Stock Market Update

The stock market is on track for a modestly lower open with futures on the S&P 500 trading eight points below fair value.

Tariff-related issues have remained at the forefront of the narrative since yesterday's close, as The Wall Street Journal reported that the Trump administration is preparing to impose stopgap tariffs up to 15% for 150 days after the Court of International Trade blocked the broader tariff effort. This serves as a reminder that the president is not willing to give up that easily on a major element of his agenda.

Besides the tariff news, overnight action featured a heavy batch of data, including hotter-than-expected Tokyo Core CPI (3.6%; expected 3.5%) and above-consensus April retail sales from Japan (3.3%; expected 2.9%). However, Germany's April Retail Sales report (-1.1%; expected 0.2%) missed estimates.

Treasuries are little changed following yesterday's bounce with the 10-yr yield flat at 4.42% ahead of the 8:30 ET release of the Personal Income/Outlays report for April, which will factor into rate expectations.

In U.S. corporate news:

• American Eagle (AEO 10.47, -0.71, -6.4%): missed Q1 EPS expectations and issued below-consensus revenue guidance for Q2.
• Costco (COST 1007.80, -0.94, -0.1%): beat Q3 EPS expectations.
• Dell (DELL 114.58, +0.95, +0.8%): missed Q1 EPS expectations, issued above-consensus guidance for Q2, and above-consensus EPS guidance for FY26.
• Gap (GAP 23.90, -4.05, -14.5%): beat Q1 expectations, issued in-line revenue guidance for Q2, and reaffirmed its revenue guidance for FY26.
• Rigetti Computing (RGTI 12.50, -0.65, -4.9%): entered into a $350 mln open market sale agreement.
• Zscaler (ZS 260.75, +9.64, +3.8%): beat Q3 expectations and issued mixed guidance for Q4.

Reviewing overnight developments:

• Asian markets ended lower. Japan's Nikkei -1.2%, Hong Kong's Hang Seng -1.2%, China's Shanghai Composite -0.5%.
  • In economic data:
    • Japan's May Tokyo CPI 3.4% (last 3.4%) and Tokyo Core CPI 3.6% y/yr (expected 3.5%; last 3.4%). April Unemployment Rate 2.5%, as expected (last 2.5%). April Industrial Production -0.9% m/m (expected -1.4%; last 0.2%), April Retail Sales 3.3% yr/yr (expected 2.9%; last 3.1%), April Housing Starts -26.6% yr/yr (expected -18.2%; last 39.1%) and Construction Orders 52.7% yr/yr (last 3.5%)
    • South Korea's April Industrial Production -0.9% m/m (expected 0.5%; last 2.9%); +4.9% yr/yr (expected 4.2%; last 5.3%). April Retail Sales -0.9% m/m (last -1.0%), April Service Sector Output -0.1% m/m (last -0.3%)
    • India's Q4 GDP quarterly 7.4% yr/yr (expected 6.7%; last 6.2%); annual GDP 6.5% (last 8.2%)
    • Australia's April Building Approvals -5.7% m/m (expected 3.1%; last -7.1%); 5.1% yr/yr (last 11.1%). April Private Sector Credit 0.7% m/m (expected 0.5%; last 0.5%), April Housing Credit 0.5% m/m (last 0.4%), and April Retail Sales -0.1% m/m (expected 0.3%; last 0.3%)
    • New Zealand's April Building Consents -15.6% m/m (last 10.7%)
  • In news:
    • Japan's top trade negotiator is visiting Washington today and there was speculation that an announcement about a trade agreement could be made shortly after Wall Street closes for the day.
    • Toyota is planning a 10% yr/yr increase to its global output for Q3.
• Major European indices trade higher. Germany's DAX +0.6%, U.K.'s FTSE +0.6%, France's CAC +0.3%.
  • In economic data:
    • Eurozone's April Private Sector Loans 1.9% yr/yr (expected 1.8%; last 1.7%)
    • Germany's April Retail Sales -1.1% m/m (expected 0.2%; last 0.9%); 2.3% yr/yr (expected 1.8%; last 1.3%)
    • Italy's Q1 GDP 0.3% qtr/qtr, as expected (last 0.2%); 0.7% yr/yr (expected 0.6%; last 0.5%). Flash May CPI 0.0% m/m (expected 0.1%; last 0.1%); 1.7% yr/yr, as expected (last 1.9%). April PPI -2.2% m/m (last -2.4%); 2.6% yr/yr (last 3.9%)
    • Spain's flash May CPI 0.0% m/m (expected 0.1%; last 0.6%); 1.9% yr/yr (expected 2.1%; last 2.2%). May Core CPI 2.1% yr/yr (last 2.4%). March Current Account surplus EUR1.42 bln (last EUR2.31 bln)
    • Swiss May KOF Leading Indicators 98.5 (expected 98.3; last 97.1)
  • In news:
    • European Central Bank policymaker Panetta said that there is reduced room to cut rates, but the macroeconomic outlook remains weak and could be worsened by trade tensions.
    • Bank of England policymaker Taylor spoke in favor of lower rates, saying that downside risks are building.