June S&P 500 E-Mini futures (ESM24) are up +0.25%, and June Nasdaq 100 E-Mini futures (NQM24) are up +0.37% this morning as speculation over interest rate cuts by major central banks heightened appetite for risk-driven assets, while market participants looked ahead to a fresh slew of U.S. labor market data, with a particular focus on Friday’s nonfarm payrolls report.
In Friday’s trading session, Wall Street’s major averages closed mixed. Caesars Entertainment (CZR) surged over +11% and was the top percentage gainer on the S&P 500 after Bloomberg reported that billionaire activist investor Carl Icahn has amassed a significant stake in the hotel and casino group, with Icahn stating in response to a Bloomberg query, “There’s absolutely no activism contemplated in Caesars.” Also, Zscaler (ZS) climbed more than +8% and was the top percentage gainer on the Nasdaq 100 after the cloud security firm reported stronger-than-expected Q3 results and boosted its full-year guidance. In addition, Gap (GPS) soared over +28% after the company posted upbeat Q1 results and raised its full-year guidance. On the bearish side, MongoDB (MDB) tumbled more than -23% and was the top percentage loser on the Nasdaq 100 after the company issued soft Q2 guidance and lowered its full-year forecast.
Data from the U.S. Department of Commerce on Friday showed that the U.S. core PCE price index, a key inflation gauge monitored by the Federal Reserve, came in at +0.2% m/m and +2.8% y/y in April, in line with expectations. Also, the U.S. Chicago PMI unexpectedly fell to 35.4 in May, weaker than expectations of 41.1. In addition, U.S. April personal spending rose +0.2% m/m, weaker than expectations of +0.3% m/m, while U.S. April personal income rose +0.3% m/m, in line with expectations.
“Markets see inflation on a slow, but steady path lower. The question is still how much more the Fed needs in terms of slower inflation before initiating an easing cycle,” said Quincy Krosby at LPL Financial.
U.S. rate futures have priced in a 0.1% chance of a 25 basis point rate cut at the Fed’s monetary policy committee meeting later this month and a 14.5% probability of a 25 basis point rate cut at the July meeting.
The highlight of the upcoming week will be the U.S. Nonfarm Payrolls report for May. Also, market participants will be eyeing a spate of other economic data releases, including U.S. JOLTs Job Openings, Factory Orders, ADP Nonfarm Employment Change, S&P Global Composite PMI, S&P Global Services PMI, ISM Non-Manufacturing PMI, Crude Oil Inventories, Exports, Imports, Initial Jobless Claims, Nonfarm Productivity, Unit Labor Costs, Average Hourly Earnings, Wholesale Inventories, and Unemployment Rate.
In addition, several notable companies like CrowdStrike Holdings (CRWD), Gitlab (GTLB), Hewlett Packard (HPE), Bath & Body Works (BBWI), Lululemon Athletica (LULU), Dollar Tree (DLTR), Campbell Soup (CPB), DocuSign (DOCU), and NIO (NIO) are scheduled to release their quarterly results this week.
Meanwhile, investor attention this week also centers on interest rate decisions in Europe and Canada. Both the European Central Bank and the Bank of Canada are widely anticipated to start reducing interest rates, potentially igniting monetary easing worldwide.
Today, all eyes are focused on the U.S. ISM Manufacturing PMI in a couple of hours. Economists, on average, forecast that the May ISM Manufacturing PMI will come in at 49.8, compared to the previous value of 49.2.
Also, investors will likely focus on the U.S. S&P Global Manufacturing PMI, which stood at 50.0 in April. Economists foresee the May figure to be 50.9.
U.S. Construction Spending data will be reported today as well. Economists foresee this figure to stand at +0.2% m/m in April, compared to the previous number of -0.2% m/m.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.481%, down -0.78%.
The Euro Stoxx 50 futures are up +1.02% this morning, tracking gains in Asian stocks, while investors awaited the European Central Bank’s interest rate decision later this week. Financial and technology stocks outperformed on Monday, while healthcare stocks lost ground. Hamburg Commercial Bank and S&P Global said Monday that the Eurozone’s final manufacturing PMI reached its highest level since March 2023 in May amid softer contractions in factory output, total new orders, exports, and purchasing activity. Meanwhile, the ECB is scheduled to announce its interest rate decision on Thursday. With a quarter-point reduction all but certain, market participants will focus on ECB President Christine Lagarde’s comments regarding the subsequent steps. In corporate news, Gsk Plc (GSK.LN) plunged over -9% following a ruling by a Delaware judge that allowed more than 70,000 lawsuits related to discontinued heartburn drug Zantac to proceed.
Spain’s Manufacturing PMI, Italy’s Manufacturing PMI, France’s Manufacturing PMI, Germany’s Manufacturing PMI, and Eurozone’s Manufacturing PMI data were released today.
The Spanish May Manufacturing PMI stood at 54.0, stronger than expectations of 52.5.
The Italian May Manufacturing PMI came in at 45.6, weaker than expectations of 47.9.
The French May Manufacturing PMI was at 46.4, weaker than expectations of 46.7.
The German May Manufacturing PMI arrived at 45.4, in line with expectations.
Eurozone May Manufacturing PMI has been reported at 47.3, weaker than expectations of 47.4.
Asian stock markets today settled mixed. China’s Shanghai Composite Index (SHCOMP) closed down -0.27% and Japan’s Nikkei 225 Stock Index (NIK) closed up +1.13%.
China’s Shanghai Composite Index closed lower today as investors shrugged off upbeat manufacturing PMI data. A private sector survey revealed on Monday that China’s manufacturing activity in May experienced its fastest growth in about two years, driven by robust production and new orders. Meanwhile, Moody’s on Monday raised China’s growth forecast for 2024 to 4.5% from 4.0%, noting that the country’s post-pandemic manufacturing and export-oriented growth strategy is materializing. In other news, state television reported Monday that China’s finance ministry had allocated 6.44 billion yuan ($889.02 million) to subsidize auto trade-ins in 2024. In corporate news, China Minmetals Rare Earth Resources and Technology fell about -4% despite lifting sale restrictions on 80.3 million shares, equivalent to 7.57% of the total issued shares. At the same time, BYD rose more than +3% following a filing with the Hong Kong Stock Exchange on Sunday, indicating that the company’s production of new energy vehicles grew to 344,008 in May from 246,259 in the same period last year, with sales climbing to 331,817 units from 240,220 units year-over-year.
The Chinese May Caixin Manufacturing PMI came in at 51.7, stronger than expectations of 51.6.
Japan’s Nikkei 225 Stock Index closed higher today, tracking Friday’s gains on Wall Street as an in-line key U.S. inflation reading bolstered expectations for interest rate cuts in the world’s largest economy this year. Financial and electronics stocks led the gains on Monday. S&P Global reported Monday that Japan’s factory activity expanded in May for the first time in a year, but overall growth remained modest, and demand was still subdued, with a weak yen increasing the cost of imported items for some producers. Separately, Ministry of Finance data showed Monday that Japanese companies increased spending on plant and equipment in January-March. Meanwhile, Japanese government bond yields retreated from near more-than-decade highs on Monday, following a Friday slide in Treasury yields. In other news, Japan’s economy minister Yoshitaka Shindo stated on Monday that the country will continue to strive toward achieving a surplus in its primary budget by fiscal year 2025. In corporate news, Sharp gained over +1% after the household electronics manufacturer announced a collaboration with KDDI to build an AI data center powered by U.S. firm Nvidia. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up +1.07% to 17.02.
The Japanese May au Jibun Bank Japan Manufacturing PMI arrived at 50.4, weaker than expectations of 50.5.
The Japanese Capital Spending came in at +6.8% y/y in the first quarter, weaker than expectations of +12.2% y/y.
Pre-Market U.S. Stock Movers
GameStop (GME) spiked about +93% in pre-market trading after the Reddit account, which fueled the meme-stock frenzy of 2021, posted what seemed to be a $116 million position in the company.
Nvidia (NVDA) advanced more than +2% in pre-market trading after announcing plans to enhance its artificial intelligence accelerators with the rollout of the Blackwell Ultra chip next year and a next-generation platform called Rubin in 2026.
Stericycle (SRCL) climbed over +7% in pre-market trading following a report from the Wall Street Journal indicating that Waste Management is nearing a deal to acquire the company for about $7 billion, including debt.
Paramount Global (PARA) gained more than +4% in pre-market trading following a report from Bloomberg stating that Skydance Media’s latest proposal for the company includes an option for nonvoting shareholders to cash out a specific number of their stock for around $15 a share.
Best Buy (BBY) rose over +1% in pre-market trading after Citi double-upgraded the stock to Buy from Sell with a price target of $100.
Target (TGT) fell about -1% in pre-market trading after Exane BNP Paribas initiated coverage of the stock with an Underperform rating and a $116 price target. Also, Goldman Sachs removed the company from its U.S. Conviction List.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Monday - June 3rd
Gitlab (GTLB), Healthequity Inc (HQY), Science Applications (SAIC), Nano Dimension (NNDM), BARK (BARK).
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On the date of publication, Oleksandr Pylypenko did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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