S&P Futures Tick Higher With Focus on Powell’s Testimony

September S&P 500 E-Mini futures (ESU25) are trending up +0.16% this morning, extending yesterday’s gains, while investors await further testimony from Federal Reserve Chair Jerome Powell for clues on the rate outlook.

The ceasefire brokered by U.S. President Donald Trump between Iran and Israel appeared to be holding on Wednesday, with both sides declaring victory in the war. Trump’s Middle East envoy said late on Tuesday that talks between the U.S. and Iran were “promising” and that Washington remained hopeful for a long-term peace agreement. Investors are now turning their attention back to the U.S. economy and how trade tensions and fiscal pressures could impact corporate earnings and growth.

In yesterday’s trading session, Wall Street’s three main equity benchmarks closed higher. Chip stocks rallied, with Intel (INTC) and Advanced Micro Devices (AMD) climbing over +6%. Also, DexCom (DXCM) surged more than +9% and was the top percentage gainer on the Nasdaq 100 after U.S. Health and Human Services Secretary Robert F. Kennedy Jr. announced that his agency is launching one of the largest campaigns in history to promote the use of wearable health devices. In addition, Uber Technologies (UBER) gained over +7% after the company announced that it would begin offering driverless Waymo rides to its customers in Atlanta. On the bearish side, Dollar General (DG) fell more than -1% after Goldman Sachs downgraded the stock to Neutral from Buy.

Economic data released on Tuesday showed that the U.S. Conference Board’s consumer confidence index unexpectedly fell to 93.0 in June, weaker than expectations of 99.4. Also, the U.S. April S&P/CS HPI Composite - 20 n.s.a. eased to +3.4% y/y from +4.1% y/y in March, weaker than expectations of +4.0% y/y. In addition, the U.S. Richmond Fed manufacturing index unexpectedly rose to -7 in June, stronger than expectations of -10.

Fed Chair Jerome Powell told lawmakers on Tuesday that the central bank is not in a hurry to cut interest rates as officials await greater clarity on the economic effects of President Trump’s tariffs. “The effects of tariffs will depend, among other things, on their ultimate level,” Powell said in remarks before the House Financial Services Committee. “For the time being, we are well-positioned to wait to learn more about the likely course of the economy before considering any adjustments to our policy stance.” Should inflation come in below expectations or the labor market weaken, Powell said, the Fed could cut rates sooner.

Cleveland Fed President Beth Hammack said that interest rates are only modestly restrictive and that policymakers may keep borrowing costs steady “for quite some time.” Also, New York Fed President John Williams said that “maintaining this modestly restrictive stance of monetary policy is entirely appropriate to achieve our maximum employment and price stability goals,” while policymakers assess the full impact of U.S. policy changes. In addition, Boston Fed President Susan Collins said that monetary policy is in the right place, emphasizing that the “modestly restrictive” stance of monetary policy is “necessary.” Finally, Fed Governor Michael Barr stated that he expects tariffs to push inflation higher and voiced support for maintaining a wait-and-see approach on interest rates.

Meanwhile, U.S. rate futures have priced in an 81.4% chance of no rate change and an 18.6% chance of a 25 basis point rate cut at the July FOMC meeting.

Today, investors will closely watch Fed Chair Jerome Powell’s semi-annual monetary policy testimony before the Senate Banking Committee.

On the economic data front, investors will focus on U.S. New Home Sales data, which is set to be released in a couple of hours. Economists foresee this figure coming in at 694K in May, compared to 743K in April.

U.S. Crude Oil Inventories data will be released today as well. Economists expect this figure to be -1.200M, compared to last week’s value of -11.473M.

On the earnings front, notable companies like Micron Technology (MU), Paychex (PAYX), General Mills (GIS), and Jefferies Financial (JEF) are set to report their quarterly figures today.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.287%, down -0.07%.

The Euro Stoxx 50 Index is down -0.13% this morning, taking a breather after yesterday’s rally spurred by the ceasefire between Israel and Iran. Bank and media stocks underperformed on Wednesday, while automobile and defense stocks advanced. Final data from the National Statistics Institute confirmed on Wednesday that Spain’s economy expanded by 0.6% in the first quarter, slightly slower than the 0.7% growth seen in the previous quarter. Separately, data showed that France’s consumer confidence was unchanged in June and remained well below its long-term average. Meanwhile, investors are focusing on the NATO summit in the Netherlands, where defense spending will take center stage. The military alliance’s 32 member states, except Spain, have reportedly agreed to raise their defense spending target to 5% of gross domestic product. In corporate news, Stellantis N.V. (STLAM.M.DX) gained over +4% after Jefferies upgraded the stock to Buy from Hold. Also, Babcock International Group Plc (BAB.LN) surged more than +12% after the British warship maker boosted its mid-term profit target.

France’s Consumer Confidence and Spain’s GDP data were released today.

The French June Consumer Confidence stood at 88, weaker than expectations of 89.

The Spanish GDP has been reported at +0.6% q/q and +2.8% y/y in the first quarter, in line with expectations.

Asian stock markets today closed in the green. China’s Shanghai Composite Index (SHCOMP) closed up +1.04%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.39%.

China’s Shanghai Composite Index closed higher and hit a more than 6-month high today as the ceasefire between Israel and Iran appeared to hold, with sentiment further lifted by Beijing’s push toward a consumer-driven economy. Brokerage and defense stocks led the gains on Wednesday. China on Tuesday issued guidelines aimed at using financial tools to stimulate consumption, with commitments to support employment and boost household incomes as part of wider efforts to strengthen the economy. The guidelines, jointly drafted by six government departments and published by the People’s Bank of China, stated that China would assist eligible companies across the consumer industry chain in raising funds through stock market listings and other channels. China will “guide financial institutions to strengthen financial services from both the supply and demand sides of consumption, meet the diversified financing needs of various entities and promote the expansion of high-quality consumption,” the PBOC said. Meanwhile, China’s Premier Li Qiang stated on Wednesday that he was confident the world’s second-largest economy could sustain a “relatively rapid” growth pace as it shifts from a manufacturing-based model to one driven by consumption. “China’s economy showed steady improvement in the second quarter,” Li added. He also stated that China’s consumption potential would create vast new market opportunities for global businesses. In other news, Beijing said it would take action in response to Taiwan’s decision to add several Chinese firms, including Huawei, to an export-control list that restricts their access to advanced technology. In corporate news, New Oriental Education & Technology climbed over +8% in Hong Kong after JPMorgan upgraded the stock to Overweight from Neutral.

Japan’s Nikkei 225 Stock Index ended higher and hit a more than 4-month high today as the truce between Israel and Iran appeared to hold, buoying investors’ risk appetite. Chip-related stocks outperformed on Wednesday, tracking overnight gains in their U.S. peers. Bank of Japan data released on Wednesday showed that a key gauge of Japan’s service-sector inflation stood at 3.3% in May, sustaining expectations of additional interest rate hikes by the central bank. Separately, data from the Cabinet Office showed that Japan’s leading economic indicators index, which gauges the economic outlook for a few months ahead based on data such as job offers and consumer sentiment, was revised upward in April. Meanwhile, a summary of opinions from the BOJ’s June policy meeting showed on Wednesday that some policymakers supported holding interest rates steady for now amid uncertainty over the impact of U.S. tariffs on the Japanese economy. Others on the nine-member board said that inflation was running above expectations, with one member suggesting the BOJ might have to raise interest rates “decisively” at some point, even if economic uncertainty persists. BOJ board member Naoki Tamura said on Wednesday that the central bank should consider further interest rate hikes without delay as inflation could reach its target earlier than expected despite trade uncertainty. On the trade front, Japan’s tariff negotiator Ryosei Akazawa is reportedly planning his seventh trip to the U.S. for as early as June 26th, seeking to end tariffs that are weighing on Japan’s economy. Investors also await Japan’s retail sales and Tokyo CPI data, scheduled for release on Friday, which will help guide the BOJ’s next policy decisions. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed down -2.63% to 23.29.

The Japanese May Corporate Services Price Index came in at +3.3% y/y, stronger than expectations of +3.1% y/y.

The Japanese April Leading Index stood at 104.2, stronger than expectations of 103.4.

Pre-Market U.S. Stock Movers

FedEx (FDX) slumped over -5% in pre-market trading after the shipping giant issued below-consensus FQ1 adjusted EPS guidance.

BlackBerry (BB) surged more than +14% in pre-market trading after the cybersecurity company posted better-than-expected Q1 results and raised its full-year sales guidance.

QuantumScape (QS) jumped over +33% in pre-market trading after the company announced it had successfully integrated its advanced Cobra separator process into baseline cell production.

Worthington Enterprises (WOR) rose more than +10% in pre-market trading after the maker of building and consumer products reported stronger-than-expected FQ4 results.

TMC the metals company Inc. (TMC) climbed over +6% in pre-market trading after Wedbush upgraded the stock to Outperform from Neutral with a price target of $11.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Wednesday - June 25th

Micron (MU), Paychex (PAYX), General Mills (GIS), Jefferies Financial (JEF), H B Fuller (FUL), Novagold (NG), Worthington Steel (WS), Steelcase (SCS), MillerKnoll (MLKN), Winnebago Industries (WGO), Daktronics (DAKT).