- The U.S. stock market opens slightly higher. Investors are pricing in a 40% chance of a 50bp Fed rate cut next week
- More than 10% drop in Adobe (ADBE.US) share prices fails to spoil the mood on the Nadsaq 100. Disappointed forecasts
- U.S. consumer sentiment prelim according to UoM above expectations; U.S. import and export prices below expectations
The US stock market at the opening extends yesterday's upward momentum. The S&P 500 index gains more than 0.4%, and the Nasdaq 100 gains more than 0.2%. The Russell 2000 once again leads the way, posting a nearly 2% jump; smaller companies in the index are helped by the prospect of Fed policy easing. U.S. consumer sentiment (preliminary data for August) slightly beat forecasts in all categories, from expectations to assessment of the current situation. Inflation expectations (annual) fell from 2.8% to 2.7%, but long-term expectations rose to 3.1% versus 3% previously.
Source: xStation5
Start investing today or test a free demo
Open real account TRY DEMO Download mobile app Download mobile appUS500 (D1 interval)
The US500 is trading up nearly 0.6% today, but the index may face a serious test of demand near 5660 points. Declines were defended in August at the EMA200 level (red line) and recently demand reacted to test the EMA 100 (black line), drawing a potentially bullish formation of increasingly higher lows.
Source: xStation5
Adobe disappoints Wall Street
US software products giant Adobe Systems (ADBE.US) is losing more than 10% today. Investors didn't like the company's rather soft business guidance, although quarterly results (as well as expectations themselves) turned out to be better, than forecasts. Implied by the company's forecasts, Q4 quarterly sales growth is expected to be the weakest in the company's entire history to date, although CEO Narayen argued for a record strong current quarter.
- Adobe reported $4.65 earnings per share, compared to $4.53 forecasts and $5.4 billion in revenue, while Wall Street expected $5.37 billion. Adobe forecast revenue of $5.50 - $5.55 billion and earnings per share between $4.63 and $4.68.
- These forecasts are slightly lower than Wall Street's projections of $5.6 billion in revenue and $4.67 in earnings per share. The forecast for new digital media subscriptions for November is $550 million, which is flat compared to August. Wall Street had predicted $565 million.
- Revenues in the media segment rose 11% year-on-year to reach $4 billion. Subscriptions rose $550 million, beating the company's forecast; Adobe itself expected a drop to $460 million versus $490 million in May.
- The company outlined expected improvements to its generative AI, Firelfly AI, and the company's CFO stressed that the pace of change in this category is at a record high throughout the company's history. Analysts still believe that Adobe, with its huge share of corporate budgets, could become a long-term beneficiary of generative AI.
Adobe (ADBE.US, D1 interval)
The stock fell below the 200-session exponential moving average today on the daily interval, putting a question mark over the company's continued long-term trend. Earlier, the stock formed a double peak formation near $570 per share. The next significant support is only around $500 per share, where we see the 38.2 Fibonacci retracement of the 2022 upward wave.
Source: xStation5
Source: XTB Research, Bloomberg Finance L.P.
Source: XTB Research, Bloomberg Finance L.P.
US Macro
University of Michigan US Consumers Sentiment Prelim: 69 (Forecast 68.5, Previous 67.9)
- University of Michigan Expectations Prelim: 73 (Forecast 72.2, Previous 72.1)
- University of Michigan Condition Prelim: 62.9 (Forecast 61.6, Previous 61.3)
University of Michigan 1 Yr Inflation Prelim: 2.7% (Forecast 2.8%, Previous 2.8%)
- University of Michigan 5 Yr Inflation Prelim: 3.1% (Forecast 3%, Previous 3.0%)
Overall, today prelim UoM data points to still strong US consumers, while inflation expectations dropped below estimates - it's quite bullish mix for US stocks. Long-term inflation expectations unexpectedly rise above 3%, which may be a signal, that Fed may have a problem with sustainable achieving 2% inflation target in a long term. However, a scale of surprise in this measure is very low and does not indicate any serious problem for the Federal Reserve. The most important factor is stronger than expected results in every measure of sentiments; both current conditions and expectations.
US Import Prices MoM (August): -0.3% (Forecast -0.2%, Previous 0.1%)
US Export Prices MoM (August): -0.7% (Forecast -0.2%, Previous 0.7%)
Import Prices came in 0.8% higher YoY, however the reading from compared August 2023 was quite weak at -3% YoY
