September S&P 500 E-Mini futures (ESU26) are up +0.72%, and September Nasdaq 100 E-Mini futures (NQU26) are up +1.09% this morning, pointing to a higher open on Wall Street as investors cautiously move back into risky assets at the start of a holiday-shortened week.
Technology stocks led the gains in U.S. equity futures as investors stepped in to buy the dip following last week’s selloff. Sentiment was supported by an Axios report that the U.S. and Iran agreed to pause strikes and meet this week in Qatar to resume talks on the Strait of Hormuz and other issues. The two sides exchanged tit-for-tat strikes over the past several days over the waterway through which one-fifth of the world’s oil and gas once flowed.
Meanwhile, the price of WTI crude rose over +1% on Monday as the pace of shipments through the Strait of Hormuz slowed, with shipowners likely remaining cautious about transiting the waterway.
This week, investors are looking ahead to a slew of U.S. labor market data and remarks from Federal Reserve Chairman Kevin Warsh.
In Friday’s trading session, Wall Street’s major equity averages closed lower. Chip and AI infrastructure stocks sank, with Western Digital (WDC) plunging over -13% to lead losers in the Nasdaq 100 and Texas Instruments (TXN) slumping more than -8%. Also, ON Semiconductor (ON) cratered over -23% and was the top percentage loser on the S&P 500 after agreeing to acquire Synaptics in an all-stock deal valued at around $7 billion. In addition, Oracle (ORCL) and CoreWeave (CRWV) fell more than -2% after the New York Times reported that OpenAI could delay its highly anticipated initial public offering until 2027. On the bullish side, software stocks climbed, with Workday (WDAY) surging over +9% to lead gainers in the Nasdaq 100 and Datadog (DDOG) rising more than +8%.
“Investor sentiment has turned increasingly pessimistic amid the technology selloff and sharp rotation, but the broader market is telling a different story. Rather than the start of a major downturn, this looks more like a period of consolidation beneath the surface,” said Mark Hackett at Nationwide.
Economic data released on Friday showed that the University of Michigan’s U.S. June consumer sentiment index was revised upward to 49.5. Economists had forecast an upward revision to 50.0. Also, the University of Michigan’s U.S. June year-ahead inflation expectations were left unrevised at 4.6%, in line with expectations, while 5-year implied inflation expectations were revised downward to 3.3%, in line with expectations. In addition, U.S. wholesale inventories rose +0.3% m/m in May, in line with expectations.
Minneapolis Fed President Neel Kashkari said on Friday that signs of broad-based inflation prompted him to pencil in one interest-rate hike for this year in the central bank’s economic forecasts released earlier this month. “I’m concerned about inflation, and it’s not only tied to what’s happening in the Middle East. It’s just the impression of broader inflationary pressures in the economy,” Kashkari said. Speaking during a panel later Friday, he said policymakers are committed to bringing inflation back to the Fed’s target.
U.S. rate futures have priced in a 69.5% chance of no rate change and a 30.5% chance of a 25 basis point rate hike at the conclusion of the Fed’s July meeting.
In this holiday-shortened week, the U.S. June Nonfarm Payrolls report will be the main highlight, as investors assess whether and when the Fed could raise interest rates. The key jobs report will be released on Thursday, one day earlier than usual due to Friday’s U.S. Independence Day holiday. Economists expect payrolls to increase by 114K in June, which, along with a projected pickup in wage growth and continued stability in the unemployment rate, will almost certainly reinforce expectations that the Fed’s next move is more likely to be a rate hike. “Ultimately, the performance of U.S. data will drive Fed policy, with Thursday’s labor market report being key,” according to Investec Economics analysts. Other jobs data to watch include JOLTS Job Openings, the ADP Nonfarm Employment Change, and Initial Jobless Claims. The U.S. Conference Board’s Consumer Confidence Index, the S&P/CS HPI Composite - 20 n.s.a., the Chicago PMI, the ISM Manufacturing PMI, Construction Spending, and Factory Orders data will also attract attention.
Market watchers will also be focused on remarks from Fed Chairman Kevin Warsh, who is set to participate in the European Central Bank’s annual forum in Sintra, Portugal, this week. That would mark the Fed chief’s first public appearance outside the U.S. since taking office in May. Mr. Warsh will speak on a panel with his counterparts from the Eurozone, Canada, and the U.K. Investors will closely scrutinize Warsh’s remarks for any clues on the interest-rate outlook.
Meanwhile, the U.S. Supreme Court, entering the final week of its current term, is expected to rule in the coming days on the legality of President Donald Trump’s attempt to fire Fed Governor Lisa Cook.
In addition, notable companies such as sneaker giant Nike (NKE), Corona maker Constellation Brands (STZ), and food producer General Mills (GIS) are slated to release their quarterly results this week.
On Friday, U.S. stock and bond markets will be closed in observance of Independence Day.
The U.S. economic data slate is largely empty on Monday.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.39%, up +0.41%.
The Euro Stoxx 50 Index is down -0.01% this morning, kicking off a busy week on a cautious note. Construction stocks underperformed on Monday. Limiting losses, technology stocks climbed, rebounding from last week’s selloff. Preliminary data from the National Statistics Institute released on Monday showed that Spain’s annual inflation rate stood at 3.2% in June, unchanged from May. Also, the European Commission said that economic confidence in the Eurozone improved slightly in June, as selling-price expectations eased and oil prices retreated amid cooling tensions in the Middle East. In addition, data showed that bank lending to Eurozone companies expanded at its fastest pace in three years in May, continuing the steady improvement that has gathered momentum in recent months. Meanwhile, JPMorgan lifted its year-end target for the STOXX 600 index to 680 from 630, pointing to resilient corporate earnings and an improving geopolitical backdrop. Investor focus this week is on the Eurozone’s preliminary inflation data for June. Economists expect the Eurozone’s annual headline inflation rate to ease for the first time since the outbreak of the Iran war, as price pressures soften across much of the region. Market participants will also keep an eye on the European Central Bank’s annual symposium, which takes place in Sintra, Portugal, from June 29th to July 1st. A host of ECB officials are scheduled to speak at the conference, which will wrap up with a policy panel featuring ECB President Christine Lagarde, Bank of England Governor Andrew Bailey, Bank of Canada Governor Tiff Macklem, and Fed Chairman Kevin Warsh. In corporate news, Prosus (PRX.NA) rose over +3% after the Dutch tech investor posted an 84% increase in full-year adjusted core profit.
Spain’s CPI (preliminary), Eurozone’s Business and Consumer Survey, and Eurozone’s Consumer Confidence data were released today.
The Spanish June CPI rose +3.2% y/y, in line with expectations.
Eurozone’s June Business and Consumer Survey stood at 95.0, stronger than expectations of 94.3.
Eurozone’s June Consumer Confidence came in at -17.7, in line with expectations.
Asian stock markets today settled in the green. China’s Shanghai Composite Index (SHCOMP) closed up +1.16%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.15%.
China’s Shanghai Composite Index closed higher today after the nation’s central bank set the rate on its new overnight liquidity tool at a lower-than-expected level. Healthcare and consumer stocks climbed on Monday as investors broadened their exposure beyond AI into more traditional sectors. Technology stocks also advanced, led by semiconductor and chip-equipment shares, as investors wagered that the upcoming market debut of leading Chinese memory chipmaker CXMT would boost domestic chipmakers. Meanwhile, the People’s Bank of China said it conducted 300 billion yuan ($44 billion) of overnight reverse repurchase agreements in open market operations on Monday, according to a statement that did not disclose the interest rate charged on its new facility. Bloomberg reported that the facility’s rate came in at 1.25%, below the 1.35% expected, in what some economists viewed as a de facto rate cut that could help lower market borrowing costs. “The central bank delivered a mild dovish surprise,” said Zhou Hao, chief economist at Guotai Junan International Holdings. In other news, China imposed trade restrictions on dozens more Japanese companies and several research institutes, marking a further escalation in Beijing’s campaign of economic pressure against Tokyo. Investor attention this week is on China’s official PMIs for June, which will provide a clearer picture of business sentiment following the interim peace agreement between the U.S. and Iran. Economists expect the manufacturing PMI to edge into expansionary territory, supported by two extra working days this month, while the non-manufacturing PMI is projected to slip into contraction territory as heavier-than-usual rainfall across the Yangtze River Delta and southern China may have disrupted construction activity and outdoor services. The RatingDog PMI surveys, which place greater emphasis on China’s smaller private-sector companies, will also be closely watched.
Japan’s Nikkei 225 Stock Index reversed earlier losses and closed slightly higher today as investors monitored the latest developments in the Middle East, while the AI trade turned more volatile. The Nikkei initially fell as much as 2%, but later erased those losses and turned higher as chip-related stocks trimmed losses after South Korea unveiled sweeping chip and AI mega-projects. Chip stocks tumbled in early trading, tracking Friday’s losses among their U.S. peers. Investors also snapped up beaten-down stocks, with software, real estate, and healthcare shares leading the gains on Monday. Also aiding sentiment, oil prices eased from their session highs in Tokyo trading after Axios reported that the U.S. and Iran agreed to pause strikes and meet this week in Qatar to resume talks over the Strait of Hormuz and other issues to end the war. Meanwhile, data released on Monday showed that Japan’s retail sales rose for a third straight month in May, supported by strong wage gains and government subsidies aimed at easing the cost of living. Elsewhere, Reuters reported on Monday that Japan’s government will aim to cement annual real economic growth of more than 1%, citing a draft of the long-term economic blueprint that reflects Prime Minister Sanae Takaichi’s push to reinvigorate growth. Investor focus this week is on the Bank of Japan’s quarterly Tankan survey of business sentiment, with economists expecting gauges to remain broadly stable in positive territory. Japan’s industrial production and employment data for May will also draw attention. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed up +30.92% to 43.36.
The Japanese May Retail Sales rose +5.3% y/y, stronger than expectations of +3.1% y/y.
Pre-Market U.S. Stock Movers
The Magnificent Seven stocks advanced in pre-market trading, led by more than +1% gains in Microsoft (MSFT) and Meta Platforms (META).
Chip stocks edged higher in pre-market trading, with Marvell Technology (MRVL) and Advanced Micro Devices (AMD) rising over +1%.
Applied Materials (AMAT) climbed over +4% and Lam Research (LRCX) gained more than +3% in pre-market trading after Samsung and SK Hynix committed to investing more than $500 billion to build new chip manufacturing hubs in South Korea.
Comcast (CMCSA) jumped more than +22% in pre-market trading after announcing plans to split into two publicly traded companies through the spinoff of NBCUniversal and Sky.
Progressive (PGR) fell over -1% in pre-market trading after Wells Fargo downgraded the stock to Underweight from Equal Weight with a price target of $205.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Monday - June 29th
AeroVironment (AVAV), Concentrix (CNXC).
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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