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Updated: 01-Jul-25 08:55 ET
Stepping lightly into start of third quarter

With the run the stock market has had off the April 7 low, it should surprise no one that the equity futures market is suggesting the major indices are poised to open modestly lower today. The real surprise, with the S&P 500 up 28% since the April 7 low and the Nasdaq Composite up 38%, would be if the equity futures market pointed to a higher open.

That's not to say the indices can't work their way higher as today's session unfolds, but it is illustrative of the point that the "pain trade" is higher because many participants are expecting a pullback of some kind.

Currently, the S&P 500 futures are down 22 points and are trading 0.4% below fair value, the Nasdaq 100 futures are down 100 points and are trading 0.4% below fair value, and the Dow Jones Industrial Average futures are down 46 points and are trading 0.1% below fair value.

The expected weakness is primarily a case of profit-taking activity, yet misgivings about the scope and fate of the "One Big, Beautiful Bill," trade negotiations with other countries, and a 6% drop in shares of Tesla (TSLA) after President Trump suggested Elon Musk's companies could see an end to government subsidies have tempered some of the bullish enthusiasm to begin the third quarter.

There is also a wait-and-see cloud hanging over this morning's proceedings.

Fed Chair Powell will be participating in an ECB Forum panel discussion starting at 9:30 a.m. ET, and several economic reports will be released as he participates, most likely reiterating his view that Fed policy is in a good spot to wait for more data and to respond accordingly.

The first report today will be the final S&P Global US Manufacturing PMI reading for June (prior 52.0) at 9:45 a.m. ET. A trio of releases -- May JOLTS - Job Openings (prior 7.391 million), May Construction Spending (Briefing.com consensus -0.2%; prior -0.4%), and June ISM Manufacturing PMI (Briefing.com consensus 48.8%; prior 48.5%) -- will be published at 10:00 a.m. ET.

The Treasury market has vacillated in front of all this information. The 2-yr note yield, which hit 3.69% overnight, is at 3.73% now, up one basis point from yesterday's settlement. The 10-yr note yield, which dropped to 4.19%, is at 4.22% now, down one basis point from yesterday's settlement.

Separately, the dollar continues to slide against other major currencies. It is down 0.1% against the euro this morning and down 0.7% against the yen. The U.S. Dollar Index, which declined 7.0% in the second quarter, is down 0.3% to 96.55.

--Patrick J. O'Hare, Briefing.com

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