Stock Market Update

The S&P 500 futures are down 13 points and are trading 0.2% below fair value, the Nasdaq 100 futures are down 77 points and are trading 0.4% below fair value, and the Dow Jones Industrial Average futures are flat and are trading in line with fair value.

Contracts tied to the S&P 500, Nasdaq 100, and Dow industrials have been lower after yesterday's rate cut-induced rally. Volume is expected to be above-average on this "quadruple witching" expiration day, which includes the expiration of index options, index futures, stocks options, and single-stock futures.

Pre-open losses in some mega cap names have contributed to the early downside bias, along with negative responses to earnings from FedEx (FDX) and Lennar (LEN).

The 10-yr yield is down one basis point to 3.73% and the 2-yr yield is up one basis point to 3.61%.

In corporate news:

• FedEx (FDX 260.02, -4037, -13.4%): misses by $1.15, misses on revs; lowers top end of FY25 EPS guidance; lowers FY25 revenue guidance
• Lennar (LEN 186.10, -6.35, -3.3%): beats by $0.26, beats on revs, sees Q4 New Orders of 19,000-19,300
• MillerKnoll (MLKN 25.99, -1.48, -5.4%): misses by $0.04, misses on revs; guides Q2 EPS below consensus, revs above consensus; reaffirms FY25 EPS guidance
• Bank of America (BAC 40.78, -0.09, -0.2%): 10% owner Berkshire Hathaway's (BRK.A / BRK.B) Warren Buffett sold another 22,272,071 shares worth more than $896 mln
• Texas Instruments (TXN 205.38, -2.22, -1.1%): increases dividend 5% to $1.36/share from $1.30/share
• NIKE (NKE 86.74, +5.76, +7.1%): announces that Elliott Hill will become President and CEO, effective October 14, 2024; John Donahoe will retire from his role as President and CEO and from the Board of Directors

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region ended the week on a higher note. Japan's Nikkei: +1.5% (+3.1% for the week), Hong Kong's Hang Seng: +1.4% (+5.1% for the week), China's Shanghai Composite: UNCH (+1.2% for the week), India's Sensex: +1.6% (+2.0% for the week), South Korea's Kospi: +0.5% (+0.7% for the week), Australia's ASX All Ordinaries: +0.2% (+1.4% for the week).
  • In economic data:
    • Japan's August National CPI 0.5% m/m (last 0.2%); 3.0% yr/yr (last 2.8%). August National Core CPI 2.8% yr/yr, as expected (last 2.7%)
    • China's August FDI -31.5% YTD (last -29.6%)
    • Hong Kong's August CPI 0.0% m/m (last 1.0%); 2.5% yr/yr (expected 2.6%; last 2.5%)
    • New Zealand's August Credit Card Spending -3.1% yr/yr (last -3.7%)
  • In news:
    • Japan's Nikkei (+1.5%) remains among the leaders after the Bank of Japan made no changes to its policy stance, which was expected.
    • Elsewhere, the People's Bank of China made no changes to its one-year and five-year loan prime rates, which was also expected.
    • Property names remained in focus amid indications that the Chinese government will reduce purchase restrictions.
• Major European indices are on track for a mostly lower finish to the week while Spain's IBEX (+0.3%) outperforms, reaching its best level in more than 14 years. STOXX Europe 600: -0.6% (+0.5% week-to-date), Germany's DAX: -0.7% (+1.0% week-to-date), U.K.'s FTSE 100: -0.6% (+0.1% week-to-date), France's CAC 40: -0.7% (+1.3% week-to-date), Italy's FTSE MIB: -0.2% (+1.2% week-to-date), Spain's IBEX 35: +0.3% (+2.4% week-to-date).
  • In economic data:
    • Germany's August PPI 0.2% m/m (expected 0.0%; last 0.2%); -0.8% yr/yr (expected -1.0%; last -0.8%)
    • U.K.'s August Retail Sales 1.0% m/m (expected 0.3%; last 0.7%); 2.5% yr/yr (expected 1.4%; last 1.5%). August Core Retail Sales 1.1% m/m (expected 0.5%; last 1.0%); 2.3% yr/yr (expected 1.1%; last 1.4%). August Public Sector Net Borrowing GBP13.73 bln (expected GBP12.10 bln; last GBP3.10 bln)
    • France's September Business Survey 99, as expected (last 99)
    • Spain's July trade deficit EUR3.20 bln (last deficit of EUR710 mln)
  • In news:
    • British Chancellor Reeves is being pressured to limit spending cuts and tax increases in the Autumn budget.
    • Mercedes lowered its guidance for the year due to weak demand in China.
    • European Central Bank policymakers Rehn and De Guindos said that incoming data will determine the pace of easing.