Nasdaq Futures Climb as ASML Fuels AI Optimism, U.S. PPI Data and Earnings in Focus

September Nasdaq 100 E-Mini futures (NQU26) are up +0.40% this morning as sentiment got a boost after ASML Holding’s earnings provided fresh evidence of unrelenting demand for cutting-edge chips.

Chip stocks advanced in pre-market trading after ASML Holding reported record orders in Q2 and raised its full-year sales guidance for the second time this year. The Dutch company also said it would increase production of its semiconductor manufacturing machines in the coming years. U.S.-listed shares of the Dutch chip equipment maker gained over +3% in pre-market trading.

Meanwhile, the price of WTI crude rose over +1% on Wednesday after the U.S. military launched another wave of strikes against Iran. U.S. President Donald Trump said he would step up bombardments until Tehran stopped its attacks on ships in the Strait of Hormuz. Also, U.S. forces resumed a naval blockade of maritime traffic entering and leaving Iranian ports and coastal areas.

Investors are now awaiting crucial U.S. producer inflation data, further testimony from Federal Reserve Chairman Kevin Warsh, and a fresh batch of corporate earnings reports.

In yesterday’s trading session, Wall Street’s major indexes ended in the green. Cybersecurity stocks rallied after IBM CEO Arvind Krishna said customers “were distracted with rapidly evolving, industry-wide cybersecurity concerns in the quarter,” with CrowdStrike Holdings (CRWD) jumping over +12% to lead gainers in the S&P 500 and Nasdaq 100 and Okta (OKTA) surging more than +10%. Also, chip and AI infrastructure stocks advanced, with Sandisk (SNDK) rising over +5% and Lam Research (LRCX) gaining more than +4%. In addition, Goldman Sachs (GS) climbed +9% and was the top percentage gainer on the Dow after the bank reported stronger-than-expected Q2 equities sales and trading revenue. On the bearish side, International Business Machines (IBM) plummeted more than -25% and was the top percentage loser on the S&P 500 and Dow after the IT company reported disappointing preliminary Q2 results.

The U.S. Bureau of Labor Statistics report released on Tuesday showed that consumer prices fell -0.4% m/m in June, better than expectations of -0.1% m/m. On an annual basis, headline inflation eased to +3.5% in June from +4.2% in May, better than expectations of +3.8%. Also, the core CPI, which excludes volatile food and fuel prices, was unchanged m/m and rose +2.6% y/y in June, better than expectations of +0.2% m/m and +2.8% y/y.

“The well-behaved CPI print likely lowers pressure on the Fed to hike soon, but the reignition of hostilities in Iran means the prospect of hikes is far from over. Although a path remains for rates to stay unchanged this year, the re-escalation of the conflict has narrowed it,” said Kay Haigh at Goldman Sachs Asset Management.

Fed Chairman Kevin Warsh, testifying before the House Financial Services Committee in his first Capitol Hill appearance since his confirmation, pledged on Tuesday that the central bank would bring inflation down, saying members of its rate-setting committee “have no tolerance for persistently elevated inflation.” Mr. Warsh also said the U.S. economy remains resilient, growing at a solid pace, while the labor market is broadly stable and nominal wage growth is solid. At the same time, the new Fed chairman offered little insight into his views on interest rates, consistent with his stated position that the Fed should not telegraph its next move.

Chicago Fed President Austan Goolsbee said on Tuesday that the June CPI report was “surprisingly benign” and “encouraging,” but added that one month’s data is not enough to convince him inflation is on track to return to 2%. “You never want to overreact to one month. If we get several months like this, I will be feeling better,” Goolsbee said.

Meanwhile, U.S. rate futures have priced in an 83.4% probability of no rate change and a 16.6% chance of a 25 basis point rate hike at the July FOMC meeting.

Second-quarter corporate earnings season picks up steam, with investors awaiting reports today from major U.S. bank Morgan Stanley (MS) as well as notable companies like Johnson & Johnson (JNJ), BlackRock (BLK), Progressive (PGR), and United Airlines Holdings (UAL). According to Bloomberg Intelligence, companies in the S&P 500 are expected to post an average +24% jump in quarterly earnings for Q2 compared to the previous year.

Market participants will also closely watch Fed Chairman Kevin Warsh’s semi-annual monetary policy testimony before the Senate Banking Committee. Fed Governor Lisa Cook, New York Fed President John Williams, and St. Louis Fed President Alberto Musalem will also speak today.

On the economic data front, all eyes are on the U.S. Producer Price Index, which is set to be released in a couple of hours. Economists, on average, forecast that the U.S. June PPI will be unchanged m/m and rise +6.2% y/y, compared to the May figures of +1.1% m/m and +6.5% y/y.

The U.S. Core PPI will also be closely monitored today. Economists expect a core measure of wholesale inflation to rise +0.3% m/m and +5.2% y/y in June, compared to +0.4% m/m and +4.9% y/y in May.

The New York Fed-compiled Empire State Manufacturing Index will be released today. Economists project the July figure to come in at 9.3, compared to 5.7 in June.

The EIA’s weekly crude oil inventories report will be released today as well. Economists expect this figure to be -1.8 million barrels, compared to last week’s value of 3.0 million barrels.

Later today, the Fed will release its Beige Book survey of regional business contacts, which provides an update on economic conditions in each of the 12 Fed districts. The Beige Book is published two weeks before each meeting of the policy-setting Federal Open Market Committee.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.60%, up +0.26%.

The Euro Stoxx 50 Index is up +0.10% this morning, buoyed by strong earnings reports from Richemont and ASML. Technology stocks advanced on Wednesday, led by a more than +4% gain in ASML Holding (ASML.NA) after the chip equipment maker raised its full-year sales guidance for the second time this year. Also, luxury stocks climbed, with Richemont (CFR.Z.EB) surging more than +6% after the Cartier-owner reported better-than-expected FQ1 sales. However, the benchmark index’s gains were limited amid investor concerns over escalating tensions in the Middle East. Final data released on Wednesday confirmed that Spain’s annual inflation rate held steady at 3.2% in June. Separately, data showed that Eurozone’s monthly industrial production unexpectedly fell in May, ending a three-month stretch of resilient activity. Meanwhile, European Central Bank Governing Council member Joachim Nagel said on Wednesday that the central bank should remain cautious about tightening policy but stay alert to energy price developments and act decisively if needed. “The renewed outbreak of military conflict in the Middle East and the fresh rise in oil prices underscore that the situation remains extremely volatile and the uncertainty is similarly high,” Nagel said. In other corporate news, Axfood (AXFO.S.DX) tumbled over -13% after the company reported disappointing quarterly results.

Spain’s CPI and Eurozone’s Industrial Production data were released today.

The Spanish June CPI rose +0.6% m/m and +3.2% y/y, in line with expectations.

Eurozone’s May Industrial Production fell -0.2% m/m and -1.2% y/y, weaker than expectations of +0.3% m/m and -0.5% y/y.

Asian stock markets today closed mixed. China’s Shanghai Composite Index (SHCOMP) closed down -0.29%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +1.49%.

China’s Shanghai Composite Index closed lower today, weighed down by weakness in the tech sector. Technology stocks slumped on Wednesday as investors locked in profits ahead of ChangXin Memory Technologies’ IPO, which is set to be Asia’s largest so far this year. Limiting losses, property and consumer stocks gained after China’s weaker-than-expected Q2 GDP reading stoked expectations that Beijing would ramp up policy support. Official data released on Wednesday showed that China’s economy grew at its slowest pace in more than three years in the second quarter, as surging exports fueled by the AI boom failed to offset weak domestic demand. Despite the sharp slowdown, China remains on track to meet its reduced 4.5%-5.0% growth target for the year, with the nation’s GDP expanding 4.7% in the first half of the year.  Separately, China’s June activity indicators painted a mixed picture. Industrial output exceeded expectations, retail sales, a key gauge of consumption, returned to growth, while fixed-asset investment shrank in the first half of the year. In addition, data showed that China’s home prices continued to decline in June, albeit at a slower pace, as the country’s property downturn dragged on. Goldman Sachs expects Beijing to “step up easing rhetoric in the July Politburo meeting and draw on remaining fiscal buffers quickly to stabilize investment and growth.” Investor attention now shifts to a late-July meeting of the Politburo, where top leaders typically review the economy and fine-tune policy to support growth.

The Chinese GDP rose +0.9% q/q and +4.3% y/y in the second quarter, compared to expectations of +0.9% q/q and +4.5% y/y.

The Chinese June Industrial Production rose +5.3% y/y, stronger than expectations of +4.7% y/y.

The Chinese June Retail Sales unexpectedly rose +1.0% y/y, stronger than expectations of -0.1% y/y.

The Chinese Fixed Asset Investment fell -5.7% y/y in the January-June period, weaker than expectations of -5.0% y/y.

The Chinese June Unemployment Rate was 5.0%, stronger than expectations of 5.1%.

Japan’s Nikkei 225 Stock Index closed higher today as the AI trade gathered fresh momentum. Chip and other AI-related stocks climbed on Wednesday, tracking overnight gains in their U.S. peers after a softer-than-expected June inflation report boosted risk appetite. Chipmakers extended their gains after ASML Holding, the leading supplier of equipment used to manufacture AI chips, posted upbeat Q2 results and raised its full-year sales guidance. Strength in financial and industrial stocks also supported the benchmark index. Meanwhile, the Japanese government bond yield curve steepened on Wednesday as shorter-dated yields tracked an overnight drop in U.S. Treasury yields, while longer-dated yields climbed amid renewed fiscal and inflation concerns. On the economic front, data showed that Japan’s monthly core machinery orders slumped in May at the sharpest pace since December 2019. Still, Norinchukin Research Institute economist Takeshi Minami said underlying corporate investment appetite will likely remain resilient despite Middle East uncertainties. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed down -9.58% to 32.00.

The Japanese May Core Machinery Orders fell -12.4% m/m and -1.9% y/y, weaker than expectations of -4.2% m/m and +12.9% y/y.

Pre-Market U.S. Stock Movers

Chip stocks gained in pre-market trading following ASML Holding’s earnings, with Lam Research (LRCX) and Applied Materials (AMAT) rising over +3%.

Intel (INTC) advanced more than +3% in pre-market trading after ASML said the chipmaker is using its most advanced equipment.

Aehr Test Systems (AEHR) soared over +32% in pre-market trading after the semiconductor equipment maker swung to a profit in FQ4 and issued FY27 revenue guidance that smashed expectations.

PayPal Holdings (PYPL) jumped over +20% in pre-market trading following reports that payments startup Stripe and private equity firm Advent International jointly offered to acquire the company for more than $53 billion.

Travelers (TRV) fell more than -1% in pre-market trading after Morgan Stanley downgraded the stock to Underweight from Equal Weight with a price target of $290.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Wednesday - July 15th

Johnson & Johnson (JNJ), Morgan Stanley (MS), BlackRock (BLK), The Progressive Corporation (PGR), The Bank of New York Mellon Corporation (BNY), The PNC Financial Services Group (PNC), Elevance Health (ELV), Cintas (CTAS), Kinder Morgan (KMI), United Airlines Holdings (UAL), M&T Bank (MTB), J.B. Hunt Transport Services (JBHT), First Horizon (FHN), Conagra Brands (CAG), Home BancShares (HOMB), WaFd, Inc. (WAFD), Winmark (WINA), Great Southern Bancorp (GSBC), Frequency Electronics (FEIM).