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Day Ahead: Top 3 Things to Watch

Stock MarketsAug 09, 2018 04:40PM ET
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© Reuters. CPI may be another gift to stocks after the flat PPI. - Here’s a preview of the top 3 things that could rock markets tomorrow.

1. Consumer Inflation on Tap

Investors will get a look at some more inflation numbers before many hit the road to get a jump on the weekend.

The consumer price index (CPI) comes out at 8:30 AM ET (12:30 GMT).

Economists expect that the CPI rose 0.2% in July, compared with June, and the year-over-year gain will be 3%. The core CPI, which excludes volatile food and energy prices, is forecast to have risen 0.2% month on month. The year-on-year core CPI gain is expected to be 2.3%.

Wholesale inflation numbers out Thursday were encouraging for the stock market, coming in flat. The core PPI was up 0.1% for the month, up less than anticipated.

Those numbers will give the Fed a lot of room to breathe when it comes to hiking interest rates.

2. M&A Hits Speed Bumps

Mergers and acquisitions, or the termination thereof, are gaining market attention.

Rite Aid (NYSE:RAD) and Albertson’s called off their $24 billion merger. Institutional Shareholder Services advised shareholders last month to vote against the deal because Rite Aid would not get a fair ownership interest.

Rite Aid ended the day down about 12%.

Ad Tribune Media (NYSE:TRCO) walked away from its deal to be acquired by Sinclair (NASDAQ:SBGI) for $3.9 billion. Tribune also sued Sinclair for being too aggressive with regulators. The deal looked already in trouble as the FCC voiced opposition on competition grounds.

Look for more comments tomorrow about Cigna (NYSE:CI) proposed $54 billion takeover of Express Scripts (NASDAQ:ESRX). Carl Icahn recently expressed his opposition to the deal, calling it a “folly.”

Glenview Capital’s Larry Robbins hit back today, supporting the deal.

3. Oil Rig Data Caps a Busy Week for Oil

Oil prices continue to have an impact on the market and energy stocks have been particularly active this past week.

The Baker Hughes U.S. oil rig count comes out tomorrow at 1 PM ET (17:00 GMT). Data on Wednesday showed U.S. oil output fell to 10.8 million barrels a day last week.

"Some traders swooped in and picked up oil as it is relatively cheap today, but there is still a lot of uncertainty surrounding its prospects," said David Madden at CMC Markets.

"The Energy Information Administration report yesterday, pointed to a fall in U.S. demand," Madden said. "Traders are also concerned about China's demand, given the country is locked in a trade spat with the U.S."

Day Ahead: Top 3 Things to Watch

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