Stock Market Update

The S&P 500 futures are down 40 points and are trading 0.7% below fair value, the Nasdaq 100 futures are down 200 points and are trading 1.0% below fair value, and the Dow Jones Industrial Average futures are down 58 points and are trading 0.1% below fair value.

Equity futures indicate a lower open. Pre-open losses in technology stocks have contributed to the downside bias. Rising market rates also remain top of mind for investors. The 10-yr yield is at 4.77% and the 2-yr yield is at 4.40%, little changed from Friday after soaring 18 basis points and 12 basis points, respectively, last week.

The downside bias also follows JP Morgan CEO Jamie Dimon saying in an interview that he is "cautiously pessimistic" about the US economy.

Today's economic lineup features the December Treasury Budget at 14:00 ET.

In corporate news:

• lululemon athletica (LULU 404.42, +8.95, +2.2%): raises Q4 guidance
• JP Morgan (JPM 238.26, -1.61, -0.7): CEO Jamie Dimon in interview says he is "cautiously pessimistic" about US economy
• Exxon Mobil (XOM 107.49, +0.95, +0.9%), Chevron (CVX 154.57, +1.43, +0.9%): higher amid rising oil prices ($77.93/bbl, +1.38, +1.8%)
• Apple (AAPL 234.44, -2.41, -1.0%): planning new iPhones and artificial intelligence features this year, according to Bloomberg
• Moderna (MRNA 34.69, -7.56, -17.9%): announced business updates and progress across its pipeline of mRNA medicines; sees FY25 revs below consensus
• Johnson & Johnson (JNJ 142.36, +0.30, +0.2%): to acquire Intra-Cellular Therapies (ITCI) for $132.00 per share in cash for a total equity value of approximately $14.6 billion

Reviewing overnight developments:

• There was a sea of red across the Asia-Pacific region to begin the week with many major indices losing around 1.0% after Friday's retreat on Wall Street, which reduced fed funds rate cut expectations. Japan's Nikkei: HOLIDAY, Hong Kong's Hang Seng: -1.0%, China's Shanghai Composite: -0.3%, India's Sensex: -1.4%, South Korea's Kospi: -1.0%, Australia's ASX All Ordinaries: -1.3%.
  • In economic data:
    • China's December trade surplus $104.84 bln (expected surplus of $100.00 bln; last surplus of $97.44 bln). December Imports 1.0% yr/yr (expected -1.5%; last -3.9%) and Exports 10.7% yr/yr (expected 7.3%; last 6.7%)
    • India's December CPI 5.22% yr/yr (expected 5.30%; last 5.48%)
    • Australia's December MI Inflation Gauge 0.6% m/m (last 0.2%). December ANZ Job Advertisements 0.3% m/m (last -1.8%)
    • New Zealand's November Building Consents 5.3% m/m (last -5.2%)
  • In news:
    • The Bank of Japan is reportedly still considering a rate hike and an increase to its inflation forecast at the policy meeting scheduled for the end of next week.
    • The People's Bank of China increased its cross-border macro-prudential parameter for the first time since mid-2023 to give domestic companies greater access to foreign capital.
    • South Korea's exports through the first ten days of January were up 3.8% with chip exports jumping 23.8%.
    • China reported a larger than expected trade surplus for December thanks to above-consensus growth in imports and exports.
• Major European indices trade in the red with Italy's MIB (-1.3%) leading the region lower with auto/truck makers and financials at the forefront of the selling. STOXX Europe 600: -0.9%, Germany's DAX: -0.8%, U.K.'s FTSE 100: -0.9%, France's CAC 40: -0.8%, Italy's FTSE MIB: -1.3%, Spain's IBEX 35: -0.5%.
  • In economic data:
    • Swiss December SECO Consumer Climate -30 (expected -38; last -37)
  • In news:
    • Sovereign debt is also under pressure with Italy's and Germany's 10-yr yield rising twelve and three basis points, respectively, even though European Central Bank Chief Economist Lane said that more easing is likely on the way from the ECB.
    • The U.K.'s 10-yr yield is also creeping higher alongside continued weakness in the pound, which is on the verge of falling to its lowest level against the dollar since early 2023.
    • British Chancellor Reeves said during a weekend trip to Beijing that the October budget is "non-negotiable."