Stock Market Update

The S&P 500 futures are down four points and are trading 0.2% below fair value, the Nasdaq 100 futures are down 16 points and are trading 0.1% below fair value, and the Dow Jones Industrial Average futures are down 70 points and are trading 0.2% below fair value.

There's a negative bias in early trading ahead of the June Consumer Price Index. The vibe could shift with the release of the inflation data.

Market participants are expecting the report to corroborate rate cut optimism following the indication by Fed Chair Powell this week that the next policy move will likely be a cut.

The 10-yr note yield is little changed in front of the inflation data, up one basis point to 4.29%.

In corporate news:

• PepsiCo (PEP 161.63, -1.96, -1.2%): beats by $0.12, reports revs in-line; reaffirms FY24 EPS guidance
• Delta Air Lines (DAL 42.76, -4.10, -8.8%): misses by $0.01, reports revs in-line; guides Q3 EPS below consensus, revs below consensus; reaffirms FY24 EPS guidance
• Apple (AAPL 232.36, -0.62, -0.3%): EU Commission accepts commitments by Apple opening access to 'tap and go' technology on iPhones; wants to ship at least 90 mln iPhone 16 devices in the second half of 2024, according to Bloomberg
• Costco (COST 904.50, +20.19, +2.3%): reports June adjusted comps of +6.9%; also to increase membership fees by $5 for non-exec and $10 for executive memberships
• Alcoa (AA 39.25, +0.79, +2.1%):guides Q2 EPS and revs above consensus
• Citigroup (C 66.09, -0.89, -1.3%): down over 1% after U.S. regulators fine the company $136 mln for failing to make adequate progress fixing data issues, according to Reuters
• Pfizer (PFE 28.85, +0.50, +1.8%): advances development of once-daily formulation of oral GLP-1 receptor agonist danuglipron

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region ended Thursday on a mostly higher note. Japan's Nikkei: +0.9%, Hong Kong's Hang Seng: +2.1%, China's Shanghai Composite: +1.1%, India's Sensex: UNCH, South Korea's Kospi: +0.8%, Australia's ASX All Ordinaries: +0.9%.
  • In economic data:
    • Japan's May Core Machinery Orders -3.2% m/m (expected 0.9%; last -2.9%); 10.8% yr/yr (expected 7.2%; last 0.7%)
    • Australia's July MI Inflation Expectations 4.3% (last 4.4%)
    • New Zealand's June FPI 1.0% m/m (last -0.2%)
  • In news:
    • Expectations are growing for the People's Bank of China to cut the reserve requirement ratio by 25 bps and lower the one-year loan prime rate by 10 bps before the end of Q3.
    • South Korea's exports through the first ten days of July were up 33.8% yr/yr with chip exports jumping 85.7%.
    • The Bank of Korea left its policy rate at 3.50%, as expected, though Governor Rhee acknowledged that the bank is preparing to "switch lanes," suggesting a rate cut is approaching.
• Major European indices trade near their flat lines. STOXX Europe 600: +0.4%, Germany's DAX: UNCH, U.K.'s FTSE 100: +0.2%, France's CAC 40: +0.2%, Italy's FTSE MIB: -0.1%, Spain's IBEX 35: +0.2%.
  • In economic data:
    • Germany's June CPI 0.1% m/m, as expected (last 0.1%); 2.2% yr/yr, as expected (last 2.4%)
    • U.K.'s May GDP 0.4% m/m (expected 0.2%: last 0.0%); 1.4% yr/yr (expected 1.2%; last 0.7%). May Construction Output 1.9% m/m (expected 0.5%; last -1.1%); 0.8% yr/yr (expected -1.9%; last -2.1%). May Industrial Production 0.2% m/m (expected 0.3%; last -0.9%); 0.4% yr/yr (expected 0.6%; last -0.7%). May trade deficit GBP17.92 bln (expected deficit of GBP15.60 bln; last deficit of GBP19.44 bln)
  • In news:
    • The U.K. reported stronger-than-expected growth in May while Industrial Production growth missed expectations.
    • European Central Bank policymaker and Bank of France Governor Villeroy de Galhau cautioned that France cannot keep widening its budget deficit.
    • Italy is expected to reduce its planned debt sales for the second half of the year due to better-than-expected cash balance.