June S&P 500 futures (ESM23) are up +0.23%, and June Nasdaq 100 E-Mini futures (NQM23) are up +0.46% this morning as market participants looked ahead to the latest U.S. inflation data and the Federal Reserve’s interest rate decision this week.
In Friday’s trading session, Wall Street’s major averages closed moderately higher, with the benchmark S&P 500 notching a 9-3/4 month high, the blue-chip Dow posting a 5-week high, and the tech-heavy Nasdaq 100 rising to a 14-month high. Tesla Inc (TSLA) climbed about +4% and was the top percentage gainer on the Nasdaq 100 after General Motors Co (GM) agreed to use the company’s EV charging network. Also, Adobe Systems Incorporated (ADBE) gained over +3% after Wells Fargo upgraded the stock to Overweight from Equal Weight amid a generative AI tailwind. In addition, Netflix Inc (NFLX) rose more than +2% following a report that the company’s subscriptions spiked after its crackdown on password sharing. On the negative side, Target Corporation (TGT) fell over -3% after Citi downgraded the big-box retailer to Neutral from Buy. Regional bank stocks also lost ground, with Comerica Inc (CMA) and Zions Bancorporation (ZION) dropping more than -3%.
“The overall tone of the market is based on the idea that the Fed will pause its increases. As it pauses, the broader market will start to rally and maybe catch up with the large-cap tech stocks that have led the way up until now,” said Rick Meckler, partner at Cherry Lane Investments.
In other news, oil prices fell more than -2% on Monday following remarks from Iran’s supreme leader indicating openness to a deal with the West regarding its nuclear program, while concerns over China’s fuel demand growth also weighed on the market.
In the coming week, the U.S. Federal Reserve interest rate decision and Fed Chair Jerome Powell’s post-policy meeting press conference will be the main highlight. U.S. rate futures have priced in a 77.6% probability of no hike and a 22.4% chance of a 25 basis point rate increase on Wednesday.
In addition, market participants will be eyeing a spate of economic data, including U.S. CPI, Core CPI, PPI, Core PPI, Crude Oil Inventories, Retail Sales, Core Retail Sales, Philadelphia Fed Manufacturing Index, Export Price Index, Import Price Index, Initial Jobless Claims, NY Empire State Manufacturing Index, Industrial Production, Manufacturing Production, Business Inventories, Michigan Consumer Sentiment (preliminary), and Michigan Consumer Expectations (preliminary).
The U.S. economic data slate is mainly empty on Monday.
In the bond markets, United States 10-Year rates are at 3.756%, up +0.32%.
The Euro Stoxx 50 futures are up +0.84% this morning as investors geared up for a week packed with interest-rate decisions from major central banks. Consumer product and automobile stocks are leading the overall market higher, with Adidas Ag (ADS.D.DX) climbing over +5% after Bernstein upgraded the stock to Outperform from Market Perform. Meanwhile, the European Central Bank is scheduled to announce its interest rate decision on Thursday, the day after the Federal Reserve. The Frankfurt-based central bank is widely expected to implement a further 25 basis point increase amid stubbornly high inflation in the region. On the M&A front, shares of Novartis Ag (NOVN.Z.IX) rose about +0.8% after the company agreed to buy Seattle-based biotech firm Chinook Therapeutics for up to $3.5 billion. Also, Georg Fischer Ag (GF.Z.IX) gained about +2% after making a takeover bid for Uponor Oyj.
The European economic data slate is largely empty on Monday.
Asian stock markets today settled mixed. China’s Shanghai Composite Index (SHCOMP) closed down -0.08%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.52%.
China’s Shanghai Composite today closed slightly lower as investors continued to question the extent of the economic rebound in the country this year. Meanwhile, shares of major Chinese property stocks plunged on Monday after investment bank Goldman Sachs said in a note on Sunday that the country’s property sector is expected to grapple with “persistent weakness” for years. Also, China’s bank stocks retreated amid growing expectations that the government will cut benchmark lending rates this month, resulting in further erosion of lenders’ profitability. Nomura Chief China Economist Ting Lu reiterated the need for additional rate cuts, pointing to the ongoing deterioration in economic conditions. Focus is now squarely on Chinese fixed asset investment, unemployment, industrial production, and retail sales data due later in the week.
“The Chinese economy is really a story of a crisis of confidence right now,” said Meera Pandit, a global market strategist at JPMorgan Asset Management.
At the same time, Japan’s Nikkei 225 Stock Index closed higher as investors strengthened bets for the Bank of Japan to leave ultra-loose policy unchanged at its meeting this week. Data on Monday showed that the country’s wholesale inflation slowed for the fifth straight month in May due to falling fuel and raw material costs, putting less pressure on the Bank of Japan to tighten policy. Meanwhile, Eisai climbed about +2% after the company’s Alzheimer’s drug Leqembi gained support from advisers to U.S. regulators, clearing the way for traditional U.S. approval. Semiconductor-related stocks also gained ground, with chip-testing equipment maker Advantest rising over +2%. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down 6.78% to 21.59.
The Japanese May PPI came in at -0.7% m/m and +5.1% y/y, weaker than expectations of -0.2% m/m and +5.5% y/y.
Pre-Market U.S. Stock Movers
Energy stocks and energy service providers are falling in pre-market trading, with the price of WTI crude down more than -2%. Marathon Oil Corporation (MRO) and Occidental Petroleum (OXY) are down more than -1%.
Oracle Corporation (ORCL) soared over +4% in pre-market trading after Wolfe Research upgraded the stock to Outperform from Peer Perform.
Adobe Systems Incorporated (ADBE) rose about +2% in pre-market trading after Jefferies raised the firm’s price target on the stock to $530 from $440.
Nio Inc Class A ADR (NIO) climbed more than +4% in pre-market trading following a report that the company would cut prices for all its models and end free battery swapping services to new buyers.
Ocular Therapeutix Inc (OCUL) rose over +3% in pre-market trading after the company announced 12-month data from its Phase 1 U.S. clinical trial evaluating OTX-TKI for the treatment of wet age-related macular degeneration.
Carnival Corporation (CCL) gained more than +3% in pre-market trading after JPMorgan upgraded the stock to Overweight from Neutral.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Monday - June 12th
Oracle (ORCL), Nathans Famous (NATH), Daktronics (DAKT), Mesabi Trust (MSB), Transphorm Tech (TGAN), Yatra Online (YTRA), Enzo Biochem (ENZ), Anixa Biosciences (ANIX), Bridgford (BRID), Bancroft (BCV), Streamline (STRM).
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