June S&P 500 E-Mini futures (ESM24)are down -0.26%, and June Nasdaq 100 E-Mini futures (NQM24) are down -0.28% this morning as market participants looked ahead to the release of U.S. inflation data as well as the Federal Reserve’s policy meeting later in the week.
In Friday’s trading session, Wall Street’s major averages closed in the red. DocuSign (DOCU) fell over -4% after the e-signature company provided a weaker-than-expected Q2 billings forecast. Also, Vail Resorts (MTN) slumped more than -10% after the company posted downbeat Q3 results and lowered its annual total reported EBITDA guidance. In addition, Biomea Fusion (BMEA) plummeted over -63% after announcing that the FDA placed a clinical hold on its ongoing Phase I/II clinical trials of BMF-219 in type 1 and type 2 diabetes. On the bullish side, 3M Company (MMM) rose more than +2% and was the top percentage gainer on the Dow after Bank of America Global Research upgraded the stock to Buy from Neutral with a price target of $120.
The U.S. Labor Department’s report on Friday showed that nonfarm payrolls climbed by 272K jobs last month, well above the 182K consensus. At the same time, the U.S. May unemployment rate unexpectedly rose to 4.0%, weaker than expectations of no change at 3.9%. Also, U.S. average hourly earnings came in at +0.4% m/m and +4.1% y/y in May, stronger than expectations of +0.3% m/m and +3.9% y/y. Finally, U.S. April consumer credit rose +6.40B, weaker than expectations of +9.30B.
“[Friday’s] jobs report may lower rate-cut expectations,” said Bret Kenwell at eToro. “But at the end of the day, a strong labor market is hardly a bad thing - especially for an economy that’s so dependent on consumer spending.”
The U.S. Federal Reserve’s interest rate decision and Fed Chair Jerome Powell’s post-policy meeting press conference will take center stage in the coming week. The Federal Reserve is anticipated to hold interest rates steady for the seventh straight meeting on Wednesday, shifting investor focus to the central bank’s quarterly “dot plot” in its Summary of Economic Projections, which displays Federal Open Market Committee member projections regarding the trajectory of interest rates. The updated dot plot is likely to indicate two 25-basis point cuts this year, down from three cuts projected in March.
Meanwhile, U.S. rate futures have priced in an 8.8% chance of a 25 basis point rate cut at the July FOMC meeting and a 43.4% probability of a 25 basis point rate cut at the conclusion of the Fed’s September meeting.
On the economic data front, the U.S. consumer inflation report for May will be the main highlight. Also, market participants will be monitoring other economic data releases this week, including the U.S. Core CPI, PPI, Core PPI, Crude Oil Inventories, Initial Jobless Claims, Export Price Index, Import Price Index, and Michigan Consumer Sentiment Index.
On the earnings front, major companies like Adobe (ADBE), Oracle (ORCL), and Broadcom (AVGO) are set to report their quarterly figures this week.
In addition, several Fed officials will be making appearances this week, including Williams, Goolsbee, and Cook.
The U.S. economic data slate is mainly empty on Monday.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.459%, up +0.66%.
The Euro Stoxx 50 futures are down -1.29% this morning as investors digested the results of the European Parliament elections. Construction stocks underperformed on Monday. Risk sentiment took a hit on Monday following the conclusion of the four-day European Parliament vote, which led to a shift toward the right and the election of more eurosceptic nationalists. The EU election drama came to a close Sunday evening as French President Emmanuel Macron announced snap parliamentary elections later this month, spurred by Marine Le Pen’s far-right party’s strong performance in the European election. The euro dropped to its lowest level in a month against the dollar on Monday. Meanwhile, statistics agency Istat said Monday that Italy’s monthly industrial production unexpectedly fell in April. Separately, a survey released on Monday revealed that investor morale in the Eurozone increased for the eighth consecutive month in June. Investors are also cautious ahead of U.S. inflation data and a Federal Reserve meeting later this week. In corporate news, Aviva Plc (AV-.LN) fell over -1% after J.P. Morgan downgraded the stock to Neutral from Overweight and removed it from its analyst focus list.
Italy’s Industrial Production and Eurozone’s Sentix Investor Confidence Index data were released today.
The Italian April Industrial Production stood at -1.0% m/m, weaker than expectations of +0.3% m/m.
Eurozone June Sentix Investor Confidence Index came in at 0.3, stronger than expectations of -1.5.
Japan’s Nikkei 225 Stock Index (NIK) closed up +0.92%, while Chinese markets were closed for a holiday.
China’s Shanghai Composite Index was closed for the Dragon Boat Festival holiday. China’s financial markets will reopen on Tuesday, June 11th.
Japan’s Nikkei 225 Stock Index closed higher today. Financial and electronics stocks led the gains on Monday. Export-oriented stocks also advanced due to a weaker yen. Revised government data showed Monday that Japan’s economy contracted less than initially reported in the first quarter due to upward revisions to capital spending and inventory data. Separately, data released by the Ministry of Finance showed on Monday that Japan’s current account surplus expanded by 8.2% in April compared to a year earlier. Meanwhile, Japan’s 10-year government bond yield surged above 1%, tracking Friday’s jump in U.S. Treasury yields following stronger-than-expected U.S. jobs data. Investor attention this week is directed toward the Bank of Japan’s policy decision on Friday, with economists anticipating it to keep policy steady, while the focus remains on whether the central bank will scale back its monthly bond purchases. In corporate news, Sharp surged over +6% following SoftBank Group’s announcement Friday of plans to build a large-scale AI data center using the telecommunications and electrical equipment manufacturer’s plant. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up +1.18% to 17.98.
The Japanese GDP has been reported at -0.5% q/q and -1.8% y/y in the first quarter, compared to expectations of -0.5% q/q and -2.0% y/y.
The Japanese April Current Account n.s.a. stood at 2.051T yen, stronger than expectations of 1.738T yen.
The Japanese May Economy Watchers Current Index arrived at 45.7, weaker than expectations of 48.6.
Pre-Market U.S. Stock Movers
Southwest Airlines (LUV) climbed over +6% in pre-market trading following a report from the Wall Street Journal indicating that activist investor Elliott Investment Management has built an almost $2 billion stake in the airline and intends to advocate for changes.
Walmart (WMT) gained more than +1% in pre-market trading after J.P. Morgan upgraded the stock to Overweight from Neutral with a price target of $81.
Advanced Micro Devices (AMD) fell over -2% in pre-market trading after Morgan Stanley downgraded the stock to Equal Weight from Overweight with an unchanged price target of $176.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Monday - June 10th
Yext (YEXT), Calavo Growers (CVGW), FuelCell Energy (FCEL), Zedge (ZDGE), Optical Cable (OCC).
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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.