Roaring Kitty, Nike flops, inflation on deck

This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

Bracing for inflation data
The S&P 500 eked out a gain as investors gear up for key inflation data, looking for any signs the Federal Reserve may cut interest rates. The Dow Jones Industrial Average added 36 points, while the tech-heavy Nasdaq Composite climbed 0.3%. Micron slipped more than 7% after the memory chip maker issued disappointing fourth-quarter revenue guidance. Nvidia also dropped 1.9%. The yield on the 10-year Treasury inched lower, while U.S. oil prices rose 1% amid continued Israel-Lebanon tensions.

Nike warning
Shares of Nike plunged 12% in extended trading after the sneaker giant slashed its full-year guidance, anticipating a 10% drop in sales for the current quarter. The company cut its guidance as it contends with slower online sales, planned declines in classic footwear franchises, “increased macro uncertainty” in Greater China and “uneven consumer trends” across Nike’s markets, finance chief Matthew Friend said on a call with analysts. Nike’s fourth-quarter earnings beat expectations but the company missed revenue estimates.

‘Stunned’ consumers
Walgreens‘ shares plummeted after the company reported disappointing fiscal third-quarter earnings and lowered its full-year profit forecast, blaming a tough consumer environment and challenging pharmacy conditions. ″We assumed… in the second half that the consumer would get somewhat stronger” but “that is not the case,” Walgreens CEO Tim Wentworth told CNBC. “The consumer is absolutely stunned by the absolute prices of things.”

Roaring Kitty, back again
Chewy shares experienced a rollercoaster ride on Thursday, soaring as much as 34% following a cryptic post by meme stock influencer Roaring Kitty, before falling back into negative territory. The post of a cartoon dog resembling Chewy’s logo fueled speculation among retail investors. However, the gains were short-lived with the stock ultimately ending the session 0.3% lower.

Going global
Chinese automakers are poised to capture 33% of global market share by 2030, according to a new AlixPartners report. Growth will be fueled by increased sales outside China, which are expected to reach 9 million by 2030. The rapid expansion raises concerns among traditional automakers and politicians globally, who fear the influx of affordable Chinese vehicles, particularly electric models, could undercut domestic production.

[PRO] Recession?
BCA Research is warning of a looming recession in the world’s biggest economy later in 2024 or early 2025 that could trigger a 30% drop in the S&P 500. CNBC’s Michelle Fox has more on BCA’s analysis and the implications for investors.

“The consumer is absolutely stunned,” Walgreens CEO Tim Wentworth told CNBC as the drug store operator posted disappointing earnings. Levi Strauss CFO Harmit Singh also warned consumers are “cautious.” While it’s easy to blame inflation for consumers’ struggles, both companies face their own challenges.

Walgreens was booted from the Dow Jones Industrial Average in February and over the past two years its stock has plunged 70%. The company is closing underperforming stores in a “challenging” environment for U.S. pharmacies. Levi’s, despite denim being back in fashion, is reducing its reliance on department stores.

That being said, will the Fed come to the aid of struggling consumers and households? 

Investors will be watching today’s release of May’s core personal consumption expenditures (PCE) price index, the Fed’s preferred inflation measure. Any weakness could increase the likelihood of an interest rate cut this year. 

CNBC’s Jeff Cox has more on what to expect from Fed’s favored inflation print.

Mohamed El-Erian, Allianz chief economic advisor, told CNBC the Fed should consider cutting rates in July. “This economy is slowing much faster,” El-Erian said. “The household sector no longer has excessive savings or much debt capacity… This is about an economy that no longer has buffers.” He believes the Fed’s 2% inflation target is wrong and that equilibrium inflation is closer to 3%.

Fundstrat head of research Tom Lee expects inflation to fall “like a rock,” boosting stocks. He highlights the auto market, where he sees potential for new car prices to drop, helping to lower goods inflation.

As many strategist predict the broader market to plummet over the summer, Lee downplayed comparisons to the dot-com boom, noting that investor sentiment doesn’t feel like a bubble. “There was a lot more ebullience back then. Today, there are many top-callers,” Lee said on “Squawk Box.”

— CNBC’s Hakyung Kim, Brian Evans, Sarah Min, Gabrielle Fonrouge, Michelle Fox, Michael Wayland, Annika Kim Constantino and Spencer Kimball contributed to this report.