S&P Futures Tread Water Ahead of Key U.S. Retail Sales Data and Fed Speak

June S&P 500 E-Mini futures (ESM24)are trending up +0.03% this morning as market participants braced for crucial U.S. retail sales data and a series of Federal Reserve speakers.

In yesterday’s trading session, Wall Street’s major indexes ended in the green, with the benchmark S&P 500 and tech-heavy Nasdaq 100 posting new record highs. Autodesk (ADSK) advanced over +6% and was the top percentage gainer on the S&P 500 and Nasdaq 100 following a report from the Wall Street Journal stating that activist investor Starboard Value has taken a $500 million stake in the company. Also, Tesla (TSLA) climbed more than +5% after Bloomberg reported that the company had gained approval to test its advanced driver-assistance system on some streets in Shanghai. In addition, Micron Technology (MU) rose over +4% after three brokerages raised their price targets on the stock. On the bearish side, Louisiana-Pacific (LPX) fell more than -3% after Goldman Sachs downgraded the stock to Sell from Neutral with a price target of $81.

Economic data on Monday showed that the U.S. Empire State manufacturing index rose to a 4-month high of -6.00, stronger than expectations of -12.50.

Philadelphia Fed President Patrick Harker said on Monday that he views one interest-rate cut as appropriate for this year according to his current forecast. Harker noted that a recent report showing a cooling of consumer prices in May was “very welcome,” yet emphasized that policymakers require more evidence to be assured that inflation is moving toward the central bank’s 2% goal. “If all of it happens to be as forecasted, I think one rate cut would be appropriate by year’s end,” Harker said. “Indeed, I see two cuts, or none, for this year as quite possible if the data break one way or another. So, again, we will remain data dependent.”

Meanwhile, U.S. rate futures have priced in an 8.3% chance of a 25 basis point rate cut at the July FOMC meeting and a 55.0% chance of a 25 basis point rate cut at the conclusion of the Fed’s September meeting.

Today, all eyes are focused on U.S. Retail Sales data, set to be released in a couple of hours. Economists, on average, forecast that May Retail Sales will stand at +0.3% m/m, compared to the previous number of 0.0% m/m.

Also, investors will focus on U.S. Core Retail Sales data, which came in at +0.2% m/m in April. Economists foresee the May figure to be +0.2% m/m.

U.S. Industrial Production data will be reported today. Economists expect May’s figure to be +0.3% m/m, compared to the previous number of 0.0% m/m.

U.S. Manufacturing Production data will come in today. Economists forecast this figure to stand at +0.3% m/m in May, compared to the previous figure of -0.3% m/m.

U.S. Business Inventories data will be reported today as well. Economists foresee this figure to come in at +0.3% m/m in April, compared to the previous number of -0.1% m/m.

In addition, market participants will be looking toward a batch of speeches from Fed officials Barkin, Collins, Logan, Kugler, Musalem, and Goolsbee.

The U.S. stock markets will be closed on Wednesday for observance of the Juneteenth National Independence Day federal holiday.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.293%, up +0.38%.

The Euro Stoxx 50 futures are up +0.29% this morning, tracking gains in Asian stocks following a tech-driven rally in the U.S. that drove Wall Street to another record high. Travel and leisure stocks outperformed on Tuesday. Bank and technology stocks also advanced, extending their recovery from the selloff triggered by political turmoil in France. Eurostat said Tuesday that the Eurozone’s annual inflation rate increased to 2.6% in May from 2.4% in April, matching the preliminary estimate. Separately, the ZEW Economic Research Institute reported Tuesday that German investor morale improved less than expected in June. Meanwhile, investors are awaiting the Bank of England’s policy rate decision on Thursday, with the central bank widely anticipated to hold its Bank Rate at 5.25% for the seventh consecutive meeting. Central banks in Norway and Switzerland are also scheduled to meet this week. In corporate news, Schneider Electric Se (SU.FP) rose over +1% after Jefferies upgraded the stock to Buy from Hold.

Eurozone’s CPI, Eurozone’s Core CPI, Germany’s ZEW Economic Sentiment, and Eurozone’s ZEW Economic Sentiment data were released today.

Eurozone May CPI has been reported at +0.2% m/m and +2.6% y/y, in line with expectations.

Eurozone May Core CPI stood at +0.4% m/m and +2.9% y/y, in line with expectations.

The German June ZEW Economic Sentiment came in at 47.5, weaker than expectations of 49.6.

Eurozone June ZEW Economic Sentiment arrived at 51.3, stronger than expectations of 47.8.

Asian stock markets today closed in the green. China’s Shanghai Composite Index (SHCOMP) closed up +0.48%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +1.00%.

China’s Shanghai Composite Index closed higher today, tracking regional markets higher, while investors awaited enhanced policy support from Beijing in light of the nation’s mixed economic data. Gains in software-related stocks led the overall market higher on Tuesday. Despite sluggish economic numbers, the People’s Bank of China maintained the one-year medium-term lending facility rate unchanged on Monday, fueling hopes that Beijing will provide further support for the economy later in the year. Meanwhile, China’s yuan held close to a seven-month low against the U.S. dollar on Tuesday as stronger guidance from the PBOC offset mixed economic data. In other news, Hong Kong’s government announced Tuesday that it will end its long-standing practice of shutting its markets during typhoons and major storms, effective September 23rd. In corporate news, Wuhan East Lake High Technology Group climbed about +5% after announcing its plans to expand into the digital technology sector and set up a subsidiary focused on software development with an investment of 2 billion yuan.

Meanwhile, Australia’s central bank held its benchmark interest rate unchanged at a 12-year high of 4.35% for a fifth consecutive meeting on Tuesday, reiterating that it wasn’t “ruling anything in or out.” Reserve Bank Governor Michele Bullock stated in a press conference that the central bank deliberated the possibility of a rate hike at its policy meeting.

Japan’s Nikkei 225 Stock Index closed higher today, tracking a tech-led rally on Wall Street overnight. Electronics and technology stocks led the gains on Tuesday. Meanwhile, Japanese government bond yields rebounded on Tuesday, tracking U.S. Treasury yields upward, while investors maintained caution over Japan’s monetary policy outlook and the Bank of Japan’s tapering plans. BOJ Governor Kazuo Ueda reiterated Tuesday that the central bank would raise interest rates if confidence in achieving its inflation target improves. However, “we are still not fully confident that it will definitely come true,” Ueda told a parliamentary committee. In other news, S&P Global Ratings published a report on Tuesday underscoring the resilience and readiness for the expansion of the country’s megabanks. Analyst Chizuru Tateno anticipates enhanced profitability in fiscal 2024 due to stable profits, managed risks, and overseas investments. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -6.76% to 17.11.

Pre-Market U.S. Stock Movers

La-Z-Boy (LZB) gained over +2% in pre-market trading after the company reported upbeat Q4 results and provided better-than-expected Q1 revenue guidance.

Lennar Corporation (LEN) slid more than -3% in pre-market trading after the homebuilder gave a slightly weaker-than-expected Q3 home deliveries forecast.

NextEra Energy (NEE) slumped over -5% in pre-market trading after announcing plans to sell almost $2 billion of equity units.

Kroger (KR) rose more than +1% in pre-market trading after BMO Capital upgraded the stock to Outperform from Market Perform with a price target of $60.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Tuesday - June 18th

KB Home (KBH), Patterson (PDCO), Cognyte Software (CGNT), Americas Car-Mart (CRMT).

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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.