Looking to the Futures

September S&P 500 futures (/ESU26) reclaimed all-time highs on Thursday, settling at a record 7,822.50 as cooler-than-expected producer inflation data helped ease concerns over another Federal Reserve rate hike. The contract traded as high as 7,838.50 during the session after opening at 7,770.00. The underlying S&P 500 Index gained 0.65% to close at a record 7,798.99, while the Nasdaq Composite rose 0.81%, and the Dow Jones Industrial Average gained 0.13%.

Thursday's surge followed the morning release of the July Producer Price Index (PPI), which was unchanged month-over-month, compared with expectations for a 0.2% increase. On an annual basis, producer prices rose 4.7%, down from 5.5%% in June. Goods prices declined 0.7% during the month, led by a 3.1% decline in energy prices, while prices for services increased 0.2%. 

The softer wholesale inflation report followed Wednesday's Consumer Price Index (CPI), which provided further signs of moderating price pressures. This report showed consumer prices rose 0.1% in July and 3.4% from a year earlier, down slightly from June's 3.5% annual increase. Core CPI, which excludes food and energy, increased 0.2% for the month and 2.5% year-over-year. 

The back-to-back inflation reports helped temper expectations for additional monetary policy tightening at the Federal Reserve's September meeting. Following Thursday's PPI report, markets were pricing in a roughly 32% probability of a rate hike at the September 15-16th FOMC meeting, which was down from the approximately 41% chance on Wednesday and 55% chance one week earlier. 

Fed officials continue to grapple with and offer differing views on the appropriate path forward. Richmond Fed President Thomas Barkin said Thursday that it remains an "open question" whether another rate hike will ultimately be necessary to return inflation to the Fed's 2% target. Barkin noted that current interest rates may already be restrictive enough to continue bringing inflation lower, although persistent price pressures remain a concern. 

Despite continued geopolitical tensions in the Middle East, crude oil prices fell more than 2% during Thursday's session. Lower energy prices helped support the broader risk-on move while also providing some relief to inflation concerns. Continued uncertainty surrounding the U.S.-Iran conflict remains a potentially heightened source of volatility in the sessions to come, however. 

On the daily chart, September S&P 500 futures (/ESU26) extended its recent advance on Thursday, reaching a new all-time high of 7,838.50 before settling at 7,822.50. Price continues to remain firmly above its major moving averages, with it settling roughly 0.9% above the 9-day simple moving average after appearing to use it as support. The longer-term trend also remains firmly positive, with /ES continuing to trend well above its 50-,100-, and 200-day SMAs. 

The 14-day RSI finished at 66.41, signaling bullish momentum as it moves closer to overbought levels of 70. Volume increased on Thursday with 1,037,427 contracts traded but remained below the 50-day average of 1,433,463. 

According to the Daily Hightower Report, /ES may find support at 7783.38 and 7736.69, with potential resistance at the 7857.62 and 7885.18 levels. 

9-Day SMA:                    7752.78

20-Day SMA:                  7599.60

50-Day SMA:                  7546.81

100-Day SMA:                7339.22

200-Day SMA:                7101.30

14-Day RSI:                    66.41

50-Day Vol Avg:              1,433,463

Major economic reports, trading events, and news items that could potentially impact specific futures markets:

8:30 am ET- Retail Sales

10:00 am ET- Manufacturing & Trade: Inventories

10:00 am ET- U. Michigan Prelim Consumer Survey

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