Stock Market Update

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

The early advance in futures reflects some guarded optimism about the lack of U.S. involvement in the Israel-Iran conflict, though the potential for a change in the situation remains in place.

The market is also looking forward to today's FOMC announcement at 14:00 ET, which is not expected to call for a rate cut, but Fed Chairman Powell's press conference at 14:30 ET could influence the market's expectations for the timing of the next cut. The CME Fedwatch tool currently points to a 63.3% implied likelihood of a rate cut being announced in September.

Participants received a couple of economic reports this morning, including May Housing starts, which declined 9.8% month-over-month to a seasonally adjusted annual rate of 1.256 million units (Briefing.com consensus 1.356 million), while building permits declined 2.0% month-over-month to a seasonally adjusted annual rate of 1.393 million (Briefing.com consensus 1.411 million).

The key takeaway from the report is that housing starts are weak, sitting at their lowest level since May 2020; moreover, a 2.7% month-over-month decline in single-unit permits doesn't connote an encouraging outlook for starts.

Separately, initial jobless claims for the week ending June 14 decreased by 5,000 to 245,000 (Briefing.com consensus 253,000), while continuing jobless claims for the week ending June 7 decreased by 6,000 to 1.945 million.

The key takeaway from the report is that it covers the week in which the survey for the June employment report is conducted, and with initial jobless claims still at a relatively low level, there will be a basis for economists to expect another decent gain in nonfarm payrolls (all things considered).

Steel stocks are set for a mixed start after Nucor (NUE 125.00, +2.80, +2.3%) issued above-consensus guidance for Q2 while Steel Dynamics (STLD 130.60, -2.56, -1.9%) issued below-consensus guidance for Q2.

Treasuries started the day in positive territory, sending the 10-yr yield lower by two basis points to 4.37%.