By Peter Nurse
Investing.com -- The main focus of the day will be the release of the latest U.S. consumer price data and the potential impact this has on Fed thinking. Elon Musk’s sale of more Tesla stock will also put the electric car maker in the spotlight, along with Disney’s third quarter results and official crude inventory numbers. Here's what you need to know in financial markets on Wednesday, August 10.
1. U.S. CPI in spotlight
The main focus of investors’ attention Wednesday will be the release of the U.S. consumer price index for July, which is expected to play a significant part in the thinking of Federal Reserve policymakers over future interest rate hikes.
The U.S. CPI is due at 8:30 AM ET (1230 GMT) and is expected to have risen 0.2% last month after advancing 1.3% in June. This would equate to an annual increase of 8.7%, down slightly from the 9.1% seen in the prior month.
While that would be the largest month-on-month deceleration of price increases since 2005, largely on the back of a sharp drop in the cost of gasoline, the report, however, is still likely to show that underlying inflation pressures remain elevated.
The annual core CPI figure, which excludes volatile food and energy prices, is seen actually rising to 6.1%, from 5.9% in June.
The Fed has indicated that several monthly declines in CPI growth would be needed before it lets up on the aggressive monetary policy tightening. This suggests that a much more substantial move lower is needed for the central bank policymakers to decide against another super-sized interest rate hike in September.
2. Musk sells more Tesla stock
Elon Musk has boosted his legal war chest, with the Tesla (NASDAQ:TSLA) CEO selling an additional $6.9 billion worth of shares in the electric vehicle maker over the past week, an SEC filing revealed on Wednesday.
Musk stated, in a series of tweets, that he wanted to avert an emergency sale of stock if he is compelled to complete the $44 billion takeover of Twitter (NYSE:TWTR), which he has subsequently tried to back away from.
The billionaire is set to go to court in October and faces either a forced buyout of Twitter or a hefty fine for calling off the deal.
Musk has now sold around $32 billion worth of stock in Tesla over the past 10 months, but this move comes just four months after he said he had no further plans to further dispose of stock after an $8.5 billion sale in the wake of his initial offer to buy the social media platform.
3. Stocks set to edge higher; Roblox Slumps
U.S. stock markets are set to open marginally higher Wednesday, bouncing back after a series of weaker sessions, with the focus on the release of a key inflation report.
By 6:00 AM ET (1000 GMT), Dow Jones futures were up 65 points or 0.2%, S&P 500 futures were up 0.3%, and Nasdaq 100 futures were up 0.3%.
The main Wall Street indices all closed lower Tuesday, with the broad-based S&P 500 and the tech-heavy Nasdaq Composite dropping for their third straight sessions, after the likes of Micron (NASDAQ:MU), Novavax (NASDAQ:NVAX), and Upstart (NASDAQ:UPST) warned of future earnings weakness.
The latest consumer prices report [see above] is set to drive activity Wednesday as it could influence future Fed interest rate moves.
In corporate news, results from Disney [see below] lead the way, but Coinbase (NASDAQ:COIN) will also be in the spotlight after the crypto exchange reported a massive $1.1 billion net loss in the second quarter, citing a "fast and furious" downturn of the crypto markets.
Roblox (NYSE:RBLX) stock was sharply lower premarket after the video game publisher reported a wider-than-expected loss in the second quarter, while Wynn Resorts (NASDAQ:WYNN) disappointed as the gaming company’s Macau Resort struggled with COVID issues.
4. Disney+ streaming subscribers in focus
Walt Disney (NYSE:DIS) will be in the spotlight Wednesday, as the entertainment giant is scheduled to publish its fiscal third quarter results after the market close.
The focus will be on the Disney+ streaming service following the loss of streaming rights to Indian Premier League cricket and after rival Netflix (NASDAQ:NFLX) impressed with its subscriber figures a couple of weeks ago.
Demand for Disney’s theme parks is expected to have bounced back strongly, and the segment may outperform expectations despite a $350 million hit from overseas closings.
Investors could also be looking for more information following a New York Times report that Walmart (NYSE:WMT) has held talks with media companies, including Disney, about including streaming entertainment in its membership service.
5. Oil falls; EIA inventory data due
Crude oil prices weakened Wednesday after an industry report showed a surprise increase in U.S. inventories, prompting concerns of falling demand in the world’s largest consumer.
Data from the American Petroleum Institute, released on Tuesday, showed that U.S. crude stocks rose by around 2.2 million barrels last week, much more than the 100,000 barrels predicted.
Such a result, if confirmed by official government data later Wednesday from the Energy Information Administration, would mark a second straight week of an unexpectedly large build in U.S. oil inventories.
“EIA weekly data shows that implied gasoline demand in the U.S. has been seasonally weak so far this summer, given the higher pump prices,” said analysts at ING, in a note. “The more recent weakness in prices may limit the demand destruction that some may feel is needed in order to keep the market balanced.”
By 6:00 AM ET, U.S. crude futures were down 0.9% at $89.72 a barrel, while Brent crude was down 0.9% at $95.47 a barrel.