US OPEN: Cautious gains after GDP disappointment

Despite a market and economic backdrop that does not encourage optimism, Wall Street is opening the final session of the week in a mood of (very) cautious optimism. This may be driven mainly by extremely important readings from the U.S. economy, which can temporarily distract the market’s attention. US100 is gaining the most, with futures on the technology index up 0.3%.

However, market debate and speculation still focus on the conflict in the Strait of Hormuz and on the oil market. Important information has entered the public sphere over the past several hours. The U.S. Treasury Department has suspended enforcement of sanctions against part of Russia’s oil exports; a temporary license has been issued to service entities involved in transporting and trading oil that is already loaded onto ships.

At the same time, concerns are being raised by the CEO of the CME exchange, who says that the alleged U.S. government idea of manipulating derivatives instruments to push oil prices down would be a “biblical catastrophe.”

Macroeconomic data:

• Core PCE inflation rose to 3.1% year over year. This is in line with expectations, but it is still an increase and remains clearly above the Fed’s target. The headline measure looked better, with price growth slowing to 2.8%.
• At the same time, quarter-on-quarter GDP growth came in at half the expected pace: just 0.7% versus expectations of 1.4%. The weakening-economy scenario is also supported by the durable goods reading, which posted 0% growth. A cool GDP print combined with slightly lower PCE inflation allows market participants to hope for rate cuts despite the crisis in the Persian Gulf.

US100 (D1)

Price is increasingly struggling not only to return to the previous upward channels, but—as can be seen—also to hold these ever-widening ones. Weak demand is clearly visible. The market is hovering closer and closer to the EMA200, which is crucial for maintaining bullish momentum. Source: xStation5

Company news:

• Adobe (ADBE.US): The company’s current CEO and one of the creators of Photoshop announced he will step down without naming a successor. The market interpreted this decision as an admission of failure and confirmation of the firm’s status as a “loser in the AI race.” Shares are down about 5%.
• PagerDuty (PD.US): The provider of AI agent-based solutions for businesses is down more than 8% after its earnings call. Despite beating EPS by 20% versus expectations, revenue growth and guidance were too weak for many shareholders.
• EverCommerce (EVCM.US): The company distributing management software is down more than 13% after weak results. EPS came in at just $0.03 versus the expected $0.05.
• KinderCare (KLC.US): The company providing education and childcare services significantly cut its growth forecasts and is down as much as 30%.
• Klarna Group (KLAR.US): The CEO bought as much as $50 million worth of the company’s shares; the stock is up about 7%.