Stock futures rise as Wall Street awaits key inflation report

Treasury yields slide ahead of CPIU.S. Treasury yields were in retreat on Tuesday morning less than an hour before the release of a key inflation report. The yield on the benchmark 10-year Treasury note and the 2-year Treasury were lower by about 5 basis points each, trading at 3.314% and 3.525% respectively. The yield on the 30-year Treasury bond was down about 4 basis points at 3.477%.Bond yields move opposite of price, and a basis point is equal to 0.01%. Treasury yields have moved higher in September as Federal Reserve officials have pledged to continue their fight against inflation even if it causes short-term damage to the economy. — Jesse PoundSteer clear of Rent the Runway, Barclays saysBarclays downgraded shares of Rent the Runway to neutral from outperform, citing concerns over the company’s active subscriber growth. “The significant deterioration in Active Customer trends in the quarter (QoQ active sub growth slowed to -8% in 2Q vs Street +7%, decelerating from +17% in 1Q) suggest that RENT is more susceptible to macro pressure on the aspirational consumer than we expected,” analyst Michael Binetti wrote in a note. Rent the Runway shares fell more than 22% in the premarket after the company announced it was laying off 24% of its corporate workforce. —Sarah MinDollar falls for fifth day in a rowThe dollar index, which tracks the U.S. currency’s performance against six others, fell for a fifth straight day, potentially giving stocks a boost. Many large U.S. companies get a big chunk of their revenue from outside the U.S., meaning that a weaker dollar could boost their revenue. The index traded 0.5% lower at 107.76.Chinese EV maker BYD can rally nearly 40%BYD, a Chinese electric vehicle maker, could make big gains going forward, according to Barclays.”BYD (Build Your Dream) became the #1 global EV maker in terms of deliveries in 2Q22, dethroning Tesla from that pedestal for the first time, and its triple-digit revenue growth rate is likely to continue for the rest of 2022, despite its already sizable base,” analyst Jiong Shao wrote in a Tuesday note.The analyst also has a $40 per share price target on the stock, implying upside of 38% from Monday’s close.CNBC Pro subscribers can read the full story here.— Sarah MinUK unemployment hits 48-year low while real wages fall sharplyU.K. unemployment fell to 3.6% in the three months to July, its lowest since 1974.The economic inactivity rate, meanwhile, rose by 0.4 percentage points to a five-year high of 21.7%.The Office for National Statistics attributed the change to a rise in long-term sickness designations and students leaving the jobs market. The increasing tightness of the labor market may fuel further inflationary pressure and cause headaches for the Bank of England.Annual growth in real wages — taking into account inflation — excluding bonuses fell by 2.8% in the three months to the end of July.”People will understandably be looking to their employers for help during the cost of living crisis while Andrew Bailey will be hoping that businesses don’t up salaries too high too quickly and compound inflation,” said Marcus Brookes, chief investment officer at Quilter Investors.”However, the U.K. must brace for discontent amongst the public sector with strikes over pay continuing as budgets are stretched.”- Elliot SmithUBS plans to boost dividend; shares rise in pre-marketUBS Group plans to increase its dividend by 10% to $0.55 per share and expects its 2022 share repurchases to exceed $5 billion, the Swiss bank said on Tuesday.UBS shares were indicated 1.2% higher in pre-market activity after what ZKB analyst Michael Klien called surprise news.Read more here.— ReutersEuropean stocks rise slightlyEuropean stocks were cautiously higher on Tuesday morning as global markets geared up for the latest reading of U.S. inflation.The pan-European Stoxx 600 was up 0.3% in early trade, with food and beverage stocks adding 0.8% to lead gains as most sectors and major bourses inched into positive territory. Retail stocks slid 0.4%.CNBC Pro: Want to invest in real estate? These REITs are among analysts’ favoritesReal estate investment trusts — or REITs — are coming back to the spotlight after a volatile year for many asset classes.Analysts from Morgan Stanley and Citi highlight REITs from two sectors that they say could outperform the wider market, and remain resilient in a recession.CNBC Pro subscribers can read more here.— Weizhen TanFed actions this month could be ‘nonevent’ for asset prices, Ameriprise says The upcoming September Federal Reserve meeting, where the central bank is expected to raise interest rates, is likely already priced into the market, according to Ameriprise chief market strategist Anthony Saglimbene.”In our view, central bank actions this month are likely a nonevent for asset prices,” he wrote in a Monday note. “However, incoming economic data over the coming weeks and months and its influence on policy actions next year could play a much more significant role in shaping stock direction over the intermediate term.”Markets now expect the Fed to hike rates by 0.75 percentage point, meaning that assets may not move much if that is the central bank’s decision. A consumer price index report Tuesday that’s in-line with expectations may also not move the needle.””Unless inflation figures last month changed substantially more than expected, including Wednesday’s update on the August Producer Price Index (PPI), we believe a 75 basis point hike from the Fed is essentially locked in at this point,” he said. —Carmen ReinickeRelief rally is likely bear market bounce, Wells Fargo saysThe recent relief rally in stocks is likely another bear market bounce and investors should position for more choppiness ahead, according to Wells Fargo. “Year-do-date, the outperformance of defensive, high shareholder payout, high-quality and low-valuation stocks reminds investors of the hallmark of a bear market,” global portfolio and investment strategist Chao Ma wrote in a Monday note. Such recoveries happen in nearly every bear market and many are quickly reversed, leaving investors with regrets, they added.”Although it is difficult to predict the bottom of a bear market, in the past, market bottoms were typically preconditioned by over-pessimistic market sentiment and a sign of definitive improvement in the underlying economic or market issue,” Ma said. “We believe we are not there yet in either regard.”In the meantime, Ma recommends investors look for defensive stocks with low volatility, high dividends and share repurchase yields. He also says investors should go for high quality names with profitability and leading market share and affordable market price. —Carmen ReinickeU.S. stock futures rise ahead of Tuesday CPI reportU.S. stock futures were higher Monday night as Wall Street looks ahead to the August consumer price index report set to be released Tuesday morning. The report will give investors an update on the inflation situation in the U.S. and is one of the last pieces of data the Federal Reserve will see ahead of its September meeting. Dow Jones Industrial Average futures gained 55 points, or 0.17%. S&P 500 and Nasdaq 100 futures climbed 0.18% and 0.21%, respectively.—Carmen Reinicke

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