S&P Futures Gain on Trade Optimism, U.S. PCE Inflation Data in Focus

September S&P 500 E-Mini futures (ESU25) are trending up +0.28% this morning amid renewed optimism about trade deals, while investors await the release of the Federal Reserve’s first-line inflation gauge.

U.S. Commerce Secretary Howard Lutnick said late on Thursday that the U.S. and China had finalized an understanding on trade, and added that the White House is close to reaching agreements with 10 major trading partners ahead of a July 9th deadline when reciprocal tariffs are set to take effect. Also, the Treasury Department announced an agreement with G-7 allies that will exempt U.S. companies from certain foreign-imposed taxes in exchange for dropping the “revenge tax” provision from U.S. President Donald Trump’s tax bill.

In yesterday’s trading session, Wall Street’s major indices closed higher. Enphase Energy (ENPH) surged over +12% and was the top percentage gainer on the S&P 500 on signs that Congress may not eliminate tax credits for rooftop solar panels. Also, chip stocks gained ground, with Marvell Technology (MRVL) climbing more than +5% to lead gainers in the Nasdaq 100 and Broadcom (AVGO) rising over +2%. In addition, McCormick & Co. (MKC) gained more than +5% after the spice maker posted better-than-expected FQ2 adjusted EPS and reaffirmed its full-year guidance. On the bearish side, Equinix (EQIX) slumped over -9% and was the top percentage loser on the S&P 500 after BMO Capital and Raymond James downgraded the stock.

The U.S. Bureau of Economic Analysis’ third estimate showed on Thursday that the economy contracted at a 0.5% annualized pace in the first quarter, revised from the prior estimate of -0.2%. Also, U.S. durable goods orders shot up +16.4% m/m in May, stronger than expectations of +8.6% m/m, while core durable goods orders, which exclude transportation, rose +0.5% m/m, stronger than expectations of +0.1% m/m. In addition, U.S. pending home sales rose +1.8% m/m in May, stronger than expectations of +0.2% m/m. Finally, the number of Americans filing for initial jobless claims in the past week fell -10K to 236K, compared with the 244K expected.

“The economy is slowing, but remains resilient. While the numbers as a whole don’t necessarily make a compelling case for bulls or bears, for the time being, the market appears fixated on tech strength and the S&P 500’s potential return to record levels,” said Chris Larkin at E*Trade from Morgan Stanley.

Richmond Fed President Tom Barkin said on Thursday that he expects tariffs to exert upward pressure on prices, and with significant uncertainty still lingering, the central bank should wait for greater clarity before making any changes to interest rates. Also, Chicago Fed President Austan Goolsbee said the central bank could resume rate cuts if inflation shows a clear path toward the policymakers’ 2% target and uncertainty surrounding the economic outlook diminishes. In addition, San Francisco Fed President Mary Daly said she’s observing increasing evidence that tariffs may not trigger a significant or sustained inflation spike, supporting the argument for a rate cut in the fall.

Meanwhile, U.S. rate futures have priced in a 79.3% chance of no rate change and a 20.7% chance of a 25 basis point rate cut at July’s monetary policy meeting.

Today, all eyes are focused on the U.S. core personal consumption expenditures price index, the Fed’s preferred price gauge, which is set to be released in a couple of hours. Economists, on average, forecast that the core PCE price index will stand at +0.1% m/m and +2.6% y/y in May, compared to the previous figures of +0.1% m/m and +2.5% y/y.

U.S. Personal Spending and Personal Income data will also be closely monitored today. Economists anticipate May Personal Spending to rise +0.1% m/m and Personal Income to grow +0.3% m/m, compared to the April figures of +0.2% m/m and +0.8% m/m, respectively.

The University of Michigan’s U.S. Consumer Sentiment Index will be reported today as well. Economists expect the final June figure to be revised slightly lower to 60.4 from the preliminary reading of 60.5.

In addition, market participants will be looking toward speeches from New York Fed President John Williams, Fed Governor Lisa Cook, and Cleveland Fed President Beth Hammack.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.270%, up +0.42%.

The Euro Stoxx 50 Index is up +1.01% this morning as signs of improving trade relations between Beijing and Washington fueled optimism for a potential de-escalation in the U.S.-driven tariff war. Automobile and media stocks led the gains on Friday. The benchmark index is on track to log its first weekly gain in three weeks. Also boosting sentiment was a Wall Street Journal report stating that the European Union is considering tariff reductions on a range of U.S. imports in an effort to secure a swift trade agreement with the U.S. Other concessions under discussion include reducing nontariff barriers, increasing purchases of American goods such as liquefied natural gas, and proposing cooperation with the U.S. to address its economic concerns about China, the report said. Meanwhile, data released on Friday showed that inflation in both France and Spain edged higher for the first time this year in June, as energy costs rose amid escalating tensions in the Middle East. Still, the data is unlikely to immediately alarm European Central Bank policymakers, as inflation remained below the central bank’s 2% target in May. ECB Vice President Luis de Guindos stated on Friday that the central bank is on course to achieve its 2% inflation target. “We are confident we will meet the inflation target, which is why we lowered interest rates,” he said. In corporate news, Indra Sistemas Sa (IDR.E.DX) rose over +4% after Morgan Stanley upgraded the stock to Overweight from Equal Weight.

France’s CPI (preliminary), Spain’s CPI (preliminary), Eurozone’s Business and Consumer Survey, and Eurozone’s Consumer Confidence data were released today.

The French June CPI stood at +0.3% m/m and +0.9% y/y, stronger than expectations of +0.1% m/m and +0.7% y/y.

The Spanish June CPI came in at +0.6% m/m and +2.2% y/y, stronger than expectations of +0.4% m/m and +2.0% y/y.

Eurozone’s June Business and Consumer Survey arrived at 94.0, weaker than expectations of 95.1.

Eurozone’s June Consumer Confidence stood at -15.3, in line with expectations.

Asian stock markets today closed mixed. China’s Shanghai Composite Index (SHCOMP) closed down -0.70%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +1.43%.

China’s Shanghai Composite Index closed lower today as investors digested disappointing industrial profit data, though signs of easing trade tensions between the U.S. and China helped limit losses. Financial stocks underperformed on Friday. Still, the benchmark index ended the week higher. China’s industrial profits fell sharply in May from a year earlier, reversing the previous month’s gains, as subdued demand and U.S. trade tariffs pressured profitability. Industrial profit dropped 9.1% year-over-year in May, plunging from April’s 3.0% increase, according to data released by the National Bureau of Statistics. Meanwhile, U.S. Commerce Secretary Howard Lutnick said late Thursday that the U.S. and China had finalized an understanding on trade reached in Geneva last month. “They’re going to deliver rare earths to us,” and once that happens, “we’ll take down our countermeasures,” Lutnick said in an interview with Bloomberg News. U.S. President Donald Trump said the U.S. had signed a trade agreement with Beijing on Wednesday. China said on Friday that it had further confirmed details of a trade framework with the U.S. in recent days. In a statement, the Chinese Commerce Ministry said Beijing will “review and approve eligible applications for export of controlled items in accordance with the law.” In corporate news, Xiaomi climbed over +3% in Hong Kong after the Chinese EV and smartphone manufacturer priced its new electric YU7 SUV at 253,500 yuan ($35,364), nearly 4% lower than Tesla’s Model Y. Investors now await the upcoming July Politburo meeting for signs of potential stimulus measures.

Japan’s Nikkei 225 Stock Index closed higher and hit a 6-month high today, tracking overnight gains on Wall Street. Sentiment was also supported by comments from White House spokesperson Karoline Leavitt, who indicated that the upcoming U.S. tariff deadline could be extended. Heavy-industry and automobile stocks led the gains on Friday. Technology stocks also advanced. The benchmark index posted its biggest weekly gain in nine months. Government data released on Friday showed that core consumer inflation in Japan’s capital eased in June for the first time in four months but remained well above the Bank of Japan’s 2% target, sustaining market expectations for additional interest rate hikes. In positive news for the “virtuous cycle” that the BOJ has been aiming to create, data showed that unemployment held steady at a low 2.5% in May. Policymakers anticipate that tightness in the job market will continue to pressure Japanese companies to raise wages. At the same time, Japan’s retail sales in May grew at the slowest pace since February. Meanwhile, Capital Economics’ Marcel Thieliant noted that the inflation “overshoot” points to a potential rate hike by the BOJ. He expects the BOJ will raise rates in October, as underlying inflation still runs well ahead of the central bank’s forecasts. Despite persistent inflationary pressure, the BOJ kept its policy rate unchanged at 0.5% last week amid elevated uncertainty surrounding the trade outlook. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed up +0.74% to 23.29.

The Japanese June Tokyo Core CPI arrived at +3.1% y/y, weaker than expectations of +3.3% y/y.

The Japanese May Retail Sales stood at +2.2% y/y, weaker than expectations of +2.4% y/y.

The Japanese May Unemployment Rate was 2.5%, in line with expectations.

Pre-Market U.S. Stock Movers

Nike (NKE) surged over +9% in pre-market trading after the sportswear company posted better-than-expected FQ4 results and said it expects the decline in sales and margins to ease in the current quarter.

The Trade Desk (TTD) rose more than +3% in pre-market trading after Evercore ISI upgraded the stock to Outperform from In Line with an unchanged price target of $90.

Estee Lauder (EL) gained over +2% in pre-market trading after HSBC upgraded the stock to Buy from Hold with a price target of $99.

Autodesk (ADSK) advanced about +1% in pre-market trading after Berenberg upgraded the stock to Buy from Hold with a price target of $365.

Concentrix (CNXC) slumped more than -7% in pre-market trading after the technology and services provider reported weaker-than-expected FQ2 adjusted EPS and provided below-consensus FQ3 adjusted EPS guidance.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Friday - June 27th

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