Stock Market Update

The S&P 500 futures are down 36 points and are trading 0.6% below fair value, the Nasdaq 100 futures are down 138 points and are trading 0.6% above fair value, and the Dow Jones Industrial Average futures are down 292 points and are trading 0.7% below fair value.

Follow-through selling today, on the heels of yesterday's soft finish that was influenced by festering trade concerns and geopolitical angst, is being attributed to many of the same factors. Sadly, a crash of an Air India 787 Dreamliner shortly after takeoff is also looming over the equity futures market, as Boeing (BA) is indicated 7.4% lower and GE Aerospace (GE) is indicated 5.1% lower.

Things would be worse, but Oracle (ORCL), which is up 9.0% after its earnings report, has helped mitigate some of the selling pressure.

Separately, there has been a good bit of attention on comments from President Trump, who, according to Bloomberg, said the U.S. will be sending letters in about a week and a half or two to countries, "telling them what the deal is" and that they can take it or leave it. That proclamation is stirring concerns about higher reciprocal tariff rates kicking in again for countries that do not strike a deal with the U.S. ahead of the July 8 deadline, although the president said he would be open to extending deadlines to countries negotiating in good faith before adding that he didn't think we're going to have that necessity.

On top of that, the market is cognizant that the U.S.-China trade framework agreement is still wrapped in uncertainty, as both sides are holding export control restrictions in their pocket as pressure points if they feel the other side isn't living up to the agreement.

Today's economic calendar features a combination of influential reports in the form of the May Producer Price Index and Weekly Initial and Continuing Jobless Claims. Both will be released at 8:30 a.m. ET. There will also be a $22 bln 30-yr bond reopening at 1:00 p.m. ET.

The 2-yr note yield is down two basis points to 3.92%, and the 10-yr note yield is down four basis points to 4.37%. The U.S. Dollar Index is down 0.7% to 97.93.

In corporate news:

• Boeing (BA 198.25, -15.75, -7.4%): Air India confirms that flight AI171, from Ahmedabad to London Gatwick, was involved in an accident today after takeoff
• Cardinal Health (CAH 153.58, +0.05, +0.03%) raises FY25 non-GAAP diluted EPS guidance; establises preliminary FY26 non-GAAP diluted EPS guidance in-line
• Oracle (ORCL 192.30, +15.92, +9.0%): beats by $0.06, beats on revs; issues in-line EPS and revenue guidance for Q1
• Salesforce.com (CRM 263.85, -2.06, -0.8%) blocked AI competitors from using Slack data, according to The Information

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region were mostly lower Thursday. Japan's Nikkei -0.7%; Hong Kong's Hang Seng -1.4%; China's Shanghai Composite flat; India's Sensex -1.1%; South Korea's Kospi +0.5%; and Australia's All Ordinaries -0.3%.
  • In economic data:
    • Japan's Q2 BSI Large Manufacturing COnditions -4.8 (expected 0.8; last -2.4)
    • Hong Kong's Q1 PPI 4.8% (last 4.1%); Q1 Industrial Production 0.7% yr/yr (last 0.9%)
  • In news:
    • South Korea's Kospi (+0.5%) was an outlier, recording its seventh straight gain as Governor Rhee called for more fiscal stimulus to support the economy, according to Yonhap News.
    • Misgivings about the U.S. and China living up to their trade agreement, given that both sides appear to be maintaining export control restrictions as leverage.
    • President Trump suggested the U.S. could raise tariffs unilaterally again if the July 8 deadline arrives and countries are not negotiating in good faith to strike a deal, according to Bloomberg.
    • The Reserve Bank of India plans to use its cash reserve ratio more frequently as a monetary policy tool, according to Reuters.
    • Japan's Prime Minister Ishiba refuted the idea that his government is looking into a cash payout proposal, according to Nikkei.
    • Air India, sadly, reported a crash of one of its planes (a Boeing 787 Dreamliner) shortly after takeoff on a flight from Ahmedabad.
• Major European indices are losing ground, tracking with the softness seen in the U.S. market. STOXX Europe 600 -0.8%; Germany's DAX -1.2%; U.K.'s FTSE 100 -0.1%; France's CAC 40 -0.7%; Italy's FTSE MIB -1.1%; Spain's IBEX 35 -0.9%.
  • In economic data:
    • UK's April GDP -0.3% m/m (expected -0.1%; last 0.2%) and 0.9% yr/yr (last 1.1%; April Industrial Production -0.6% m/m (expected -0.4%; last -0.7%) and -0.3% yr/yr (expected -0.2%; last -0.7%); April Construction Output 0.9% m/m (expected 0.3%; last 0.5%); April Manufacturing Production -0.9% m/m (expected -0.8%; last -0.8%); April Trade Balance GBP -23.21B (expected GBP -20.80B; last GBP -19.87B)
    • Italy's Quarterly Unemployment Rate 6.1% (expected 6.0%; last 6.1%)
  • In news:
    • Trade worries, ostensibly, are a driving factor following President Trump's proclamation that the U.S. will send letters in one to two weeks to countries "telling them what the deal is," according to Bloomberg, stirring concerns about the seemingly delayed negotiating process with the EU and the specter of higher tariff rates.
    • Some weaker-than-expected data for April out of the UK has sparked some growth concerns.
    • The euro and the pound are up against the dollar, with the euro showing some stark strength (EUR/USD +0.9% to 1.1590) that has it at a nearly four-year high. Notably, there is some attention on Lipper data showing robust inflows into European funds in May.