Stock Market Update

The S&P 500 futures are up 19 points and are trading 0.3% above fair value, the Nasdaq 100 futures are up 86 points and are trading 0.4% above fair value, and the Dow Jones Industrial Average futures are up 18 points and are trading fractionally above fair value.

Stock futures indicate a modestly higher open, but things will be subject to change (for better or worse) following the 8:30 a.m. ET release of the May Personal Income and Spending Report, which contains the Fed's preferred inflation gauges in the PCE Price Index and Core-PCE Price Index. The levels for those indexes will fuel monetary policy expectations (for better or worse), which in turn will fuel the performance of Treasuries.

The 2-yr note yield is unchanged at 4.72% and the 10-yr note yield is up one basis point to 4.30%. 

Not much change there, which isn't the case for Dow component Nike (NKE). It is down 15% after reporting fiscal Q4 earnings that were overshadowed by some very disappointing fiscal Q1 and FY25 sales guidance.

Separately, the U.S. Dollar Index is down 0.1% to 105.93. The yen is little changed against the dollar but continues to trade near a 38-year low against the greenback with talk heating up about possible intervention from Japanese authorities. Not to be overlooked, there is much talk this morning about last night's presidential debate. Politico reports that Democrats are actively considering replacing President Biden on the Democratic ticket after his debate performance.

Russell will be completing the reconstitution of its indices today; and France will be holding the first round of its snap election over the weekend. It is reported that Marine Le Pen's National Rally party is expected to receive the largest share of the vote.

In corporate news:

• Nike (NKE 80.02, -14.17, -15.0%): NIKE beats by $0.15, misses on revs, gross margin increased 110 bps, North America revenue decreased 1%; Expects FY25 reported revenue to be down mid single digits (reduced from initial outlook of positive growth)
• Apple (AAPL 216.15, +2.05, +1.0%): iPhone shipments in China increased 40% in May, according to Bloomberg
• Foot Locker (FL 24.26, -1.26, -4.9%): down on the heels of Nike's disappointing sales outlook
• Infinera Corp (INFN 6.29, +1.03, +19.6%): Nokia confirms deal to acquire Infinera (INFN) for $6.65/share or an enterprise value of $2.3 bln; deal financed from Nokia's cash on hand
• Kura Sushi (KRUS 74.10, -8.29, -10.1%): guides MayQ sales below consensus; lowers FY24 revenue guidance
• Accolade (ACCD 4.51, -1.88, -29.4%): beats by $0.13, beats on revs; guides Q2 revs below consensus; guides FY25 revs below consensus
• PTC Therapeutics (PTCT 30.00, -4.66, -13.4%): EMA recommended not renewing the conditional marketing authorization for Translarna - ataluren, a medicine for treating patients with non-sense mutation Duchenne muscular dystrophy

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region ended the week on a mostly higher note. Japan's Nikkei: +0.6%, Hong Kong's Hang Seng: unchanged, China's Shanghai Composite: +0.7%, India's Sensex: -0.3%, South Korea's Kospi: +0.5%, Australia's ASX All Ordinaries: +0.1%.
  • In economic data:
    • Japan's June Tokyo CPI 2.3% yr/yr (last 2.2%) and Tokyo Core CPI 2.1% yr/yr (expected 2.0%; last 1.9%). May Unemployment Rate 2.6%, as expected (last 2.6%) and May Industrial Production 2.8% m/m (expected 2.0%; last -0.9%). May Housing Starts -5.3% yr/yr (expected -6.1%; last 13.9%) and Construction Orders 2.1% yr/yr (last 26.4%). 
    • South Korea's May Industrial Production -1.2% m/m (expected 0.2%; last 2.4%); 3.5% yr/yr (expected 3.1%; last 6.2%). May Retail Sales -0.2% m/m (last -1.2%) and May Service Sector Output -0.5% m/m (last 0.7%)
    • Australia's May Private Sector Credit 0.4% m/m, as expected (last 0.5%) and Housing Credit 0.4% m/m (last 0.5%)
  • In news:
    • Continued weakness in the Japanese yen lifted the USD/JPY pair past the April peak (160.22), which prompted an intervention from Japanese authorities.
    • Japan's top currency diplomat Kanda will retire at the end of July and will be replaced with a current official from the Ministry of Finance.
    • The Bank of Japan's meeting minutes with a bond market group showed growing expectations for rising rates and insufficient JGB market depth due to reluctance of foreign investors.
    • S&P affirmed China's A+ rating with a Stable outlook.
• Major European indices are looking for a mostly higher finish to the week. STOXX Europe 600: +0.3%, Germany's DAX: +0.5%, U.K.'s FTSE 100: +0.5%, France's CAC 40: -0.6%, Italy's FTSE MIB: +0.1%, Spain's IBEX 35: +0.1%.
  • In economic data:
    • Germany's May Import Price Index 0.0% m/m (expected 0.2%; last 0.7%); -0.4% yr/yr (expected -0.3%; last -1.7%). June Unemployment Change 19,000 (expected 14,000; last 25,000) and Unemployment Rate 6.0% (expected 5.9%; last 5.9%)
    • U.K.'s Q1 GDP 0.7% qtr/qtr (expected 0.6%; last -0.3%); 0.3% yr/yr (expected 0.2%; last -0.2%). Q1 Current Account deficit GBP21.0 bln (expected deficit of GBP17.7 bln; last deficit of GBP21.2 bln)
    • France's June CPI 0.1% m/m, as expected (last 0.0%); 2.1% yr/yr (last 2.3%). May PPI -1.4% m/m (last -3.6%); -6.7% yr/yr (last -6.7%). May Consumer Spending 1.5% m/m (expected 0.2%; last -0.9%)
    • Italy's June CPI 0.1% m/m (expected 0.2%; last 0.2%); 0.8% yr/yr (expected 1.0%; last 0.8%). April Industrial Sales 0.8% m/m (last -2.8%); -2.0% yr/yr (last -5.1%). May non-EU trade surplus EUR5.77 bln (last surplus of EUR4.91 bln)
    • Spain's June CPI 0.3% m/m (expected 0.2%; last 0.3%); 3.4% yr/yr, as expected (last 3.6%). June Core CPI 3.0% yr/yr (last 3.0%). April Current Account surplus EUR2.83 bln (last EUR3.29 bln)
    • Swiss June KOF Leading Indicators 102.7 (expected 101.0; last 102.2).
  • In news:
    • The U.K.'s Q1 GDP was revised slightly higher while flash June CPI readings from France and Spain showed another deceleration in the yr/yr inflation rate.
    • The latest Consumer Expectations survey for the eurozone showed that year-ahead inflation expectations remained at 2.8% while the three-year outlook dipped to 2.3% from 2.4%.
    • European Commission President von der Leyen was nominated for a second five-year term, as expected.
    • The first round of French elections will take place this weekend with Marine Le Pen's party expected to receive the largest share of the vote.