After a week in which Nvidia lost its founder as chief executive, Wall Street is going into Friday in a calmer mood, but it is a nervous kind of calm. Nvidia is clawing back about 2% before the open, Microsoft is slipping as an outage drags on, and everyone is waiting for one number: October’s US producer prices at 13:30 UK time, an hour before stocks open at 14:30.
The situation right now
US stock futures are barely moving. S&P 500 futures are up about 0.2% near 7,628, Nasdaq 100 futures are flat near 28,395 and Dow futures are up around 0.1% near 52,440. That follows a losing day on Thursday, when the S&P 500 fell 0.35% to 7,592.40, the Nasdaq Composite dropped 0.39% and the smaller companies of the Russell 2000 fell 1.66%.
The VIX, Wall Street’s fear gauge, is a little lower near 18.3. Nobody is panicking, but nobody wants to take a big position an hour before an inflation report either.
What has changed since this morning
The biggest shift is in Cisco. Overnight the networking giant looked like the good news story of the week, with record revenue of $18.5 billion, up 24%, and a higher full-year forecast. By late morning in London the shares had turned about 2% lower before the open. Investors have zeroed in on profit margins, which have been squeezed by cheaper AI hardware and pricey memory chips, and on order growth that slowed to 21% from 35% the quarter before.
Microsoft has also become a story. A global outage hitting Teams and Outlook has run into Friday, and the shares are down around 2% to 3% before the open. And the chip trade has turned again: AMD and Broadcom, which jumped on Thursday as investors bet they could win business from Nvidia, are each about 2% lower, while Nvidia itself is up.
The real test is wholesale inflation
Nvidia has had the headlines, but the number that matters most today is producer prices, a measure of what businesses charge each other before goods reach the shops. Economists expect October’s figure to rise 0.4% on the month, a big slowdown from September’s 1.3% jump, with the annual rate edging up to 6.6%. Core prices, which strip out food and energy, are expected to rise 0.3% on the month.
The reason it matters is the Federal Reserve. Rate futures now show roughly an 87% chance of a quarter-point rise in December and around a 13% chance of a half-point move. Fed officials have done little to cool that view this week. Cleveland’s Beth Hammack said inflation is heading in the “wrong direction”, and San Francisco’s Mary Daly said businesses are increasingly thinking about raising prices. A hot number would push the half-point bet higher; a cooler one would give the market some breathing room going into the weekend.
Stocks moving before the open
Nvidia is up about 2% as bargain hunters return after a fall of around 11% this week through Thursday. Colette Kress is running the company on an interim basis, and the next questions are whether Jensen Huang agrees to a Senate Banking Committee request to testify next month, and what the results on Tuesday look like.
The standout mover is Modine Manufacturing, the cooling equipment maker, which is up more than 25% after Bloomberg reported that Samsung Electronics is in talks to buy it. Strategy, the company that holds a huge pile of Bitcoin, is lower again after MSCI said it will drop the stock from its indexes and Bitcoin fell to its lowest level since mid-August, around $69,250. Applied Materials is little changed after a strong forecast, a reminder of how much good news was priced in after a 41% gain this year.
The dollar and currencies
The dollar is steady near a 19-month high, with the dollar index around 103.2. The euro is near $1.105 and sterling around $1.323, both struggling to make headway against a currency backed by rising US rates. The yen is the one to keep an eye on. It is trading near 160 per dollar, the level many see as a trigger for Japan to step in, and Finance Minister Satsuki Katayama renewed her warning against speculative moves on Friday.
Bonds
The 10-year Treasury yield is about 5.13% and the two-year near 4.86%, both still close to the highs reached after Thursday’s weak 30-year auction. Not everyone sees that as a threat. Jefferies argued this week that a 5% yield on five-year Treasuries is attractive. But for expensive growth shares, a 10-year yield above 5% is a headwind. In the UK, the 10-year gilt yield is around 5.34%.
Oil, gold and metals
Brent crude is little changed near $95.90 and US crude slightly lower near $88.40, after the International Energy Agency said the oil market should return to a surplus this quarter for the first time since the Iran war began, as Middle Eastern exports recover. Traffic through the Strait of Hormuz remains the swing factor. Gold is steady near $3,890 after hitting a 13-month low this week, silver is near $49.90 and copper is down about 0.8%.
What is left on the calendar
Producer prices land at 13:30 UK time. After the open there is a long line of Fed speakers: Boston’s Susan Collins at 14:10, Dallas’s Lorie Logan at 14:40, Vice Chair for Supervision Michelle Bowman at 15:50 and Daly again at 17:00, with Vice Chair Philip Jefferson just after midnight. Looking further ahead, Nvidia reports on Tuesday and Anthropic is expected to make its stock market debut on Thursday in what would be the world’s largest flotation.
Levels worth watching
On the S&P 500, Thursday’s close near 7,592 and the round 7,600 are the first markers. For Nasdaq 100 futures, 28,000 matters. In bonds, 5% on the 10-year yield remains the line in the sand, and in currencies, 160 yen per dollar is the level Tokyo is watching. Gold around $3,900 and Bitcoin around $70,000 are the other round numbers in play. These are references for context, not targets.
How we see it
The bias going into the open is neutral to cautious, with the outcome hanging on the inflation figure. On the positive side, Nvidia has a caretaker, the worst of the leadership shock looks priced in, and Cisco and Applied Materials both confirmed that companies are still spending heavily on AI. On the negative side, a 10-year yield above 5.1%, a dollar near a 19-month high and a Fed that keeps talking about further rate rises leave little room for a hot surprise.
A cooler producer price number would open the door to a relief rally in technology into the weekend. The risk is a hotter one, which would firm up talk of a half-point rise in December and push yields higher again. A close back below 5% on the 10-year yield would challenge the cautious view; a break above 160 yen per dollar would raise the odds of Japanese intervention and a jolt across currency markets. The markets to watch are Nasdaq futures, Nvidia, Microsoft, the 10-year Treasury yield and dollar-yen.
For beginners, the lesson from Cisco is a useful one: a company can beat every forecast and still fall, because the share price had priced in a great quarter. If you want to see how you would approach a day like this, the Samuel & Co Trading assessment is a good place to start.
