Stock Market Update

The S&P 500 futures are down 26 points and are trading 0.4% below fair value, the Nasdaq 100 futures are down 120 points and are trading 0.6% below fair value, and the Dow Jones Industrial Average futures are down 144 points and are trading 0.3% below fair value.

There's a negative bias in early trading. Participants are taking a pause after a big run of late due to an emerging view that stocks are overbought in the short-term. 

Trade developments continue to lead headlines after President Trump said that India offered to remove all tariffs on goods from the U.S., according to Bloomberg.

There's a big slate of economic data to get through this morning, including the Producer Price Index (PPI) for April and the Retail Sales report for April at 8:30 ET. Weekly jobless claims, the May Empire State Manufacturing Survey, and the May Philadelphia Fed Index are also released at 8:30 ET.

April Industrial Production and Capacity Utilization are out at 9:15 ET, March Business Inventories and the May NAHB Housing Market Index are out at 10:00 ET.

The 10-yr yield is down two basis points to 4.51% and the 2-yr yield is down two basis points to 4.03%.

In corporate news:

• Walmart (WMT 99.00, +2.17, +2.2%): beats by $0.03, reports revs in-line, U.S. comps up 4.5%; reaffirms FY26 EPS guidance and net sales guidance
• Foot Locker (FL 23.70, +10.83, +84.2%): DICK'S Sporting Goods (DKS) confirms it will acquire Foot Locker (FL); FL shareholders can elect to receive either $24.00 in cash or 0.1168 shares of DICK'S Sporting Goods common stock for each share of Foot Locker common stock
• Cisco (CSCO 63.34, +2.05, +3.3%): beats by $0.04, reports revs in-line; guides Q4 EPS above consensus, mid-point of revs above consensus; announces that Scott Herren has decided to retire as Executive Vice President and CFO effective July 26, 2025; Appoints Mark Patterson, Executive Vice President and Chief Strategy Officer, to succeed Mr. Herren
• Deere (DE 497.50, 0.0, 0.0%): beats by $1.08, beats on revs; lowers FY25 net income guidance
• Alibaba (BABA 126.65, -7.40, -5.5%): misses by $0.04, misses on revs; approves special dividend
• UnitedHealth (UNH 288.10, -19.91, -6.5%): under criminal investigation for alleged Medicare fraud, according to WSJ

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region ended Thursday on a mixed note. Japan's Nikkei: -1.0%, Hong Kong's Hang Seng: -0.8%, China's Shanghai Composite: -0.7%, India's Sensex: +1.5%, South Korea's Kospi: -0.7%, Australia's ASX All Ordinaries: +0.1%.
  • In economic data:
    
    • Japan's April Machine Tool Orders 7.7% yr/yr (last 11.4%)
    • South Korea's April trade surplus $4.88 bln, as expected (last surplus of $4.92 bln). April Imports -2.7% yr/yr, as expected (last 2.3%) and Exports 3.7% yr/yr, as expected (last 3.0%)
    • Australia's April Employment Change 89,000 (expected 20,900; last 36,400) and full employment change 59,500 (last 12,200). April Unemployment Rate 4.1%, as expected (last 4.1%) and April Participation Rate 67.1% (expected 66.8%; last 66.8%). April MI Inflation Expectations 4.1% (last 4.2%)
    • New Zealand's April FPI 0.8% m/m (last 0.5%)
  • In news:
    • Japanese automakers underperformed amid reports that Japan may agree to re-import vehicles made in the United States into Japan.
    • Japan's trade negotiator Akazawa will visit Washington for trade talks next week.
    • China Securities Journal noted that analysts see room for more reserve requirement ratio cuts by the end of the year.
    • Officials from South Korea and the U.S. reportedly discussed foreign exchange policy during a meeting on May 5.
• Major European indices are mixed amid some profit taking from the recent advance. STOXX Europe 600: +0.1%, Germany's DAX: +0.1%, U.K.'s FTSE 100: +0.2%, France's CAC 40: -0.2%, Italy's FTSE MIB: -0.2%, Spain's IBEX 35: +0.4%.
  • In economic data:
    • Eurozone's Q1 GDP 0.3% qtr/qtr (expected 0.4%; last 0.2%); 1.2% yr/yr, as expected (last 1.2%). Q1 Employment Change 0.3% qtr/qtr (expected 0.1%; last 0.1%); 0.6% yr/yr (expected 0.8%; last 0.7%). March Industrial Production 2.6% m/m (expected 1.9%; last 1.1%); 3.6% yr/yr (expected 2.5%; last 1.0%)
    • Germany's April WPI -0.1% m/m (expected +0.2%; last -0.2%); +0.8% yr/yr (last +1.3%)
    • U.K.'s Q1 GDP +0.7% qtr/qtr (expected +0.6%; last +0.1%); +1.3% yr/yr (expected +1.2%; last +1.5%). Q1 Business Investment +5.9% qtr/qtr (expected +0.4%; last -1.9%); +8.1% yr/yr (last +1.8%). March Industrial Production -0.7% m/m (expected -0.6%; last +1.7%); -0.7% yr/yr (expected -0.9%; last +0.4%). March Manufacturing Production -0.8% m/m (expected -0.8%; last +2.4%); -0.8% yr/yr (expected -0.5%; last +0.5%). March Construction Output +0.5% m/m (expected +0.2%; last +0.2%); +1.4% yr/yr (expected +1.2%; last +1.4%). March trade deficit GBP19.87 bln (expected deficit GBP19.10 bln; last deficit GBP20.96 bln)
    • France's April CPI +0.6% m/m (expected +0.5%; last +0.2%); +0.8% yr/yr (expected +0.8%; last +0.8%).
    • Swiss April PPI +0.1% m/m (expected +0.2%; last +0.1%); -0.5% yr/yr (last -0.1%)
  • In news:
    • European Central Bank Vice President de Guindos underscored the persistent concerns today, warning that escalating trade tensions could lead to a trade war with "significant negative consequences for global growth, inflation and asset prices."
    • U.K.'s Q1 GDP showed stronger-than-expected growth, but that is being overshadowed by concerns about the near future.
    • German utility RWE reaffirmed its 2025 outlook while insurer Allianz reported a fall in first-quarter net profit.