Stock market today: Stocks inch higher with key inflation print looming

Stocks did little on Thursday ahead of the market's marquee release set for Friday morning.

The May reading on the Personal Consumption Expenditures (PCE) price index, the Fed's preferred inflation measure, is expected at 8:30 a.m. ET on Friday.

Economists expect the print will show prices on a "core" basis — which excludes food and energy — rose 0.1% last month. This would mark the slowest monthly rise since last November. On an annual basis, core PCE inflation should jump 2.6%, the least since March 2021.

The election conversation is coming into full swing, with the first debate between President Biden and former President Donald Trump set for Thursday night.

But the volatility spike in markets usually caused by uncertainty over the presidential race is likely still a few months away. Research from Truist co-chief investment officer Keith Lerner shows that the CBOE Volatility Index, known by its ticker as simply the VIX (^VIX), is usually quiet during election years until a big spike in October.

"Elections play a role and can add to market volatility," Lerner wrote in a note to clients. "However, an objective review of the historical data indicates that Washington’s perceived influence on market returns may be overstated and should not be viewed in isolation."

He added, "In the current environment, the path of inflation and interest rates, and whether the Federal Reserve can stick the soft economic landing will likely be more consequential than the election."

Nearly halfway through the year, volatility has played little role in markets. The VIX has been unusually quiet and, with a reading of less than 13, is hovering near historic lows.

The number of continuing applications for unemployment benefits hit its highest level since November 2021 last week, furthering signs the labor market is cooling as unemployed workers struggle to find new jobs.

New data from the Department of Labor showed nearly 1.84 million claims were filed in the week ending June 22, up from 1.82 million the week prior. Meanwhile, the four-week moving average of weekly jobless claims ticked higher by 3,000 to 236,000, the highest rate since September 2023.

LPL Financial chief economist Jeffrey Roach reasoned the data is "sending a warning sign that the labor market could be softening."

The key question for the Federal Reserve is whether this softening is yet another sign of normalization in the labor market or an indicator that higher interest rates could seriously harm the US economy.

An increasing number of economists believe that the risks lean toward a painful outcome.

Oxford Economics lead US economist Nancy Vanden Houten cautioned on reading too far into claims data, which can be volatile from week to week, but noted that a further move higher in the trend of weekly jobless claims would undoubtedly be a point of concern.

"A persistent rise in initial claims would signal more weakness in the labor market and a larger rise in the unemployment rate than we currently expect and would add more support to our case for the Fed to start lowering rates in September," Vanden Houten wrote in a note on Thursday.

The Fed has largely remained steadfast in its argument that it must gain "greater confidence" in inflation's path lower before cutting interest rates. In his most recent press conference on June 12, Fed Chair Jerome Powell noted the labor market continues to normalize and, from the Fed's perspective, hasn't shown true signs of concern yet.

"We see gradual cooling — gradual moving toward better balance. We’re monitoring it carefully for signs of ... something more than that, but we really don’t see that," Powell said.

Read more here.

As Josh Schafer pointed out in a previous blog post, Chewy (CHWY) shares are letting out a few barks this afternoon following a tweet from cat fan and GameStop (GME) lover Roaring Kitty.

Can't make this stuff up!

Since Chewy is in the news, I thought it would be worthwhile to share what Chewy the actual business is up to. The company is coming off a comeback quarter, where auto ship sales improved. Chewy is also pushing into the vet business to diversify itself, as CEO Sumit Singh told me on Yahoo Finance.

Our full interview below.

Chewy (CHWY) shares rose more than 30% in less than 15 minutes after Roaring Kitty's X account posted a picture of a dog.

Posts on the account tied to investor Keith Gill, also known as "Roaring Kitty" on social media, have been driving up shares of Gamestop (GME) over the past month. While that meme trade had largely gone quiet over the past week, the account's tweet at 1 p.m. ET sent shares of Chewy rocketing higher.

Petco (WOOF) also saw a quick bounce, rising more than 7%.

Ryan Cohen, the CEO of GameStop who Keith Gill recently talked glowingly about during a YouTube livestream, is the founder of Chewy.

Walgreens (WBA)

Walgreens Boots Alliance stock tanked 25% after the pharmacy chain lowered its earnings per share guidance due to "challenging" industry trends and a worse-than-expected US consumer environment.

Micron (MU)

Chipmaker Micron’s sales forecast for the current quarter met expectations but failed to satisfy investors looking for stellar outperformance from AI-linked companies.

The stock sank 6% on Thursday.

GameStop (GME)

GameStop was the No. 3 ticker on Yahoo Finance's Trending Ticker page on Thursday as the stock popped roughly 5%.

It's been a volatile two months for shares of the video game retailer following the online reemergence of one of the stock's biggest retail investor bulls, Keith Gill.

Yahoo Finance's Alexis Keenan reports:

A new Supreme Court ruling that upended a $6 billion opioid settlement just made it more difficult for owners of any company to use federal bankruptcy proceedings to shield themselves from legal peril.

The dispute — Harrington v. Purdue — involved bankrupt OxyContin manufacturer Purdue Pharma and members of the Sackler family, the company's billionaire owners.

The main question in the case was whether or not Purdue’s bankruptcy proceedings could be used to protect the Sacklers’ personal fortunes from future opioid-related liabilities.

In the 5-4 decision, the court said that no provision within the US Bankruptcy Code permits the type of agreement that the Sacklers and the company tried to reach.

Read more here.

Yahoo Finance's Senior Columnist Kerry Hannon reports:

Fifty-five-year-old Americans have a median retirement savings of less than $50,000.

That’s bleak news for older Gen Xers who are only about a decade out from retiring — and a far cry from the target of having eight times your annual income saved by this age.

“A lot of folks are behind, and that has important longer-term implications for retirement,” David Blanchett, head of retirement research at PGIM DC Solutions, told Yahoo Finance. “It’s not easy. We can always find things that we'd rather spend the money on today than save for this thing that's going to happen in 10 or 20 or 30 years.”

It’s not just the future that looks grim. They’re just squeaking by right now: More than one-third of 55-year-olds say they would have trouble putting together $400 to cover an emergency expense, compared to 19% of 65-year-olds and 15% of 75-year-olds, according to the survey from Prudential Financial.

Read more here.

High home prices and elevated mortgages are keeping prospective buyers away from the housing market.

Pending home sales — a forward-looking indicator of home sales based on contract signings — fell 2.1% in May from the month prior, according to National Association of Realtors data. Year over year, they were down 6.6%, the data released Thursday showed.

The Midwest and South posted a drop in contract signings in May from the month before. The Northeast and West recorded gains. All regions across the country registered losses in activity on an annual basis.

“The market is at an interesting point with rising inventory and lower demand,” NAR chief economist Lawrence Yun said in a statement. “Supply and demand movements suggest easing home price appreciation in upcoming months. Inevitably, more inventory in a job-creating economy will lead to greater home buying, especially when mortgage rates descend.”

Mortgage rates are sitting at their lowest average in three months, but that's still not enough to lure buyers. About 95% of mortgage borrowers have interest rates below current market rates, and almost 80% have rates more than 2 percentage points below market rates, per Goldman Sachs data.

Looking ahead, Yun expects “moderately lower mortgage rates, higher home sales, and stabilizing home prices.”

Walgreens stock plunged 24% to touch its lowest level since 1997 after the drugstore chain lowered its fiscal 2024 earnings guidance, citing "challenging pharmacy industry trends and a worse-than-expected US consumer environment"

"Our customers have become increasingly selective and price-sensitive in their purchases," said Walgreens Boots Alliance CEO Tim Wentworth during the company's earnings call on Thursday morning.

Management indicated that 25% of the company's stores are not currently contributing to the long-term strategy and "changes are imminent."

Walgreens said it plans to close a "significant portion" of its underperforming stores over the next three years.

It expects adjusted earnings per share for the year to come in between $2.80 and $2.95, down from its prior forecast of $3.20 to $3.35.

Communication stocks boosted the Nasdaq Composite (^IXIC) into positive territory with a rise of 0.3% shortly after the market open on Thursday.

Netflix (NFLX) and Meta (META) both advanced more than 1%, helping lift the tech-heavy gauge that had dipped just below the flatline.

The S&P 500 (^GSPC) rose 0.2% while the Dow Jones Industrial Average (^DJI) was little changed.

Meanwhile, chip giant Nvidia's (NVDA) shares were fractionally lower after Micron’s (MU) sales forecast failed to enthuse investors on the AI craze that has fueled the broader market rally this year.

Stocks opened slightly lower on Thursday as investors assessed economic data released before the bell.

The S&P 500 (^GSPC) was little changed, while the Dow Jones Industrial Average (^DJI) slipped 0.1%. The tech-heavy Nasdaq Composite (^IXIC) fell to just below the flatline.

Real gross domestic product (GDP) increased at an annual rate of 1.4% in the first quarter of 2024, according to the third estimate by the Bureau of Economic Development released on Thursday morning. The print was slightly higher than the prior reading of 1.3% but still showed the slowest growth since 2022.

A reading on initial weekly jobless claims came in at 233,000, a decrease of 6,000 from the previous week, according to Department of Labor data.

On the corporate front, chipmaker Micron’s (MU) sales forecast for the current quarter met expectations but failed to satisfy investors looking for stellar outperformance from AI-linked companies. The stock fell about 4% in early trading. AI chip giant Nvidia (NVDA) also slipped almost 1% at the open.

Levi's (LEVI) shares are getting slammed by 15% in the premarket following earnings.

And I think it's deserved for two reasons.

First, China sales tanked 10% from the prior year. I have been chatting to a good number of folks of late who have recently visited China. One theme is that Chinese consumers are feeling on the gloomy side and not spending like in years past. That mood is impacting demand for Levi's jeans, Starbucks (SBUX) coffee, and — according to General Mills' (GIS) earnings call yesterday — Haagen-Dazs ice cream.

It's hard to see the inflection point in China.

Same goes for the Levi's wholesale business, or the business that sells into department stores. Sales fell 4% from the prior year. The company's commentary suggests wholesale demand may not inflect until 2025.

I plan to put some of my concerns to Levi's CFO Harmit Singh today at 10:30 a.m. ET on Yahoo Finance. Tune in!