the highest in more than three years at +5.1%, but that’s still lower than analysts had been projecting.

The opening of the Strait of Hormuz last month (which is presently in jeopardy considering news reports out of the Middle East this morning, making these PPI numbers potentially a mere fleeting relief) sent Energy prices down -6.4% on wholesale inflation, with Diesel hurtling -18% downward. Overall, Goods dropped -1.4% and Food was -0.6%. Pre-market futures, as we saw above, are happy with these numbers, regardless.

Q2 Earnings Today: Morgan Stanley, BlackRock Ahead of the Bell

Investment giant Morgan Stanley MS reported Q2 earnings ahead of today’s opening bell, with big beats on both top and bottom lines. Earnings of $3.46 per share zoomed past the $2.89 in the Zacks consensus for a +19.7% positive surprise. Revenues also impressed: $21.38 billion were +8.9% higher than expected. Shares are selling the news a bit, however, as the stock had already risen +28% year to date prior to the print.

Wall Street competitor BlackRock BLK also outperformed estimates ahead of the open this morning, with earnings of $13.91 per share well ahead of the $12.67 projected and $12.05 per share reported a year ago. Revenues of $7.08 billion beat consensus by +3.75%, and towers above the $5.42 billion in revenues the company posted for Q2 of last year. Shares are up +5.6% on the news, pushing the stock into positive territory year to date.

Outside the world of Big Finance, Johnson & Johnson JNJ outpaced earnings estimates by 6 cents to $2.90 per share this morning, for a +2.1% positive surprise. Revenues of $25.31 billion surpassed the Zacks consensus by +0.53%. Household goods and pharmaceuticals typically don’t bring the gaudy margins the AI firms or big investment houses do, though the stock is still up more than +20% year to date, despite this morning’s slight selloff on the Q2 news.

After today’s close, we’ll see earnings from United Airlines UAL. Earnings are expected to come in -51% from a year ago — higher fuel costs took a bite out of the airlines last quarter — on +16% gains in revenues. The company carries a Zacks Rank #2 (Buy) rating into this afternoon’s print, and has beaten earnings estimates in the past four quarters by an average of +5%.

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