Nasdaq Futures Climb as Chip Stocks Rebound Ahead of First Fed Decision Under Warsh

June Nasdaq 100 E-Mini futures (NQM26) are up +0.54% this morning, signaling a rebound from yesterday’s selloff, while investors await the first Federal Reserve rate decision under Kevin Warsh.

Nasdaq 100 futures were buoyed by a rebound in chip stocks. Micron Technology (MU), Marvell Technology (MRVL), and KLA Corp. (KLAC) rose more than +2% in pre-market trading.

The price of WTI crude steadied on Wednesday. The U.S. and Iran prepare to formally sign their interim peace agreement in Switzerland on Friday. The Wall Street Journal reported that the U.S. will lift sanctions on Iranian oil sales under the deal. The memorandum of understanding also includes lifting U.S. and Iranian blockades in the Strait of Hormuz.

In yesterday’s trading session, Wall Street’s major indexes ended mixed. Chip stocks retreated, with Marvell Technology (MRVL) slumping over -9% to lead losers in the Nasdaq 100 and Intel (INTC) falling more than -8%. Also, software stocks slid, with Atlassian Corp. (TEAM) dropping more than -3% and ServiceNow (NOW) falling over -2%. In addition, Cboe Global Markets (CBOE) sank more than -9% and was the top percentage loser on the S&P 500 after Commodity Futures Trading Commission Chair Michael Selig defended the decision to approve perpetual futures. On the bullish side, Moderna (MRNA) climbed over +6% and was among the top percentage gainers on the S&P 500 after the U.S. Food and Drug Administration released briefing documents for a June 18th meeting to discuss the company’s mFLUSIVA mRNA vaccine.

Economic data released on Tuesday showed that the U.S. import price index jumped +1.9% m/m in May, stronger than expectations of +0.9% m/m. Separately, U.S. May housing starts fell -15.4% m/m to a 6-year low of 1.177 million, weaker than expectations of 1.430 million, and building permits, a proxy for future construction, fell -0.7% m/m to 1.413 million, weaker than expectations of 1.420 million.

“We expect import prices to gradually decelerate in the second half of the year as geopolitical tensions ease and global supply conditions improve,” said Vivian Chen at Nationwide Financial.

Today, all eyes are focused on the Federal Reserve’s monetary policy decision. The Federal Open Market Committee is widely expected to leave the Fed funds rate unchanged in a range of 3.50% to 3.75% as officials assess how the Iran war’s energy-price shock is filtering through the economy. Investors will be watching for any signals on whether a rate hike is likely. Economists expect the FOMC to remove the so-called “easing bias” from its post-meeting statement and instead signal that its next policy move is just as likely to be a hike or eliminate the line in question altogether. Investors will also focus on how Warsh navigates the post-meeting press conference, his views on inflation, and how he intends to lead the central bank. In addition, the Fed will release updated projections for the economy along with its “dot plot” interest-rate forecasts, and there is speculation that Warsh may choose not to submit his dots to signal his opposition to so-called forward guidance.

“Investors will be watching the Summary of Economic Projections closely for clues on whether rate hikes are truly on the table in the second half of the year — and if so, how many. Depending on the tone and how much this meeting reshapes investor expectations, it could dictate the market’s narrative for the next several weeks, at least until earnings season takes over,” said Bret Kenwell at eToro.

On the economic data front, investors will focus on U.S. Retail Sales data, set to be released in a couple of hours. Economists, on average, forecast that Retail Sales will show a +0.5% m/m increase in May, matching the previous month’s gain.

U.S. Core Retail Sales, which exclude motor vehicles and parts, will also be closely monitored today. Economists expect the May figure to rise +0.6% m/m, following a +0.7% m/m gain in April.

The National Association of Realtors’ Pending Home Sales data will be released today. Economists project the May figure to rise +0.8% m/m following a +1.4% m/m climb in April.

The EIA’s weekly crude oil inventories report will be released today as well. Economists expect this figure to be -3.6 million barrels, compared to last week’s value of -7.2 million barrels.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.44%, down -0.22%.

The Euro Stoxx 50 Index is up +0.43% this morning, building on recent gains, while investors await details of the U.S.-Iran peace agreement and the Fed’s policy decision. Technology stocks climbed on Wednesday. Defense stocks also gained. Limiting gains, automobile stocks slumped, dragged lower by a more than -6% drop in BMW (BMW.D.DX) after the automaker cut its full-year profit guidance. Final data from Eurostat confirmed on Wednesday that the Eurozone’s annual inflation rate rose to 3.2% in May. Separately, data showed that the U.K. annual inflation rate held steady in May, surprising economists who had expected an uptick and reinforcing the view that the Bank of England will leave interest rates unchanged at its meeting on Thursday. In addition, European Central Bank data showed that Eurozone wage growth remained subdued despite the rise in energy prices stemming from the Middle East conflict. Meanwhile, Sweden’s central bank left its key policy rate unchanged at 1.75% on Wednesday but said the likelihood of a rate hike later this year has increased as the fallout from the Middle East conflict threatens to push inflation higher. Elsewhere, Barclays said it had closed its Underweight position on European stocks and boosted its target for the STOXX 600 to 670 points from 620. In corporate news, Straumann (STMN.Z.IX) surged over +9% after the dental implants maker significantly raised its annual profit guidance.

U.K. CPI, U.K. Core CPI, Eurozone’s CPI, and Eurozone’s Core CPI data were released today.

U.K. May CPI rose +0.2% m/m and +2.8% y/y, weaker than expectations of +0.4% m/m and +3.0% y/y.

U.K. May Core CPI rose +0.3% m/m and +2.6% y/y, weaker than expectations of +0.4% m/m and +2.7% y/y.

Eurozone’s May CPI rose +0.1% m/m and +3.2% y/y, in line with expectations.

Eurozone’s May Core CPI rose +0.3% m/m and +2.6% y/y, compared to expectations of +0.3% m/m and +2.5% y/y.

Asian stock markets today closed in the green. China’s Shanghai Composite Index (SHCOMP) closed up +0.40%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.72%.

China’s Shanghai Composite Index closed higher today, led by gains in the tech sector. Semiconductor stocks rallied on Wednesday. 5G communications stocks also climbed. At the same time, consumer and financial stocks slid. Investors also kept a close eye on the high-profile Lujiazui Forum in ​Shanghai. China’s central bank signaled a potential shift in its policy interest-rate framework toward the overnight rate, a move that would align it more closely with global peers. Governor Pan Gongsheng said that the People’s Bank of China will enhance its management of short-term interest rates and increase overnight reverse repurchase operations at an appropriate time. China also announced new money-market measures aimed at expanding the use of its currency among entities such as foreign central banks and sovereign wealth funds. Elsewhere, Chinese Vice Premier He Lifeng said on Wednesday that the country will vigorously and orderly advance the resolution of local government debt and further open its financial sector. In corporate news, Senasic Electronics Technology shares popped more than +127% in their Hong Kong trading debut, underscoring investors’ enthusiasm for chipmakers amid the city’s IPO boom.

Japan’s Nikkei 225 Stock Index closed higher and hit a new record high today, buoyed by gains in AI-related stocks and solid economic data. AI-related stocks were among the biggest gainers on Wednesday, with chip inspection equipment maker Lasertec surging over +13%. The gains followed comments from an ASML executive in an interview aired by a Japanese broadcaster that the Dutch company is expanding capacity to meet AI-driven demand. Government data released on Wednesday showed that Japan’s exports grew for a ninth consecutive month in May, buoyed by strong demand for electronic components, automobiles, and nonferrous metals. The nation’s imports grew at a faster pace last month as the Iran war-driven oil shock pushed up global energy costs, forcing the country to seek alternative sources of supply. Separate data showed that Japan’s monthly core machinery orders rebounded more strongly than expected in April, indicating that businesses may be starting to increase investment. In addition, the Reuters Tankan survey showed that Japanese manufacturers’ sentiment improved for a second straight month in June, as robust semiconductor demand supported chemicals and machinery producers. Meanwhile, Japanese government bond yields fell on Wednesday as a slump in oil prices eased inflation concerns. Investor focus is now squarely on Japan’s National Core CPI for May, scheduled for release on Friday. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed down -6.37% to 29.11.

The Japanese May Trade Balance stood at -378.7 billion yen, stronger than expectations of -564.6 billion yen.

The Japanese May Exports rose +17.0% y/y, stronger than expectations of +16.2% y/y.

The Japanese May Imports rose +12.5% y/y, weaker than expectations of +12.8% y/y.

The Japanese April Core Machinery Orders rose +8.7% m/m and +15.6% y/y, stronger than expectations of +1.2% m/m and +9.3% y/y.

Pre-Market U.S. Stock Movers

Chip stocks advanced in pre-market trading, with Micron Technology (MU) and Marvell Technology (MRVL) rising over +2%.

Intel (INTC) gained more than +3% in pre-market trading after the company said it had begun “risk production” of the 18A-P variant of its 18A manufacturing process.

SpaceX (SPCX) advanced over +2% in pre-market trading, putting the stock on pace for a fourth consecutive day of gains following the company’s IPO last week.

La-Z-Boy (LZB) jumped more than +16% in pre-market trading after the home furniture store posted better-than-expected FQ4 results and issued solid FQ1 revenue guidance.

ResMed (RMD) fell about -1% in pre-market trading after Morgan Stanley downgraded the stock to Equal Weight from Overweight.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Wednesday - June 17th

Jabil (JBL), CarMax (KMX), Polyrizon (PLRZ).