Stocks Set to Extend Rebound Amid AI Dip-Buying

June S&P 500 E-Mini futures (ESM26) are up +0.46%, and June Nasdaq 100 E-Mini futures (NQM26) are up +0.69% this morning as a rebound in the AI trade entered a second day.

Stock index futures were supported by gains in most of the Magnificent Seven stocks as well as chip and AI infrastructure names in pre-market trading, as investors continued to buy the dip.

Sentiment got a further boost from falling oil prices as WTI dropped over -2% on Tuesday after Israel and Iran agreed to end attacks against each other. U.S. President Donald Trump told reporters early Tuesday that a peace deal with Tehran remains within reach and could be finalized “in two or three days.”

Treasuries edged higher as traders scaled back bets on Fed rate hikes, with the benchmark 10-year yield falling one basis point to 4.56%.

In yesterday’s trading session, Wall Street’s main stock indexes ended mostly higher. Chip stocks climbed, with Intel (INTC) surging over +11% to lead gainers in the S&P 500 and Nasdaq 100 after The Information reported that Alphabet’s Google chose the company to manufacture 3 million TPUs in 2028. Also, Marvell Technology (MRVL) advanced more than +9% after S&P Dow Jones Indices announced on Friday that the stock would join the S&P 500 on June 22nd. In addition, Cerebras Systems (CBRS) popped over +18% after multiple brokerages initiated coverage of the stock with bullish ratings. On the bearish side, Cien Corp. (CIEN) slid more than -4% and was among the top percentage losers on the S&P 500 after the company said it plans to offer $2 billion worth of convertible senior notes due 2031 in a private placement.

“We do not expect investors to lose confidence in the AI outlook. Although tech stocks have come under pressure in recent days amid concerns about whether expectations can be met, business fundamentals remain strong,” said Mark Haefele at UBS Global Wealth Management. 

Meanwhile, Bloomberg reported on Monday that SpaceX’s initial public offering is heavily oversubscribed, as demand intensifies for a potentially record-setting debut. Pricing is expected on Thursday, with trading set to begin on the Nasdaq the following day. Elon Musk’s rocket and AI company is offering 555.6 million shares at $135 apiece, which would raise roughly $75 billion and value it at around $1.8 trillion.

Today, investors will focus on the National Association of Realtors’ existing home sales data, set to be released in a couple of hours. Economists foresee this figure coming in at 4.07 million in May, compared to 4.02 million in April.

U.S. Trade Balance data will also be released today. Economists forecast that the trade deficit will narrow to -$56.2 billion in April from -$60.3 billion in March.

U.S. Wholesale Inventories data will be released today as well. Economists anticipate that the final April figure will be revised higher to +0.6% m/m from the preliminary reading of +0.5% m/m.

Attention will then shift to the U.S. consumer inflation report for May due on Wednesday, which should offer investors further clues on whether the Fed will raise rates this year. The report comes after last Friday’s surprisingly strong jobs data prompted traders to boost bets on a Fed rate hike by year-end.

U.S. rate futures have priced in a 96.7% chance of no rate change and a 3.3% chance of a 25 basis point rate cut at the conclusion of the Fed’s June meeting.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.56%, down -0.26%.

The Euro Stoxx 50 Index is up +0.76% this morning as sentiment improved after Israel and Iran agreed to end attacks against each other. Bank stocks led the gains on Tuesday. Italy’s financial sector has been in focus this week after Monte dei Paschi di Siena received two takeover bids from rivals Intesa and Banco BPM, as the banks aimed to expand their market share in the Eurozone’s financial industry. Also, technology stocks extended their rebound as cheaper valuations attracted investors. At the same time, healthcare stocks slid, with GSK Plc (GSK.LN) dropping over -3% after the British drugmaker agreed to buy Nuvalent in a deal valued at $10.6 billion. Data from the federal statistics office released on Tuesday showed that Germany’s monthly industrial production rebounded slightly in April, supported by recent gains in new orders after companies built up inventories to prepare for sharply higher energy prices triggered by the Middle East conflict. Separate data showed that German exports unexpectedly rose in April from the previous month. Meanwhile, market participants are bracing for the European Central Bank’s monetary policy decision on Thursday, where the central bank is widely expected to raise the deposit rate by 25 basis points to 2.25%, with attention centered on any signals about the likely timing of future rate hikes. In other corporate news, UBS Group AG (UBSG.Z.IX) rose over +2% after Reuters reported that Swiss lawmakers are weighing a new proposal to ease capital requirements on the lender.

Germany’s Exports and Industrial Production data were released today.

The German April Exports unexpectedly rose +0.9% m/m, stronger than expectations of -0.3% m/m.

The German April Industrial Production rose +0.4% m/m, in line with expectations.

Asian stock markets today closed in the green. China’s Shanghai Composite Index (SHCOMP) closed up +1.28%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +2.17%.

China’s Shanghai Composite Index closed higher today, buoyed by a rebound in tech stocks. Semiconductor and other AI-related stocks jumped on Tuesday as investors stepped in to buy the dip following Monday’s selloff. Sentiment was also aided by China’s solid trade data and news that Israel and Iran agreed to end attacks against each other. China’s export growth picked up in May, driven by strong demand for chips, autos, and other high-tech goods powering the global AI boom. That strength in exports should help offset some of the weakness in domestic demand in the nation’s economy. Meanwhile, imports notched a strong month as well, signaling some improvement in domestic demand. Zhiwei Zhang at Pinpoint Asset Management said that stronger-than-expected trade data underscore the continued competitiveness of Chinese companies in the international market. In corporate news, WuXi AppTec fell over -2% after the U.S. Defense Department added the company to its list of entities considered to have links to Beijing’s military. Investor attention is now squarely on China’s key inflation gauges for May, scheduled for release on Wednesday. Economists expect China’s consumer inflation to pick up slightly, while producer prices are projected to accelerate to their fastest pace in nearly four years.

The Chinese May Trade Balance arrived at $105.43 billion, stronger than expectations of $92.1 billion.

The Chinese May Exports surged +19.4% y/y, stronger than expectations of +15.0% y/y.

The Chinese May Imports jumped +27.4% y/y, stronger than expectations of +25.0% y/y.

Japan’s Nikkei 225 Stock Index closed higher today, snapping a three-session losing streak as dip buyers returned to the AI ​​trade. Semiconductor-related stocks bounced back on Tuesday after a selloff in the previous session, mirroring a rebound in their U.S. peers overnight. Chip-making equipment maker Tokyo Electron surged nearly +9% and chip-testing equipment maker Advantest climbed more than +4%, becoming the largest contributors to the Nikkei’s advance. Sentiment was also supported by easing tensions in the Middle East. Meanwhile, Japanese government bonds climbed on Tuesday after Reuters reported that the Bank of Japan will consider keeping the current pace of bond purchases beyond the next fiscal year. Elsewhere, Japanese Finance Minister Satsuki Katayama said on Tuesday that there has been no change in Tokyo’s position that authorities stand ready to take decisive action against foreign exchange volatility. Investor focus is now on Japan’s PPI data, scheduled for release on Wednesday, which is expected to show that cost pressures on companies remained elevated in May. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed up +0.59% to 32.65.

Pre-Market U.S. Stock Movers

Chip stocks advanced in pre-market trading, with Marvell Technology (MRVL) and Micron Technology (MU) rising over +3%.

Most members of the Magnificent Seven stocks edged higher in pre-market trading, with Meta Platforms (META) gaining more than +1% and Alphabet (GOOGL) rising about +0.6%.

Applied Digital (APLD) jumped over +11% in pre-market trading after the company entered into a lease agreement for an AI data center campus with a U.S.-based hyperscaler.

FuelCell Energy (FCEL) surged nearly +10% in pre-market trading after Canaccord upgraded the stock to Buy from Hold with a price target of $30.

Vail Resorts (MTN) slid more than -4% in pre-market trading after the mountain resorts company reported weaker-than-expected FQ3 EPS and cut its full-year guidance.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Tuesday - June 9th

Casey’s General Stores (CASY), The J. M. Smucker Company (SJM), SailPoint (SAIL), Uranium Energy (UEC), Academy Sports and Outdoors (ASO), United Natural Foods (UNFI), IperionX (IPX), Cracker Barrel Old Country Store (CBRL), Suja Life (SUJA), Titan Machinery (TITN), Designer Brands (DBI), Lands’ End (LE), Limoneira Company (LMNR), Atrium Therapeutics (RNA), Domo, Inc. (DOMO), One and one Green Technologies (YDDL).