Here are five things you must know for Monday, September 12:
1. -- Stock Futures Extend Gains, Dollar Slumps
U.S. equity futures bumped higher Monday, extending gains for Wall Street after its first weekly advance in over a month, as a sliding U.S. dollar added to global risk appetite.
The dollar index, which tracks the greenback against a basket of six global currencies, was marked 1% lower from Friday's closing levels to trade at a two-week low of 107.942.
The moves extended a 2.5% decline for the dollar since it reached a fresh 20-year high last week, thanks in part to hawkish signaling on rate hikes from the European Central Bank, which has boosted the euro, and hits at foreign exchange market intervention from the Bank of Japan to support the slumping yen.
The declines are significant in that, while bets on a 75 basis point rate hike from the Federal Reserve next week in Washington are hovering at around 90%, stocks continue to build on last week's modest rally, suggesting investors are starting to find more faith in the fact that U.S. companies will be able to generate solid earnings growth over the coming quarters.
Third quarter earnings for the S&P 500 are likely to grow 5.1% from last year to a collective $469.7 billion, Refinitiv data indicates, easing from a second quarter tally of $475.4 billion.
The dollar's recent decline hasn't been followed by a corresponding side in U.S. Treasury bond yields, however, as investors absorb the accelerating run-off of the Fed's $8.9 trillion balance sheet and the sale of $95 billion on government, agency and mortgage bonds now expected each month.
Benchmark 2-year Treasury note yields were last seen trading at 3.542%, just shy of the November 2007 high reached last week, while 10-year notes held at 3.30% ahead of a $35 billion auction later today.
On Wall Street, futures contracts tied to the S&P 500 are indicating a 27 point opening bell gain while those linked to the Dow Jones Industrial Average are priced for a 190 point advance. Futures linked to the tech-focused Nasdaq are indicating a 98 point move to the upside.
In overseas markets, Europe's Stoxx 600 benchmark gained 0.85% in early Frankfurt trading while the region-wide MSCI ex-Japan index gained 0.7% amid holiday closures for major markets. Japan's Nikkei 225 rose 1.16% higher to close at a two-week high of 28,542.11 points.
2. -- Week Ahead: Inflation, Retail Sales Data In Focus
The Federal Reserve, as well as investors around the world, will likely focus on two key data releases this week that could define the central bank's near-term rate path and determine if the U.S. economy is heading for its hoped-for 'soft landing'.
The Commerce Department will publish August inflation data on Tuesday, with economists looking for a month-on-month decline in consumer price pressures, taking the annual rate down to around 8.1%. Retail sales data will follow on Thursday, with expectations that the ongoing decline in gas prices will allow for an expansion of discretionary spending and drive the consumer the economy -- the largest growth component -- into a solid recovery over the second half of the year.
Another focus for investors keen on finding a market perspective for inflationary pressures will be the sale of $35 billion in 10-year Treasury bonds on Monday. Healthy demand, particularly from foreign buyers, will lower government borrowing costs and suggest that growth concerns may begin to outweigh inflation worries in the months ahead.
Other releases of note include producer price inflation figures and a 30-year bond auction on Wednesday and first quarter earnings from Oracle after the close of trading on Monday.
3. -- Elon Musk Makes Another Plea to Scrap Twitter Takeover
Twitter (TWTR) shares edged lower in pre-market trading after Tesla (TSLA) CEO Elon Musk made yet another attempt to scrap his agreement to buy the social media group.
Musk, through his lawyers, sent a letter to Twitter late Friday that claimed the group's decision to pay whistleblower Peiter Zatko $7.75 million as part of a separation agreement in late June -- without consulting the Tesal CEO -- violated terms of their $44 billion merger agreement.
Last week, Chancellor Kathaleen McCormick of the Delaware Chancery granted Musk's request to add Zatko's complaint to his counter-suit of Twitter, but was denied a request to delay the October 17 trial date.
Zatko, who is also know in the hacking community as 'Mudge', accused Twitter of insufficient oversight and a focus on profits that allowed spam accounts to proliferate on the micro-blogging platform.
Twitter shares were marked 0.88% lower in pre-market trading to indicate an opening bell price of $41.82, while Tesla gained 0.57% to $301.40 each.
4. -- Disney Shares Bump As Activist Backs Keeping ESPN
Walt Disney Co. (DIS) shares nudged higher in pre-market trading after activist investor Dan Loeb appeared to back away from an earlier demand for the entertainment group to seek the sale of its ESPN television network.
Loeb said in a Tweet sent from his verified account Sunday that he and his Third Point LLC hedge fund, which manages around $14 billion in assets, have a "better understanding of (ESPN's) potential as a standalone business and another vertical for (Disney) to reach a global audience to generate ad and subscriber revenues.
Last month, Loeb pushed for the sale of ESPN, shortly after unveiling a new position in the media and entertainment group, saying it would alleviate leverage at the parent company while allowing a stand-alone ESPN the flexibility to pursue increasingly expensive sports rights and expand into the lucrative sports betting market.
"We look forward to seeing (ESPN president James Pitaro) execute on the growth nd innovation plans, generating considerable synergies as part of The Walt Disney company," Loeb added in a follow-up Tweet.
Disney shares were marked 0.54% higher in pre-market trading to indicate an opening bell price of $115.80 each.
5. -- Oracle Earnings To Focus On Cloud Growth, Dollar Impact
Oracle (ORCL) shares moved higher in pre-market trading ahead of the cloud-focused software group's fiscal first quarter earnings after the close of trading.
Oracle is expected to see revenues for the three months ending in August rise 17.7% from last year to $11.45 billion, with an adjusted bottom line of $1.07 per share.
Investors are likely to focus on growth rates in the group's cloud services division, which slowed to just 3% over the final months of its last fiscal year, and on the ongoing impact of gains for the U.S. dollar, which hit a fresh 20-year peak against its currency peers last month.
Oracle may also update investors on the integration of Cenner, the second-largest designer of software used by doctors and hospitals to mange and store medical records, which it bought earlier this year for $28.3 billion.
Oracle shares were marked 0.91% higher in pre-market trading to indicate an opening bell price of $76.60 each.
