Stock Market Update

The S&P 500 futures are up two points and are trading fractionally above fair value, the Nasdaq 100 futures are up six points and are trading 0.1% above fair value, and the Dow Jones Industrial Average futures are up 24 points and are trading 0.1% above fair value.

Contracts linked to the S&P 500, Nasdaq 100, and Dow Jones Industrial Average are trading flattish. The muted action this morning follows record closing highs last week for the S&P 500 and Nasdaq Composite. There's also some hesitation in play in front of market-moving events. Namely, earnings season starts later this week when large cap banks like JPMorgan Chase (JPM), Wells Fargo (WFC), and Citigroup (C) report results.

This week's calendar also features a fresh read on inflation in the form of the June Consumer Price Index and Producer Price Index. 

Treasury yields are moving higher, acting as a limiting factor for equities. The 10-yr note yield is up four basis points to 4.31% and the 2-yr note yield is up three basis points to 4.63%.

In corporate news:

• Boeing (BA 186.50, +1.67, +0.9%): will plead guilty in criminal case involving 737 MAX crashes, according to WSJ
• Paramount Global (PARA 12.06, +0.25, +2.1%): & Skydance Media sign merger definitive agreement; PARA class a stockholders to receive $23/share in cash/stock election, class b stockholders to receive $15/share in cash/stock election
• NVIDIA (NVDA 126.89, +1.05, +0.8%): price target raised to $150 from $120 and reiterated as a Buy at UBS
• JPMorgan Chase (JPM 204.15, -0.64, -0.3%): downgraded to Peer Perform from Outperform at Wolfe Research
• ServiceNow (NOW 780.05, -26.42, -3.3%): downgraded to Sell from Neutral at Guggenheim
• Exxon Mobil (XOM 112.74, -0.63, -0.6%): sees Q2 upstream earnings of $5.7 bln; sees Q2 non-GAAP total earnings of $8.2 bln
• Corning (GLW 41.14, +2.70, +7.0%): sees Q2 EPS at high end or slightly above prior range; raises Q2 revenue guidance

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region began the week on a lower note. Japan's Nikkei: -0.3%, Hong Kong's Hang Seng: -1.6%, China's Shanghai Composite: -0.9%, India's Sensex: -0.1%, South Korea's Kospi: -0.2%, Australia's ASX All Ordinaries: -0.7%.
  • In economic data:
    • Japan's May Average Cash Earnings 1.9% yr/yr (expected 2.1%; last 1.6%) and Overtime Pay 2.3% yr/yr (last -1.2%). May Current Account surplus JPY2.85 trln (expected JPY2.45 trln; last JPY2.05 trln). June Bank Lending 3.2% yr/yr (expected 3.1%; last 2.9%) and June Economy Watchers Current Index 47.0 (expected 46.1; last 45.7)
    • Australia's May Home Loans -2.0% m/m (expected 2.0%; last 4.5%) and Invest Housing Finance -1.3% m/m (last 5.3%)
  • In news:
    • The Japanese government noted that pay hikes at companies with more than 30 employees exceeded inflation for the first time in 26 months and that base pay in May increased at a 21-year high of 2.5% yr/yr.
    • South Korean battery maker SK On said that it is in crisis due to weak demand for electric vehicles in Europe and the United States, according to FT.
    • China's gold purchase slowed significantly for the second month in a row in June after steady growth during the previous year.
    • The People's Bank of China released some details on its large-scale bond borrowing plan.
    • The Reserve Bank of New Zealand shadow board recommended that the RBNZ keep its official cash rate at 5.50% at this week's policy meeting.
• Major European indices trade in the green. STOXX Europe 600: +0.4%, Germany's DAX: +0.5%, U.K.'s FTSE 100: +0.3%, France's CAC 40: +0.2%, Italy's FTSE MIB: +0.7%, Spain's IBEX 35: +0.5%.
  • In economic data:
    • Eurozone's July Sentix Investor Confidence -7.3 (expected -0.6; last 0.3)
    • Germany's May trade surplus EUR24.9 bln (expected EUR19.9 bln; last EUR22.2 bln). May Imports -6.6% m/m (last 1.2%) and Exports -3.6% m/m (last 1.7%)
  • In news:
    • The second round of French elections concluded with a surprising win for left-leaning parties after hundreds of candidates dropped out to strengthen support against Marine Le Pen's National Rally, which came in third place.
    • Germany's Chemical Industry Association affirmed its outlook for the year. New British Prime Minister Starmer named his cabinet.