The stock market saw increased volatility on Friday, driven by expectations surrounding Oracle’s earnings report and key U.S. inflation data. Investors are closely observing the European Central Bank’s rate decision and the U.S. presidential candidates’ political debate, both of which could determine the market’s complexion as the new trading week begins.
Oracle’s Earnings Report to Kick Off the Week
As the trading week begins, all eyes will be on Oracle’s fiscal first quarter 2025 earnings report, scheduled for Monday. Analysts expect the tech giant to announce earnings of $1.33 per share, a 12.1% increase from the previous year. Revenue is projected to rise by 6.5% to $13.3 billion, primarily driven by a robust 21.2% growth in cloud services, anticipated to reach $5.6 billion.
Oracle’s stock, which closed at $142.61 on Thursday, faces resistance near $145, a level marked by previous highs and substantial call option activity. Market watchers anticipate volatile fluctuations in Oracle’s stock price, potentially moving up or down by 7.7% post-earnings. Should results meet expectations, the stock may slip towards support around $125 if implied volatility declines.
U.S. Consumer Price Index (CPI) Report for August
The U.S. CPI report, scheduled for release on Monday, could set the tone for market movement. Economists predict a 2.6% year-on-year rise, down from July’s 2.9%. Core CPI, which excludes food and energy, is expected to ease to 3.1% from 3.2% in July, signaling a potential cooling in inflation.
However, inflation swaps suggest a lower CPI increase of just 2.5%. If actual figures fall short of predictions, the Federal Reserve could consider a 50-basis-point rate cut at its upcoming September 17-18 meeting, potentially impacting markets.
European Central Bank Rate Decision
The European Central Bank (ECB) is set to meet on Thursday, with markets widely anticipating a quarter-point interest rate cut. Investors will also be keenly watching ECB President Christine Lagarde for hints about future policy adjustments.
The ECB’s decision could influence the EUR/USD exchange rate, which has recently hovered around $1.11. A dovish stance might propel the euro higher, potentially reaching $1.12 or more.
U.S. Presidential Debate: Harris vs. Trump
The political landscape may also weigh on markets as Vice President Kamala Harris and former President Donald Trump face off in their first televised debate on Tuesday. Harris currently holds a slim 2% lead over Trump, according to the latest Emersion National Polls.
Market volatility could increase depending on debate outcomes and shifting investor sentiment, with investors closely watching the candidates’ stances on economic and financial policies.
Market Volatility Continues Amid Weak Economic Data
U.S. stocks faced their worst performance in 18 months last week, with the S&P 500 dropping 4.2% and the Nasdaq Composite shedding 5.8%. Weak economic data, including a jobs report showing only 142,000 jobs added in August, contributed to the downturn.
The jobs miss led to falling yields on 2-year and 10-year Treasury bonds, reflecting market uncertainty. The Federal Reserve’s ambiguous stance on future rate cuts has added to the cautious sentiment.
Also Read: Investors await a BIG drop in interest rates
Global Market Weakness
Market volatility is not limited to the U.S. European and Asian markets have also shown signs of weakness. The Stoxx Europe 600, FTSE 100, and Dax have all posted declines, while in Asia, Japan’s Topix and South Korea’s Kospi have trended lower.
Tech Stocks Under Pressure
August proved difficult for several Nasdaq-100 components. Super Micro Computer, Moderna, and Intel were among the worst performers. Super Micro Computer’s stock plummeted 37.4% amid concerns over financial controls and margin pressures.
Moderna shares fell 35.1% following a disappointing earnings report and a guidance cut. Meanwhile, Intel’s stock dropped 28% after weak earnings and restructuring announcements, including layoffs. Although these stocks may appear undervalued, their recovery could be slow, and caution is warranted.
