US Stocks Likely To Open Lower Ahead Of May Inflation Report: S&P 500 Still In A 31-Month-Long Bull Market, 'Better Times Are Coming,' Says Expert

U.S. stock futures were trading lower on Wednesday after a positive close on Tuesday. Futures of major benchmark indices were lower in premarket.

A federal appeals court on Tuesday permitted President Donald Trump‘s extensive tariffs to continue, pending its review of lower court rulings that had invalidated the duties as unconstitutional.

The U.S. and China achieved a trade consensus in London following two days of negotiations. Commerce Secretary Howard Lutnick stated they “reached a framework” to enact the Geneva consensus.

The investors will be on the lookout for May’s inflation print, which will be announced today. The median forecast sees headline inflation ticking up from 2.3% to 2.5% in May, while core CPI, which strips out food and energy, is expected to rise from 2.8% to 2.9% year-over-year.

The 10-year Treasury bond yielded 4.49% and the two-year bond was at 4.02%. The CME Group's FedWatch tool‘s projections show markets pricing a 99.9% likelihood of the Federal Reserve keeping the current interest rates unchanged in its June meeting.

The SPDR S&P 500 ETF Trust SPY and Invesco QQQ Trust ETF QQQ, which track the S&P 500 index and Nasdaq 100 index, respectively, were slightly lower in premarket on Wednesday. The SPY was down 0.11% at $602.39, while the QQQ declined 0.10% to $533.67, according to Benzinga Pro data.

Cues From Last Session:

Energy, healthcare, and consumer discretionary stocks led gains across most S&P 500 sectors on Tuesday, though industrial stocks bucked the trend, closing lower.

This came as U.S. stocks settled higher as investors tracked U.S.-China trade talks in London for progress.

Separately, Casey’s General Stores Inc. CASY shares surged about 12% after strong fourth quarter results and a dividend hike. Conversely, Calavo Growers Inc. CVGW shares fell more than 16% on weaker-than-expected second-quarter financials.

Meanwhile, the NFIB Small Business Optimism Index climbed to 98.8 in May, exceeding estimates.

The Dow Jones index ended 105 points or 0.25% higher at 42,866.87, whereas the S&P 500 index rose 0.55% to 6,038.81. Nasdaq Composite advanced 0.63% to 19,714.99, and the small-cap gauge, Russell 2000, gained 0.56% to end at 2,156.41.

Insights From Analysts:

Highlighting that the S&P 500 index continues to be in a bull market, which began in October 2022, Ryan Detrick from Carson Research said in an X post that the third year of a bull market is mostly “choppy,” based on historical data.

Detrick said that, based on his 50-year analysis, five past bull markets persisted for at least this duration, with the shortest of those lasting a full five years.

"The five bulls that made it into year 3 tended to see chop and frustration at some point," he said, adding, "That's the bad news. The good news is once you get past that (and I think we did this time), better times are coming."

Furthermore, he drew attention to the 11-year bull market that ran from March 2009 to February 2020, pointing out its encounter with a near-bear market midway through its third year.

"This current bull market had a near bear market in the middle of year 3," he said, talking about the ongoing bull market which began in October 2022.

Meanwhile, Louis Navellier of Navellier & Associates explained that June is the time for Russell's annual index realignment. Every Friday in June, Russell announces its proposed Russell 1000 and 2000 index changes, which are fine-tuned each week.

The stocks that are added to both the Russell 1000 and 2000 indices naturally benefit from index accumulation and the institutional managers that like to "track" indices.

“After Friday, June 27th, the Russell index realignment will be finalized, and many stocks being added to the Russell indices will ‘pop’ on Monday, June 30th,” he said.

Talking about his expectation from the May’s inflation print, he said, “It will be interesting if the deflationary forces in the past few months persist, since that would put more pressure on the Fed to cut key interest rates.

“There are also Treasury bond auctions on Wednesday and Thursday that will be carefully monitored, especially the bid-to-cover ratios and the "tail" on the auctions that could cause bond yields to rise,” he stated.

See Also: How to Trade Futures

Upcoming Economic Data

Here’s what investors will keep an eye on Wednesday:

• May’s headline and core consumer price index data will be released by 8:30 a.m. ET.
• May’s monthly U.S. federal budget data will be announced by 2:00 p.m. ET.

Stocks In Focus:

• Chewy Inc. CHWY fell 0.50% in premarket on Wednesday as analysts expect it to report quarterly earnings of 519 cents per share on revenue of $3.08 billion, before the opening bell.
• Victoria’s Secret & Co. VSCO was 1.13% higher ahead of its earnings, which are supposed to be released before the opening bell. Analysts expect earnings of 9 cents per share on revenue of $1.35 billion.
• Oracle Corp. ORCL was 0.03% below the flatline as analysts expect it to report quarterly earnings of $1.64 per share on revenue of $15.58 billion after the closing bell.
• Sailpoint Inc. SAIL was up 1.78% ahead of its earnings, which are supposed to be released before the opening bell. Analysts expect a quarterly loss of 1 cent per share on revenue of $225.16 million.
• GameStop Corp. GME declined 3.68% after reporting first-quarter revenue of $732.4 million, missing analyst estimates of $754.24 million. The company reported first-quarter adjusted earnings of 17 cents per share, beating analyst estimates of four cents per share.
• Dave & Buster’s Entertainment Inc. PLAY advanced 3.44% despite downbeat earnings, but it expects total capital expenditures to be less than $220 million in fiscal 2025.
• General Motors Co. GM rose 0.90% after it announced on Tuesday that it plans to invest $4 billion over the next two years at plants in Michigan, Kansas, and Tennessee.
• Catheter Precision Inc. VTAK surged 111.74% after securing its first VIVO order from Sweden’s largest hospital, Sahlgrenska University Hospital, a key teaching institution.
• Vaxart Inc. VXRT zoomed 61.26% after it said that it will reveal the first-ever oral norovirus vaccine trial results on Wednesday.
• Graphjet Technology GTI slumped 35.56% after receiving a delisting notice from Nasdaq on June 4.
• American Superconductor Corp. AMSC dropped 13.58% after announcing its intent to offer and sell common stock in an underwritten public offering without revealing the size and terms, which will be subject to market conditions.

Commodities, Gold, And Global Equity Markets:

Crude oil futures were trading higher in the early New York session by 0.23% to hover around $65.13 per barrel.

Gold Spot US Dollar rose 0.68% to hover around $3,345.05 per ounce. Its last record high stood at $3,500.33 per ounce. The U.S. Dollar Index spot was lower by 0.07% at the 99.0270 level.

Asian markets ended higher on Wednesday as China’s CSI 300, Hong Kong's Hang Seng, Australia's ASX 200, Japan's Nikkei 225, India's S&P BSE Sensex, and South Korea's Kospi indices rose. European markets were mixed in early trade.

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