By Investing.com — Wall Street is seen trading higher Friday ahead of the Fed’s preferred inflation gauge. Intel is looking at restructuring options, while Dell impressed with its quarterly results and forecasts.
1. PCE price index looms large
The main focus for investors remains on the pace and scale of Fed rate cuts this year, and there is more key inflation data due for release later in the session to inform.
The Personal Consumption Expenditures price index, the Federal Reserve’s preferred inflation yardstick, is expected to show inflation picked up slightly in July.
The index is expected to rise 0.2% on the month in July, an annual gain of 2.6%, just above the 2.5% seen the previous month.
Speaking at the Fed’s annual Jackson Hole symposium last week, Fed Chair Jerome Powell acknowledged recent progress on inflation and said that “the time has come for policy to adjust.”
This has been taken by the markets as all but guaranteeing a rate cut at next month’s policy meeting, which would be the first such cut in over four years.
However, a relatively strong economy, with second-quarter gross domestic product revised slightly higher earlier this week, and sticky inflation would provide the Fed with less impetus to cut interest rates sharply.
2. Futures rise ahead of PCE data
U.S. stock futures rose Friday, ending a volatile week on a positive note ahead of the release of a key inflation report.
By 04:00 ET (08:00 GMT), the Dow futures contract was 85 points, or 0.2%, higher, S&P 500 futures climbed 25 points, or 0.5%, and Nasdaq 100 futures rose by 145 points, or 0.8%.
All eyes are on the release later in the session of the Federal Reserve’s favorite gauge of inflation [see above], ahead of its next policy meeting in September.
On the last trading day of August, the broad-based S&P 500 index is on pace for a gain of almost 1.3% gain during the month, while the Dow Jones Industrial Average is on track to add 1.2%. The Nasdaq Composite is the sole loser of the three major averages, off by nearly 0.5% this month.
In the corporate sector, Dell (NYSE:DELL) is set to gain around 3% premarket after lifting its annual forecasts [see below].
Elsewhere, In extended trading, Ulta Beauty (NASDAQ:ULTA) stock slumped around 7% premarket after it cut its annual sales and profit forecasts, hurt by slowing demand for higher-priced cosmetics and fragrances at its stores.
Athletic apparel retailer Lululemon Athletica (NASDAQ:LULU) stock gained 4% premarket on better-than-expected earnings, even as it cut its annual sales and profit forecasts, as demand slowed in North America amid selective consumer spending.
3. Intel discusses restructuring options – Bloomberg
Intel (NASDAQ:INTC) is considering splitting off its foundry business and scrapping plans for new factories, as the chipmaker tries to weather a sharp slowdown, according to a report by Bloomberg.
The chipmaker is in talks with investment bankers over potential options, Bloomberg reported, citing people with knowledge of the matter.
Once the world’s leading chipmaker, Intel has struggled of late amid increased competition from rivals such as Advanced Micro Devices (NASDAQ:AMD) and Nvidia (NASDAQ:NVDA), as well as Taiwan’s TSMC.
Intel had earlier in August suspended its dividend and slashed about 15% of its workforce.
The Bloomberg report showed that Intel was now considering separating its product design and foundry business, while also scrapping plans for expansion as it seeks to streamline its operations.
4. Dell raises annual forecasts
Dell Technologies (NYSE:DELL) raised its annual revenue and profit forecasts, buoyed by demand for its AI-optimized servers, sending its shares higher in premarket trading.
The tech giant said on Thursday it now expects annual revenue outlook to be between $95.5 billion and $98.5 billion, up from $93.5 billion and $97.5 billion previously. It also raised its annual adjusted profit per share forecast to $7.80, plus or minus 25 cents.
Demand for its AI-optimized servers rose about 23% sequentially to $3.2 billion in the second quarter.
Revenue for the second quarter ended Aug. 2 rose about 9% to $25.03 billion, beating the average estimate of $24.14 billion, according to LSEG data. It reported adjusted profit per share of $1.89 per share, compared with estimates of $1.71 per share.
5. Crude helped by Libya supply concerns
Crude prices rose Friday, boosted by ongoing supply concerns in Libya, although signs of weakened demand limited gains.
By 04:00 ET, the U.S. crude futures (WTI) gained 0.6% to $76.33 a barrel, while the Brent contract rose 0.6% to $79.32 a barrel.
Both benchmarks are on course for gains for over 1%, with more than half of Libya’s oil production, or about 700,000 barrels per day, offline and exports halted at several ports following political ructions in the country.
However, the benchmarks are still for declines of around 2% in August, their second straight monthly drops, amid persistent concerns that slowing growth in the U.S. and China will dent demand in the coming months.
Weak economic prints from China have kept fears of a slowdown in the world’s biggest oil importer in play, while concerns exist that demand will cool in the U.S. as the travel-heavy summer season comes to an end.