June S&P 500 E-Mini futures (ESM24)are up +0.23%, and June Nasdaq 100 E-Mini futures (NQM24) are up +0.22% this morning, rebounding slightly from yesterday’s slump prompted by strong U.S. economic data, which heightened speculation that the Federal Reserve might keep rates on hold for most of this year.
In yesterday’s trading session, Wall Street’s major indexes ended in the red. GlobalFoundries (GFS) plunged over -8% and was the top percentage loser on the Nasdaq 100 after announcing that holder Mubadala Technology Investments offered $950 million of the company’s shares via Morgan Stanley and Bank of America Securities. Also, Live Nation Entertainment (LYV) slumped more than -7% and was the top percentage loser on the S&P 500 following a Bloomberg report indicating that the U.S. Justice Department and a group of states will sue the company for antitrust violations concerning Ticketmaster’s dominant control over concert ticket sales. In addition, Boeing (BA) slid over -7% and was the top percentage loser on the Dow after CFO West stated that Q2 deliveries are unlikely to increase from Q1 levels and indicated that the company would continue to burn cash this quarter and the entire fiscal year. On the bullish side, Nvidia (NVDA) surged more than +9% and was the top percentage gainer on the S&P 500 and Nasdaq 100 after the semiconductor giant reported upbeat Q1 results, offered above-consensus Q2 revenue guidance, and announced a 10-for-1 stock split. Also, Dell Technologies (DELL) climbed over +3% after the company entered into a strategic partnership with Ericsson, and Evercore ISI added the stock to its ‘Tactical Outperform’ list with a price target of $165.
Economic data on Thursday showed that the U.S. S&P Global manufacturing PMI rose to 50.9 in May, stronger than expectations of 50.0. Also, the U.S. May S&P Global services PMI climbed to 54.8, stronger than expectations of 51.2. In addition, the number of Americans filing for initial jobless claims in the past week fell -8K to 215K, stronger than expectations of 220K. At the same time, U.S. new home sales unexpectedly fell -4.7% m/m to 634K in April, weaker than expectations of 677K.
“Fed members have indicated they want to see more progress on inflation - fortunately the US economy still looks robust enough to take an extended rate pause. We continue to look for the first Fed rate cut in September,” said Don Rissmiller at Strategas Securities.
Atlanta Fed President Raphael Bostic said Thursday that the central bank might need to wait longer to lower borrowing costs due to continued upward pressure on prices despite April’s slightly cooler inflation reading. “We’re not past the worry point in terms of inflation getting back to our target,” Bostic said. At the same time, the Atlanta Fed chief downplayed the possibility of a rate increase, emphasizing the importance of the central bank maintaining a unidirectional movement in rates.
Meanwhile, U.S. rate futures have priced in a 0% chance of a 25 basis point rate cut at June’s policy meeting and a 14.3% chance of a 25 basis point rate cut at the conclusion of the Fed’s July meeting.
Today, all eyes are focused on the U.S. Michigan Consumer Sentiment Index in a couple of hours. Economists, on average, forecast that the Michigan consumer sentiment index will stand at 67.4 in May, compared to April’s value of 77.2.
Also, investors will focus on U.S. Durable Goods Orders data, which came in at +2.6% m/m in March. Economists foresee the April figure to be -0.9% m/m.
U.S. Core Durable Goods Orders data will be reported today as well. Economists estimate this figure to come in at +0.1% m/m in April, compared to the previous number of +0.2% m/m.
In addition, market participants will be looking toward a speech from Federal Reserve Governor Christopher Waller.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.468%, down -0.20%.
The Euro Stoxx 50 futures are down -0.34% this morning, continuing the negative global sentiment driven by concerns regarding the U.S. interest rate outlook. All sectors were in the red on Friday, with technology and financial stocks leading the declines. Data from the Office for National Statistics showed Friday that the U.K.’s monthly retail sales fell more sharply than expected in April amid rainy weather. Separately, data released by the German Federal Statistical Office on Friday showed that the country’s economy grew by 0.2% q/q in the first quarter, confirming preliminary data. In corporate news, Renault (RNO.FP) gained over +3% following the announcement of a share buyback plan by the French carmaker, coupled with UBS upgrading the stock to Neutral from Sell.
U.K.’s Retail Sales, U.K.’s Core Retail Sales, and Germany’s GDP data were released today.
U.K. April Retail Sales came in at -2.3% m/m and -2.7% y/y, weaker than expectations of -0.5% m/m and -0.2% y/y.
U.K. April Core Retail Sales stood at -2.0% m/m and -3.0% y/y, weaker than expectations of -0.6% m/m and -1.1% y/y.
The German GDP has been reported at +0.2% q/q and -0.2% y/y in the first quarter, in line with expectations.
Asian stock markets today settled in the red. China’s Shanghai Composite Index (SHCOMP) closed down -0.88% and Japan’s Nikkei 225 Stock Index (NIK) closed down -1.17%.
China’s Shanghai Composite Index closed lower today, influenced by stronger-than-expected U.S. economic data bolstering the prospect of higher for longer interest rates and the nation’s military drills around Taiwan. Property and software technology stocks underperformed on Friday. Also weighing on investor sentiment, China’s military conducted war games around Taiwan for a second consecutive day on Friday, focusing on exercises aimed at testing their capability to “seize power” and control strategic areas. Meanwhile, China’s yuan weakened to nearly a one-month low against the dollar on Friday. In other news, the People’s Bank of China provided liquidity of 2 billion yuan to the banking system on Friday through a seven-day reverse repo operation, with the interest rate unchanged at 1.8%.
Japan’s Nikkei 225 Stock Index closed lower today, tracking overnight losses on Wall Street as robust U.S. business activity data prompted a reassessment of Fed rate-cut expectations. Technology and real estate stocks led the declines on Friday. The Ministry of Internal Affairs reported Friday that Japan’s core inflation cooled for a second consecutive month in April due to milder food inflation while staying at or above the Bank of Japan’s 2% target for a 25th straight month. Meanwhile, Japan’s 10-year government bond yield climbed on Friday, remaining above the psychological threshold of 1.0%, as markets nearly fully priced in a 10 basis point hike at the BOJ meeting in July, according to Bloomberg data. In other news, almost two-thirds of economists polled by Reuters believe the Bank of Japan will decide to start tapering the size of its bond-buying by the end of July. In corporate news, Kobayashi Pharmaceutical Co. rose more than +1% following remarks by Oasis Management CIO Seth Fischer, who suggested that the stock could surge by 70% if the Japanese drugmaker engages with the activist fund. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up +4.37% to 16.96.
The Japanese April National Core CPI came in at +2.2% y/y, in line with expectations.
Pre-Market U.S. Stock Movers
Verastem (VSTM) surged about +35% in pre-market trading following the release of positive interim data from a Phase 1/2 study evaluating its drugs avutometinib and defactinib for the treatment of metastatic pancreatic cancer.
Ross Stores (ROST) climbed over +8% in pre-market trading after the retailer reported upbeat Q1 results and raised its full-year EPS guidance.
Workday (WDAY) plunged more than -12% in pre-market trading after the back-office software provider cut its FY25 subscription revenue guidance.
Intuit (INTU) slid over -6% in pre-market trading after the company issued Q4 earnings guidance that disappointed investors.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Friday - May 24th
Booz Allen Hamilton (BAH), Mesa Labs (MLAB), Sunlands Tech (STG).
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On the date of publication, Oleksandr Pylypenko did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.