Stock Market Update

The S&P 500 futures are down 28 points and are trading 0.5% below fair value, the Nasdaq 100 futures are down 58 points and are trading 0.3% below fair value, and the Dow Jones Industrial Average futures are down 291 points and are trading 0.7% below fair value.

There's a negative bias in early trading driven by ongoing consolidation efforts. The political uncertainty around the French election, which sent European indices lower today, has contributed to the downside bias this morning.

Treasury yields are slightly lower in a flight-to-safety bid related to the political uncertainty. The 10-yr note yield is down four basis points to 4.20% and the 2-yr note yield is down one basis point to 4.68%.

Today's calendar features the following economic releases: 

• 08:30 ET: May import prices (prior 0.9%) and nonfuel import prices (prior 0.7%); May export prices (prior 0.5%) and nonagricultural export prices (prior 0.7%)
• 10:00 ET: Preliminary June Univ. of Michigan Consumer Sentiment (Briefing.com consensus 73.0; prior 69.1)

In corporate news:

• Adobe (ADBE 521.50, +62.76, +13.7%): beats by $0.09, reports revs in-line; guides Q3 EPS above consensus, revs below consensus; guides FY24 EPS above consensus, revs in-line
• RH (RH 244.19, -32.86, -11.9%): misses by $0.27, reports revs in-line; guides Q2 revs below consensus; reaffirms FY25 revs guidance
• Tesla (TSLA 185.15, +2.68, +1.5%): shareholders during Annual Meeting approve incorporation moving from Delaware to Texas; approve CEO Elon Musk's $56 bln pay package
• Gamestop (GME 28.78, -0.34, -1.2%): Roaring Kitty increased Gamestop (GME) stake, according to CNBC
• Microsoft (MSFT 438.39, -3.19, -0.7%): President Brad Smith said company is responsible for recent security failures, according to WSJ; decided against introduction of "recall" artificial intelligence feature next week, according to Reuters
• Boeing (BA 178.69, -2.01, -1.1%): FAA investigating why some Boeing (BA) and Airbus (EADSY) jets have counterfeit titanium, according to NY Times 

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region ended the week on a mixed note. Japan's Nikkei: +0.4% (+0.5% for the week), Hong Kong's Hang Seng: -0.9% (-2.3% for the week), China's Shanghai Composite: +0.1% (-0.6% for the week), India's Sensex: +0.2% (+0.4% for the week), South Korea's Kospi: +0.1% (+1.3% for the week), Australia's ASX All Ordinaries: -0.4% (-1.7% for the week).
  • In economic data:
    • South Korea's May Export Price Index 7.5% yr/yr (last 6.5%) and Import Price Index 4.6% yr/yr (last 2.9%)
    • Japan's April Industrial Production -0.9% m/m (expected -0.1%; last 4.4%) and Capacity Utilization 0.3% (last 1.3%)
    • India's May WPI Inflation 2.61% yr/yr (expected 2.50%; last 1.26%)
    • Hong Kong's Q1 PPI 1.2% yr/yr (last 2.7%)
    • China's May New Loans CNY950.0B (expected CNY2,250.0B; last CNY730.0B)
  • In news:
    • The Bank of Japan left its uncollateralized overnight call rate unchanged at around 0.0% to 0.1%, as expected, and voted 8-1 that it would reduce bond purchases over the next one to two years or so. It plans to announce more details of the reduced purchase plan at its next policy meeting in July; however, Governor Ueda, according to Nikkei, said in his press conference that the reduction in bond purchases would likely be "sizable."
    • JGB yields and the yen both fell sharply immediately after the BOJ announcement, but then bounced apparently on Governor Ueda's statement.
    • Taiwan's central bank also left its key interest rate unchanged at 2.0%, and raised the lenders' reserve requirement ratio by 25 basis points.
    • India's wholesale inflation hit a 15-month high of 2.61%.
    • China reported much lower-than-expected new loan data for May.
• Major European indices are experiencing added selling pressure going into the weekend, upended by mounting concerns regarding the French election. STOXX Europe 600: -1.2% (-2.6% for the week), Germany's DAX: -1.3% (-2.9% for the week), U.K.'s FTSE 100: -0.3% (-1.3% for the week), France's CAC 40: -2.4% (-5.9% for the week), Italy's FTSE MIB: -2.7% (-5.7% for the week), Spain's IBEX 35: -1.4% (-4.3% for the week).
  • In economic data:
    • Eurozone's April Trade Balance EUR15.0B (expected EUR17.0B: last EUR23.7B)
    • France's May CPI 0.0% m/m (expected 0.0%; last 0.5%) and 2.3% yr/yr (expected 2.2%; last 2.2%)
    • Italy's April Trade Balance EUR4.807B (expected EUR4.250B; last EUR4.296B)
  • In news:
    • Political uncertainty has been reflected in widening credit spreads and the latest report that France's left-wing parties are aligning as a "Popular Front" to challenge Marine Le Pen's far-right National Rally Party.
    • This development has prompted a warning from France's finance minister that a left-wing win could mean an EU exit.
    • European bank stocks are among Friday's biggest losers, whereas sovereign bond yields are sliding in a safe-haven bid. EUR/USD -0.3% to 1.0699.