Stock Market Update

The S&P 500 futures are up three points and are trading 0.1% above fair value, the Nasdaq 100 futures are up 28 points and are trading 0.2% above fair value, and the Dow Jones Industrial Average futures are up 33 points and are trading 0.1% above fair value.

There's a positive bias in early trading ahead of this afternoon's FOMC policy decision at 2:00 ET. The committee is expected to lower rates for the first time since March 2020. Pre-open gains in some mega cap names has contributed to the upside action.

Treasury yields are higher in front of the September FOMC Statement. The 10-yr yield is three basis points higher at 3.67% and the 2-yr yield is three basis points higher at 3.62%.

The weekly MBA Mortgage Applications Index rose 14.2% with refinance applications surging 24% and purchase applications jumping 5%. Other data today include:

• 8:30 ET: August Housing Starts (Briefing.com consensus 1.320 mln; prior 1.238 mln) and Building Permits (Briefing.com consensus 1.415 mln; prior 1.396 mln)
• 10:30 ET: Weekly crude oil inventories (prior 0.883 mln)
• 16:00 ET: July Net Long-Term TIC Flows (prior $96.1 bln)

In corporate news:

• General Mills (GIS 73.45, -1.05, -1.4%): beats by $0.01, reports revs in-line, reaffirms FY25 guidance
• Alphabet (GOOG 161.89, +1.61, +1.0%): Google will not have to pay EUR1.49 bln fine for blocking rival advertisers, according to BBC
• Microsoft (MSFT 437.13, +1.98, +0.5%): and BlackRock to invest in AI infrastructure, according to FT
• Starbucks (SBUX 96.21, -0.23, -0.2%): reiterated as a Buy and price target raised to $118 from $112 at Bank of America
• VF Corp (VFC 19.00, +0.60, +3.3%): upgraded to Overweight from Equal Weight at Barclays

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region ended the midweek session on a mostly higher note while markets in Hong Kong and South Korea were closed for holidays. Japan's Nikkei: +0.5%, Hong Kong's Hang Seng: HOLIDAY, China's Shanghai Composite: +0.5%, India's Sensex: -0.2%, South Korea's Kospi: +0.1%, Australia's ASX All Ordinaries: UNCH.
  • In economic data:
    • Japan's August trade deficit JPY600 bln (expected deficit of JPY960 bln; last deficit of JPY680 bln). August Imports 2.3% yr/yr (expected 13.4%; last 16.6%) and Exports 5.6% yr/yr (expected 10.0%; last 10.2%). July Core Machinery Orders -0.1% m/m (expected 0.4%; last 2.1%); 8.7% yr/yr (last -1.7%)
    • Australia's August MI Leading Index 0.0% m/m (last 0.0%)
    • New Zealand's Q3 Westpac Consumer Sentiment 90.8 (last 82.2). Q2 Current Account deficit 6.7% of GDP (last 6.8% of GDP)
  • In news:
    • There was some focus on weak deposit growth at major Chinese banks during the first half of 2024.
    • A group of U.S. officials will be in Beijing tomorrow and Friday to discuss trade.
    • The Reserve Bank of Australia said that it will prioritize work on wholesale central bank digital currency rather than a retail version.
• Major European indices trade on a mostly lower note. STOXX Europe 600: -0.5%, Germany's DAX: +0.1%, U.K.'s FTSE 100: -0.6%, France's CAC 40: -0.4%, Italy's FTSE MIB: -0.1%, Spain's IBEX 35: -0.1%.
  • In economic data:
    • Eurozone's August CPI 0.1% m/m (expected 0.2%; last 0.0%); 2.2% yr/yr, as expected (last 2.6%). August Core CPI 0.3% m/m, as expected (last -0.2%); 2.8% yr/yr, as expected (last 2.9%). July Construction Output 0.0% m/m (last 0.6%)
    • U.K.'s August CPI 0.3% m/m, as expected (last -0.2%); 2.2% yr/yr, as expected (last 2.2%). August Core CPI 0.4% m/m, as expected (last 0.1%); 3.6% yr/yr, as expected (last 3.3%). August Input PPI -0.5% m/m (expected -0.3%; last -0.3%) and Output PPI -0.3% m/m (expected 0.0%; last 0.0%). August House Price Index 2.2% (expected 2.8%; last 2.7%)
  • In news:
    • August CPI readings for the eurozone, and the U.K. were largely in line with expectations.
    • The Bank of England will hold a policy meeting tomorrow, but it is not expected to result in any changes to the bank rate.
    • The Bank of France expects 2025 inflation of 1.5%, followed by 1.7% in 2026, which is below the European Central Bank's target.
    • Germany reduced its planned debt issuance for October and November by EUR2 bln.