Stock Market Update

The S&P 500 futures are up five points and are trading 0.1% above fair value, the Nasdaq 100 futures are up 117 points and are trading 0.6% above fair value, and the Dow Jones Industrial Average futures are down 122 points and are trading 0.1% below fair value.

Contracts linked to the S&P 500 and Nasdaq 100 are higher after yesterday's record close in response to pleasing inflation data and the latest move by the Fed. The early positive bias is supported by pre-open gains in some mega cap names and semiconductor-related shares following solid earnings and guidance from Broadcom (AVGO). 

Broadcom, which is among the top ten weightiest stocks in the S&P 500, shows a 13% gain in premarket action. NVIDIA (NVDA) is up 2.0% ahead of the open in sympathy. 

Treasury yields are little changed from yesterday. The 10-yr note yield is up two basis points to 4.32%, which is still 11 basis points lower than the start of the week. The 2-yr note yield is up one basis point from yesterday at 4.76%, which is 11 basis points lower on the week.

Market participants will receive the weekly jobless claims report at 8:30 ET, along with the May Producer Price Index. 

Commodity futures are lower this morning. WTI crude oil futures are down 0.7% to $77.92/bbl, natural gas futures are down 1.9% to $2.99/mmbtu, and copper futures are down 0.8% to $4.53/lb.

In corporate news:

• Broadcom (AVGO 1695.84, +200.33, +13.4%): beats by $0.11, beats on revs; guides FY24 revs above consensus; announces 10-for-1 stock split
• Tesla (TSLA 189.56, +12.27, +6.9%): CEO Elon Musk says resolution on his pay package and resolution to move incorporation to Texas are "currently passing by wide margins;" aiming to increase Model 3 pricing due to tariffs, according to CNBC
• Dave & Buster's (PLAY 45.05, -5.30, -10.5%): misses by $0.61, misses on revs, comparable store sales decreased 5.6%
• Disney (DIS 100.77, -0.03, -0.03%): and Florida Governor Ron Desantis reach deal on 15 year expansion, according to Reuters
• Oxford Industries (OXM 97.01, -4.01, -4.0%): misses by $0.02, misses on revs; guides Q2 EPS below consensus, revs below consensus; guides FY25 EPS below consensus, revs below consensus
• RTX (RTX 106.85, +0.08, +0.1%): awarded $293 mln US Special Ops Command contract
• Microsoft (MSFT 439.63, -1.43, -0.3%): OpenAI's annualized revs double since late 2023, according to The Information
• Signet Jewelers (SIG 107.00, -1.42, -1.3%): beats by $0.26, reports revs in-line; guides Q2 revs in-line; reaffirms FY25 EPS guidance, guides FY25 revs in-line

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region ended Thursday mixed. Japan's Nikkei: -0.5%, Hong Kong's Hang Seng: +1.0%, China's Shanghai Composite: -0.3%, India's Sensex: +0.3%, South Korea's Kospi: +1.0%, Australia's ASX All Ordinaries: +0.5%.
  • In economic data:
    • Japan's Q2 BSI Large Manufacturing Conditions -1.0 (expected -5.2; last -6.7)
    • Australia's May Unemployment Rate 4.0% (expected 4.0%; last 4.1%); employment change 39,700 (expected 30,500; last 37,400)
    • New Zealand's May Electronic Card Retail Sales -1.1% m/m (last -0.4%) and -1.6% yr/yr (last -3.8%)
  • In news:
    • South Korea's Kospi (+1.0%) was a standout with the short selling ban there extended through the end of March 2025.
    • Australia (+0.5%) also fared well after some better-than-expected employment data for May.
    • Following on the heels of Wednesday's FOMC decision, the Hong Kong Monetary Authority left its base rate unchanged at 5.75%, as expected.
    • The Bank of Japan meets Friday and Nikkei reports that members are likely to talk about reducing the bank's bond purchases, but it is thought a rate hike might have to wait until July.
    • Weekly flow data from Japan showed the largest sale of overseas debt in nine years.
    • President Xi said China will increase imports from other developing countries, according to state media, while China's Commerce Chamber said the EU's decisions to raise tariffs on Chinese EVs creates serious barrier to relations.
    • The PBOC for its part is in support of state firms buying existing homes and says it will gradually expand macro-prudential policy.
• Major European indices are on the defensive following a more hawkish-minded Fed, which now sees only one rate cut in 2024 versus a prior estimate of three rate cuts. STOXX Europe 600: -0.7%, Germany's DAX: -1.1%, U.K.'s FTSE 100: -0.4%, France's CAC 40: -1.2%, Italy's FTSE MIB: -1.2%, Spain's IBEX 35: -0.8%.
  • In economic data:
    • Eurozone's April Industrial Production -0.1% m/m (expected 0.1%; last 0.5%) and -3.0% yr/yr (expected -1.9%; last -1.2%)
    • Germany's May WPI 0.1% m/m (expected 0.3%; last 0.4%) and -0.7% yr/yr (last -1.8%)
    • Spain's May CPI 0.3% m/m (expected 0.3%; last 0.7%) and 3.6% yr/yr (expected 3.6%; last 3.3%)
    • Switzerland's May PPI -0.3% m/m (expected 0.5%; last 0.6%) and -1.8% yr/yr (last -1.8%)
  • In news:
    • The view that the Fed was more hawkish yesterday is contributing to interest rate differential trades that have sapped some of the strength from European bourses along with the festering uncertainty surrounding the French election, weaker-than-expected industrial production in April for the eurozone, and weakness in carmakers after the EU's tariff announcement for Chinese EVs prompted worries about retaliatory measures; also, analysts indicate that tariffs weren't as onerous as expected.
    • ECB member Nagel said core inflation is still very sticky in the eurozone, that the ECB isn't on auto pilot, and needs to take a meeting by meeting approach with policy decisions, according to Bloomberg.
    • Most economists expect the Bank of England to make first rate cut in August, according to a Reuters poll.