Stock Market Update

The S&P 500 futures are up 12 points and are trading 0.2% above fair value, the Nasdaq 100 futures are up 71 points and are trading 0.4% above fair value, and the Dow Jones Industrial Average futures are up 22 points and are trading 0.1% above fair value.

Early trading features a positive bias after another gain in the S&P 500 and Nasdaq Composite yesterday. Pre-open gains in mega cap stocks are supporting the broader market so far. A pullback in market rates has also contributed to the upside bias. The 10-yr note yield is down three basis points to 4.27% and the 2-yr note yield is down two basis points to 4.61%. 

Fed Chair Powell will continue his semiannual monetary policy testimony before the House Financial Services Committee today. 

Separately, the weekly MBA Mortgage Applications Index dropped 0.2% after a 2.6% decline last week. Other data today:

• 10:00 ET: May Wholesale Inventories (Briefing.com consensus 0.6%; prior 0.1%)
• 10:30 ET: Weekly crude oil inventories (prior -12.16 mln)

In corporate news:

• Microsoft (MSFT 461.26, +1.72, +0.4%): gave up its seat as an observer on OpenAI board, according to FT; aiming to increase prices for Xbox Game Pass, according to Windows Central
• Apple (AAPL 229.82, +1.17, +0.5%): will not put observers on OpenAI board, according to FT
• Taiwan Semiconductor Manufacturing (TSM 188.78, +4.26, +2.3%): reports June revs increased 28.0% yr/yr to ~NT$207.9 bln
• Illumina (ILMN 110.65, +3.97, +3.7%): acquires Fluent BioSciences
• Honeywell (HON 210.18, -0.42, -0.2%): confirms it agreed to acquire Air Products' (APD) liquefied natural gas process technology and equipment business for $1.81 bln in an all-cash transaction
• UPS (UPS 134.51, +0.23, +0.2%): appoints Brian Dykes as EVP and CFO; effective immediately
• Chipotle Mexican Grill (CMG 57.60, +0.12, +0.2%): announces retirement of CFO Jack Hartung; effective March 31, 2025

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region ended the midweek session on a mostly lower note. Japan's Nikkei: +0.6%, Hong Kong's Hang Seng: -0.3%, China's Shanghai Composite: -0.7%, India's Sensex: -0.5%, South Korea's Kospi: UNCH, Australia's ASX All Ordinaries: -0.2%.
  • In economic data:
    • China's June CPI -0.2% m/m (expected -0.1%; last -0.1%); 0.2% yr/yr (expected 0.4%; last 0.3%). June PPI -0.8% yr/yr, as expected (last -1.4%)
    • Japan's June PPI 0.2% m/m (expected 0.4%; last 0.7%); 2.9% yr/yr, as expected (last 2.6%)
    • South Korea's June Unemployment Rate 2.8% (last 2.8%)
    • New Zealand's May Visitor Arrivals 4.0% m/m (last -8.8%)
  • In news:
    • China's CPI deflated slightly for the second month in a row largely due to falling food prices while PPI was down for the 21st month in a row.
    • Samsung's unionized employees are threatening an indefinite strike.
    • Former Bank of Japan Governor Shirakawa said that the central bank needs to loosen the hard 2.0% inflation target.
    • The Reserve Bank of New Zealand left its official cash rate at 5.50%, as expected.
• Major European indices trade in the green. STOXX Europe 600: +0.6%, Germany's DAX: +0.6%, U.K.'s FTSE 100: +0.6%, France's CAC 40: +0.6%, Italy's FTSE MIB: +0.7%, Spain's IBEX 35: +0.9%.
  • In economic data:
    • Italy's May Industrial Production 0.5% m/m (expected 0.0%; last -1.0%); -3.3% yr/yr (last -3.0%)
  • In news:
    • Volkswagen lowered its sales forecast for the year due in part to a possible closure of an electric vehicle plant in Brussels.
    • Mercedes-Benz vehicle sales in Q2 were down 6% yr/yr.
    • Croatia's central bank governor and European Central Bank policymaker Vujcic is on track to be appointed to his third six-year term.