Futures are Signaling a Muted Open for Wall Street as Investors Weigh Economic Outlook

June S&P 500 futures (ESM23) are down -0.08%, and June Nasdaq 100 E-Mini futures (NQM23) are down -0.06% this morning after three major U.S. benchmark indices finished the regular session lower as weaker-than-expected U.S. economic data stoked investor concerns about the health of the economy.

In Monday’s trading session, EPAM Systems Inc (EPAM) tumbled over -21% and was the top percentage loser on the benchmark S&P 500 after the company lowered its Q2 and FY23 guidance. Also, Intel Corporation (INTC) plunged more than -4% and was the top percentage loser on the blue-chip Dow after Apple Inc (AAPL) announced that an upcoming Mac Pro computer would include a new chip made in-house. In addition, energy stocks, including oil majors Chevron Corp (CVX) and Exxon Mobil Corp (XOM), retreated after oil prices pared earlier gains as concerns over the demand outlook overshadowed Saudi Arabia’s decision to cut production by another 1M barrels per day. On the positive side, Palo Alto Networks Inc (PANW) climbed more than +4% as the software company is tipped to replace DISH Network (DISH) in the S&P 500 from June 20th.

Data on Monday showed the U.S. ISM Non-Manufacturing PMI unexpectedly fell to a 5-month low of 50.3 in May, weaker than expectations of 51.8. Also, the seasonally adjusted final S&P Global U.S. Services PMI came in at 54.9 in May, weaker than expectations of 55.1. In addition, U.S. April Factory Orders rose +0.4% m/m, but the increase was lower than the forecasted figure of +1.1% m/m.

“Some slowing in these services measures leaves the Fed in a good position to end the rate hike cycle at the upcoming meeting, but they will want to see more progress before backing away from hawkish guidance on future policy moves,” Jefferies said in a note.

Meanwhile, U.S. rate futures have priced in a 76.0% probability of no hike and a 24.0% chance of a 25 basis point rate increase at the June meeting.

The U.S. economic data slate is mainly empty on Tuesday.

In the bond markets, United States 10-Year rates are at 3.660%, down -0.87%.

The Euro Stoxx 50 futures are down -0.28% this morning as investors worried about slowing global economic growth and future central bank policy decisions. European technology stocks are under pressure today, tracking losses on Wall Street after Apple Inc. unveiled its new mixed-reality headset at a relatively high price. Meanwhile, ECB President Christine Lagarde said Monday that it was too early to call a peak in core inflation despite “signs of moderation.” Also, Dutch central bank chief Klaas Knot said Tuesday that Eurozone core inflation is stubborn while noting that monetary policy is displaying indications of effectiveness. Knot emphasized the need for a gradual approach to further interest rate hikes. In corporate news, shares of Novo Nordisk A/S (NOVOB.C.DX) climbed over +4% after the Danish drug developer said it had started talks to buy a controlling stake in medical device designer Biocorp.

Germany’s Factory Orders, Spain’s Industrial Production, U.K.’s Construction PMI, and Eurozone’s Retail Sales data were released today.

The German April Factory Orders stood at -0.4% m/m, stronger than expectations of -2.2% m/m.

The Spanish April Industrial Production has been reported at -0.9% y/y, weaker than expectations of +1.7% y/y.

U.K. May Construction PMI was at 51.6, stronger than expectations of 51.0.

Eurozone April Retail Sales came in at 0.0% m/m and -2.6% y/y, compared to expectations of +0.2% m/m and -3.1% y/y.

Asian stock markets today settled mixed. China’s Shanghai Composite Index (SHCOMP) closed down -1.15%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.90%.

China’s Shanghai Composite today closed sharply lower amid concerns over the health of the U.S. economy while investors awaited the release of Chinese trade data for May. Meanwhile, the China Securities Journal reported Tuesday that the country would likely implement additional cuts to banks’ reserve ratio and interest rates in the second half of this year to shore up the economy, citing policy advisers and economists. In addition, meetings between senior U.S. and Chinese officials in China this week helped soothe geopolitical concerns, with both sides agreeing to maintain communication lines. At the same time, China property stocks listed in Hong Kong surged on Tuesday on speculation of new supportive measures for the embattled sector. Focus is now squarely on China’s trade data due on Wednesday.

The Reserve Bank of Australia unexpectedly raised its benchmark rate by 25 basis points to 4.1%, the highest level since April 2012. The RBA also warned that inflation was still too high and some further tightening of monetary policy may be required to ensure inflation returns to target.

At the same time, Japan’s Nikkei 225 Stock Index closed higher for the fourth straight day, ending at a new 33-year high. Government data showed on Tuesday that the country’s household spending fell more than expected in April, while overall wage income remained weak, bolstering expectations that the Bank of Japan will maintain its ultra-loose monetary policy. Meanwhile, trading houses and the operator of Uniqlo, Fast Retailing, gained ground on technical support for heavyweight stocks as the fixing of special quotation prices on June 9th approached. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up 8.72% to 21.81.

The Japanese April Household Spending stood at -1.3% m/m and -4.4% y/y, weaker than expectations of +1.5% m/m and +0.4% y/y.

The Japanese April Overall Wage Income of Employees came in at +1.0%, stronger than expectations of +0.5%.

Pre-Market U.S. Stock Movers

Gitlab Inc (GTLB) surged more than +27% in pre-market trading after the company reported upbeat Q1 results and raised its FY24 guidance.

Mobileye Global Inc (MBLY) slid over -5% in pre-market trading after the company announced the commencement of a secondary stock offering of up to 35M of its class A shares. 

Lennox International Inc (LII) gained more than +1% in pre-market trading after KeyBanc upgraded the stock to Overweight from Sector Weight.

DTE Energy Company (DTE) rose over +1% in pre-market trading after UBS upgraded the stock to Buy from Neutral.

AMC Networks Inc (AMCX) dropped about -1% in pre-market trading after Morgan Stanley downgraded the stock to Underweight from Equal Weight.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Tuesday - June 6th

Ferguson (FERG), JM Smucker (SJM), Caseys (CASY), Ciena Corp (CIEN), Core Main (CNM), Thor Industries (THO), Academy Sports (ASO), ABM Industries (ABM), Cracker Barrel Old (CBRL), Hello Group (MOMO), Dave & Buster’s Entertainment (PLAY), Yext (YEXT), Couchbase (BASE), G-III Apparel (GIII), Chicos FAS (CHS), Calavo Growers (CVGW), Stitch Fix (SFIX), Limoneira (LMNR), Quantum (QMCO), Orion Energy (OESX).

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