Stock Market Update

Equity futures point to a modestly higher opening this morning after yesterday's rally pushed the S&P 500 and Nasdaq Composite to fresh record highs, while the DJIA briefly reclaimed the 50,000 mark. Stocks were supported by another largely positive round of earnings reports, including several major semiconductor names, while additional AI-related announcements and partnerships added to the enthusiasm.

The market also received broad support from a sharp retreat in oil prices, as reports signaled the U.S. and Iran could be moving closer to striking a peace deal. The Wall Street Journal reports that the U.S. & Iran could hold talks in Pakistan next week, but major disagreements remain over nuclear enrichment limits.

In the meantime, investors are assessing another wave of earnings reports while waiting on a few economic data releases this morning.

In addition to the weekly initial jobless claims report (Briefing.com consensus 205K), the market will receive the preliminary Q1 Productivity reading (Briefing.com consensus 1.8%) and Unit Labor Costs (Briefing.com consensus 2.7%), followed by March Construction Spending (Briefing.com consensus 0.2%), and finally March consumer Credit (Briefing.com consensus $12.5 billion) this afternoon.

In corporate news:

• The U.S. and China are considering starting AI-focused talks, according to The Wall Street Journal.
• Arm Holdings (ARM 220.47, -16.83, -7.1%) beat EPS expectations by $0.02, beat revenue expectations, and guided Q1 EPS in-line, with revenues above consensus.
• Applovin (APP 474.74, +5.91, +1.3%) beat EPS expectations by $0.12, beat on revenues, and guided Q2 revenues above consensus.
• DoorDash (DASH 184.80, +16.83, +10.02) beat EPS expectations by $0.06, missed on revenues, and reported adjusted EBITDA in-line with prior guidance.

Reviewing overnight developments:

Equity indices in the Asia-Pacific region had a strong showing on Thursday with Japan's Nikkei (+5.7%) reaching a fresh record after returning from this week's holidays. Japan's Nikkei: +5.7%, Hong Kong's Hang Seng: +1.6%, China's Shanghai Composite: +0.5%, India's Sensex: -0.2%, South Korea's Kospi: +1.4%, Australia's ASX All Ordinaries: +1.0%.

In news:

• Berkshire Hathaway has built voting stakes in two of Japan's five trading houses.
• Japan's officials indicated that they do not agree with the IMF's "rule" that limits the number of interventions in a six-month period.
• On a related note, top Japanese officials, including Prime Minister Takaichi, are expected to speak with Treasury Secretary Bessent next week.
• Indonesia is setting up a plan to stabilize its bond market.

In economic data: 

• Japan's April Monetary Base -11.3% yr/yr (expected -10.5%; last -11.6%) o Australia's March trade deficit AUD1.84 bln (expected surplus of AUD4.38 bln; last surplus of AUD5.026 bln). March Imports 14.1% m/m (last -2.7%) and Exports -2.7% m/m (last 4.2%)

Major European indices trade with modest losses while U.K.'s FTSE (-0.6%) lags. STOXX Europe 600: -0.3%, Germany's DAX: -0.3%, U.K.'s FTSE 100: -0.6%, France's CAC 40: -0.2%, Italy's FTSE MIB: -0.1%, Spain's IBEX 35: +0.1%.

In news:

• Today's local elections are expected to be a setback for the Labour government, which has been steadily losing support since taking power in mid-2024.
• Germany reported strong Factory Orders growth for March (5.0%), fueling hopes for some improvement in the country's struggling manufacturing sector.
• Airbus received an order for 150 aircraft from AirAsia.
• Norges Bank unexpectedly increased its policy rate to 4.25% from 4.00% due to inflation while Riksbank left its policy rate at 1.75% but indicated readiness to act.

In economic data:

• Eurozone's March Retail Sales -0.1% m/m (expected -0.3%: last -0.3%); 1.2% yr/yr (expected 1.0%; last 1.3%). April Construction PMI 41.7 (last 44.6)
• Germany's March Factory Orders 5.0% m/m (expected 1.0%; last 1.4%)
• U.K.'s April Construction PMI 39.7 (expected 45.8; last 45.6)
• France's March trade deficit EUR6.9 bln (expected deficit of EUR6.7 bln; last deficit of EUR5.5 bln) and March Current Account deficit EUR8.20 bln (last deficit of EUR1.50 bln)
• Swiss April Unemployment Rate 3.0%, as expected (last 3.0%)