Stock Market Update

The S&P 500 futures are down four points and are trading 0.1% below fair value, the Nasdaq 100 futures are down 84 points and are trading 0.4% below fair value, and the Dow Jones Industrial Average futures are up 98 points and are trading 0.3% above fair value.

There's a mixed vibe in early trading. Contracts tied to Dow industrials are higher and Nasdaq 100 futures are lower. Weakness in some mega cap names has contributed to the mixed action. Apple (AAPL) is down 2.5% ahead of the open after a report indicated that estimated iPhone 16 preorders are lower year-over-year than iPhone 15 preorders.

Participants are in wait-and-see mode, expecting the first rate cut by the Fed since March 2020 on Wednesday. The fed funds futures market is now pricing in a larger probability of a 50 basis points rate cut than a 25 basis points rate cut. The likelihood of a 50 basis points cut moved to 63.0%, up from 50.0% on Friday, according to the CME FedWatch Tool.

The 10-yr yield is down two basis points to 3.63% and the 2-yr note yield is down three basis points to 3.55%.

In corporate news:

• Apple (AAPL 217.13, -5.37, -2.4%): iPhone preorders estimated around 37 mln units, according to an Analyst report
• Intel (INTC 19.89, +0.23, +1.2%): receives $3.5 bln military contract, according to Bloomberg
• Trump Media & Technology Group Corp. (DJT 18.29, +0.32, +1.8%): indicated higher following second assassination attempt on former President Donald Trump on Sunday
• Colgate-Palmolive (CL 104.13, -1.60, -1.5%): downgraded to Underweight from Equal Weight at Wells Fargo
• Alphabet (GOOG 158.74, +0.37, +0.2%): reiterated as Outperform and price target lowered to $200 to $225 at Evercore ISI
• Ally Financial (ALLY 32.74, -0.23, -0.7%): downgraded to Neutral from Buy at BTIG Research
• Spotify (SPOT 340.99, +3.09, +0.9%): reiterated as Overweight at KeyBanc and price target raised to $440 from $420

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region began the week on a slightly higher note but overall volume was reduced due to holiday closures in China, Japan, and South Korea. Japan's Nikkei: HOLIDAY, Hong Kong's Hang Seng: +0.3%, China's Shanghai Composite: HOLIDAY, India's Sensex: +0.1%, South Korea's Kospi: HOLIDAY, Australia's ASX All Ordinaries: +0.2%
  • In economic data:
    • China's August Industrial Production 4.5% yr/yr (expected 4.7%; last 5.1%), August Retail Sales 2.1% yr/yr (expected 2.5%; last 2.7%), August Fixed Asset Investment 3.4% yr/yr (expected 3.5%; last 3.6%), and August House Prices -5.3% yr/yr (last -4.9%). August Unemployment Rate 5.3% (expected 5.2%; last 5.2%). August FDI -31.5% YTD (last -29.6%)
  • In news:
    • China's growth figures for August missed expectations, serving as a reminder of ongoing softness in the country's economy.
    • New Zealand is expected to see no GDP growth in fiscal 24/25, according to NZIER.
• Major European indices trade near their flat lines. STOXX Europe 600: +0.1%, Germany's DAX: -0.1%, U.K.'s FTSE 100: -0.1%, France's CAC 40: +0.1%, Italy's FTSE MIB: UNCH, Spain's IBEX 35: +0.2%.
  • In economic data:
    • Eurozone's July trade surplus EUR21.2 bln (expected EUR14.9 bln; last EUR21.7 bln). Q2 Wages 4.5% yr/yr (last 5.2%) and Q2 Labor Cost Index 4.7% yr/yr (last 5.0%)
    • Germany's August WPI -0.8% m/m (last 0.3%); -1.1% yr/yr (last -0.1%)
    • Italy's August CPI 0.2% m/m, as expected (last 0.2%); 1.1% yr/yr, as expected (last 1.1%). July trade surplus EUR6.74 bln (expected surplus of EUR4.45 bln; last surplus of EUR5.15 bln)
    • Swiss August PPI 0.2% m/m (expected 0.1%; last 0.0%); -1.2% yr/yr (last -1.7%)
  • In news:
    • European Central Bank policymaker Wunsch spoke in favor of additional rate cuts while policymaker De Guindos repeated that the future rate path has not been determined.
    • Norway had its first failed auction in more than 15 years when it failed to find bidders for its entire 12-month bill sale.
    • Fitch affirmed Germany's AAA rating with a Stable outlook while Moody's affirmed Greece's Ba1 rating and raised the outlook to Positive from Stable.