Stocks Set for Muted Open With Focus on U.S.-China Trade Talks, U.S. Inflation Data Awaited

June S&P 500 E-Mini futures (ESM25) are up +0.08%, and June Nasdaq 100 E-Mini futures (NQM25) are down -0.01% this morning, pointing to a muted open on Wall Street as investors turn their attention to talks between the U.S. and China in London, and also await the release of key U.S. inflation data later in the week.

Top officials from the U.S. and China meet in London today for talks that investors hope will signal progress toward easing trade tensions between the world’s two largest economies. The talks come after a call between U.S. President Donald Trump and Chinese leader Xi Jinping last week, in which the two agreed to resume discussions on tariffs following a temporary truce reached in mid-May. “The meeting should go very well,” Trump wrote on Truth Social on Saturday. The U.S. president told reporters on Friday that negotiations with Beijing were “very far advanced.”

In Friday’s trading session, Wall Street’s major equity averages ended in the green, with the benchmark S&P 500 notching a 3-1/2 month high and the blue-chip Dow posting a 3-month high. The Magnificent Seven stocks advanced, with Alphabet (GOOGL) rising over +3% and Amazon.com (AMZN) gaining more than +2%. Also, chip stocks gained ground, with Marvell Technology (MRVL) climbing nearly +5% and Micron Technology (MU) rising over +2%. In addition, Tesla (TSLA) gained more than +3% after CEO Elon Musk indicated he would ease tensions with President Trump following Thursday’s heated spat. On the bearish side, Lululemon Athletica (LULU) tumbled over -19% and was the top percentage loser on the S&P 500 and Nasdaq 100 after the retailer cut its full-year EPS guidance.

The U.S. Labor Department’s report on Friday showed that nonfarm payrolls rose 139K in May, stronger than expectations of 126K. Also, U.S. May average hourly earnings rose +0.4% m/m and +3.9% y/y, stronger than expectations of +0.3% m/m and +3.7% y/y. In addition, the U.S. unemployment rate was unchanged at 4.2% in May, in line with expectations. Finally, U.S. consumer credit rose $17.87B in April, stronger than expectations of $11.30B.

“While [the labor market] may not be firing on all cylinders, it’s far from showing signs of a major breakdown. [Friday’s] solid labor report buys the Fed more time, but Chair Jerome Powell may have a hard time justifying a restrictive rate policy should inflation continue lower,” said Bret Kenwell at eToro.

Philadelphia Fed President Patrick Harker said on Friday that there may be a path to cutting rates in the second half of the year, but reiterated that officials should hold steady for now and wait for uncertainty to subside. “For now, I am strongly of the belief we sit here, let some of this uncertainty resolve itself,” he said.

U.S. rate futures have priced in a 99.9% probability of no rate change at next week’s monetary policy meeting.

The U.S. consumer inflation report for May will be the main highlight this week. The report will be scrutinized for any indications that Trump’s tariffs are feeding through into prices. Barclays economists said in a note that they anticipate the inflation data will show “the first signs of tariff-related price pressures.” They expect upward price pressures on “a wide range of core goods categories,” such as apparel, household furnishings, new vehicles, and other goods. Also, investors will be keeping an eye on other economic data releases, including the U.S. PPI, the Core PPI, Initial Jobless Claims, Crude Oil Inventories, and the University of Michigan’s Consumer Sentiment Index (preliminary).

Market participants will also focus on earnings reports from several notable companies, with Adobe (ADBE), Oracle (ORCL), Chewy (CHWY), and GameStop (GME) scheduled to release their quarterly results this week.

U.S. central bankers are in a media blackout period before the June 17-18 policy meeting, so they are prohibited from making public comments this week. Despite President Trump’s push to pressure central bankers into swiftly cutting interest rates, Fed Chair Jerome Powell and his colleagues have signaled they have time to evaluate the effects of trade policy on the economy, inflation, and employment.

Meanwhile, Apple (AAPL) kicks off its annual Worldwide Developers Conference today in Cupertino, California. The event is expected to feature the company’s new products, services, and partnerships.

Today, investors will also focus on U.S. Wholesale Inventories data, which is set to be released in a couple of hours. Economists expect the final April figure to be unchanged m/m, compared to +0.4% m/m in March.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.483%, down -0.69%.

The Euro Stoxx 50 Index is down -0.06% this morning as investors cautiously await the outcome of another round of U.S.-China trade talks. Trading was subdued on Monday as markets in several countries, including Switzerland, Denmark, and Norway, were closed for the Whit Monday holiday. Defense stocks lost ground, while real estate stocks outperformed. Meanwhile, European Central Bank Governing Council member Joachim Nagel said over the weekend that he cannot determine whether rate cuts are finished for this year and that the next steps remain completely open. Separately, ECB policymaker Boris Vujcic said on Monday that the central bank should not “overreact” to Eurozone inflation dipping below its 2% target, as there are good reasons to believe it will rise again. Investor focus this week is also on the Eurozone’s industrial production and trade data for April, which will provide insight into how Trump’s initial on-off tariff onslaught affected manufacturing and exports at the beginning of the second quarter. In corporate news, Alphawave IP Group Plc (AWE.LN) soared over +23% after Qualcomm agreed to acquire the company for about $2.4 billion. At the same time, WPP Plc (WPP.LN) fell over -1% after the advertising group announced that its chief executive officer, Mark Read, would step down by the end of 2025.

The European economic data slate is empty on Monday.

Asian stock markets today settled in the green. China’s Shanghai Composite Index (SHCOMP) closed up +0.43%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.92%.

China’s Shanghai Composite Index closed higher today as investors looked ahead to the high-level U.S.-China trade talks in London. Rare-earth and technology stocks led the gains on Monday. Sentiment was supported by signs that de-escalation could be back on track following the recent flare-up in tensions between the two superpowers. China approved some applications for rare earth exports ahead of the talks. Boeing has also resumed deliveries of commercial jets to China for the first time since early April, signaling a reopening of trade flows. China Securities analysts said in a note that they think “there could be some favorable outcomes from the meeting, as Trump has hinted at some positive signs.” Still, the benchmark index’s gains were limited as investors digested weak economic data from the country. Data from the National Bureau of Statistics released on Monday showed that China’s consumer prices fell for a fourth consecutive month in May, while producer deflation worsened to its deepest level in nearly two years, as the economy grapples with trade tensions and a prolonged housing slump. Separately, data showed that China’s exports grew in May, but at a significantly slower rate as U.S. tariffs continue to affect trade despite the temporary trade truce between Beijing and Washington. Many economists anticipate the nation’s exports to slump later this year, with the average U.S. tariff on Chinese goods still hovering near 40%, which could further intensify China’s disinflationary pressures. In corporate news, Wenyi Trinity Technology jumped +10% after announcing plans to acquire a 51% stake in Anhui Zhonghe Semiconductor Technology for 121.4 million yuan.

The Chinese May CPI came in at -0.1% y/y, stronger than expectations of -0.2% y/y.

The Chinese May PPI stood at -3.3% y/y, weaker than expectations of -3.1% y/y.

The Chinese May Trade Balance arrived at $103.22B, stronger than expectations of $101.10B.

The Chinese May Exports came in at +4.8% y/y, weaker than expectations of +5.0% y/y.

The Chinese May Imports stood at -3.4% y/y, weaker than expectations of -0.9% y/y.

Japan’s Nikkei 225 Stock Index ended higher today, supported by optimism surrounding trade talks between Beijing and the U.S. Chip stocks led the gains on Monday. Yunosuke Ikeda, chief macro strategist at Nomura, said, “The trade talks in London are, at the very least, a step in the direction of easing restrictions on chip shipments between the U.S. and China.” Government data released on Monday showed that Japan’s economy shrank less than previously estimated in the first quarter, as consumption was revised higher. Still, the revision does little to ease concerns among analysts and economists that economic growth is losing momentum. “Tariffs and tariff threats are damaging exports and industrial production. Household spending is weak as inflation outpaces wage growth, and pay gains may slow further if tariff pain derails the economy,” said Moody’s Analytics economist Stefan Angrick. Japan’s economy remains at risk of technical recession, which could push back the Bank of Japan’s timeline for raising interest rates. Meanwhile, Japanese Prime Minister Shigeru Ishiba said on Monday that Japan must recognize that rising interest rates would increase the government’s debt-financing costs and impact its spending plans. Ishiba is expected to hold a bilateral meeting with U.S. President Donald Trump this week to announce a trade agreement. They will likely meet on the sidelines of the Group of Seven summit that begins on June 15th, or potentially a day earlier in Washington. In other news, Reuters reported on Monday that Japan’s government was weighing the repurchase of some super-long bonds it had issued at low interest rates. In corporate news, Otsuka Holdings climbed over +5% after the drugmaker said its experimental treatment for a potentially life-threatening kidney disease reduced high levels of protein in patients’ urine by more than half. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed down -3.31% to 22.78.

The Japanese GDP Annualized has been reported at -0.2% q/q in the first quarter, stronger than expectations of -0.7% q/q.

The Japanese April Current Account n.s.a. stood at 2.258T yen, weaker than expectations of 2.560T yen.

The Japanese May Economy Watchers Current Index came in at 44.4, stronger than expectations of 43.8.

Pre-Market U.S. Stock Movers

Tesla (TSLA) fell over -3% in pre-market trading after Baird downgraded the stock to Neutral from Outperform.

Air mobility stocks jumped in pre-market trading, extending Friday’s gains after President Trump signed an executive order launching an electric “Vertical Takeoff and Landing” integration pilot program. Joby Aviation (JOBY) and Archer Aviation (ACHR) are up over +9%.

Intuitive Surgical (ISRG) slid over -3% in pre-market trading after Deutsche Bank downgraded the stock to Sell from Hold with a price target of $440.

Robinhood Markets (HOOD) slumped more than -5% in pre-market trading after S&P Dow Jones Indices left the S&P 500 index constituents unchanged in its latest rebalancing, defying expectations from some analysts who had anticipated the online brokerage would be added to the benchmark index. Also, Redburn Atlantic downgraded the stock to Sell from Neutral with a price target of $48.

Sunnova Energy (NOVA) plummeted over -27% in pre-market trading after the residential solar panel installer filed for Chapter 11 bankruptcy protection.

You can see more pre-market stock movers here

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

Caseys (CASY), VinFast (VFS), Calavo Growers (CVGW), Graham (GHM), Limoneira (LMNR), Motorcar Parts (MPAA), Lakeland Industries (LAKE), Comtech (CMTL).