Stock Market Update

The S&P 500 futures are up 20 points and are trading 0.4% above fair value, the Nasdaq 100 futures are up 50 points and are trading 0.2% above fair value, and the Dow Jones Industrial Average futures are up 174 points and are trading 0.4% above fair value.

Early trading features a positive bias despite negative responses to earnings from Apple (AAPL) and Amazon (AMZN). 

Optimism around the trade war situation is growing, contributing to the early trading bias, after China's Commerce Ministry said that the "US has recently sent messages to China through relevant parties, hoping to start talks with China. China is currently evaluating this."

The market sentiment may shift following the 8:30 ET release of the April Employment Situation Report. 

Treasury yields are little changed. The 10-yr yield is down one basis point to 4.22% and the 2-yr yield is up one basis point to 3.71%.

In corporate news:

• Apple (AAPL 205.85, -7.47, -3.5%): beats by $0.03, reports revs in-line; iPhones top expectations; increases dividend 4%; authorized an additional program to repurchase up to $100 bln of the company's common stock; Co guides Q3 (Jun) revs in line; sees $900 mln in tariff costs in Q3 (Jun)
• Amazon (AMZN 188.80, -1.40, -0.7%): beats by $0.22, reports revs in-line; guides Q2 revs in-line
• Amgen (AMGN 287.94, +4.16, +1.5%): beats by $0.63, beats on revs; reaffirms FY25 EPS guidance, revs guidance
• Atlassian (TEAM 190.40, -38.63, -16.7%): beats by $0.07, reports revs in-line; guides Q4 revs in-line
• Airbnb (ABNB 117.50, -6.51, -5.3%): beats by $0.01, beats on revs; guides Q2 revs in-line, expects Q2 growth of Nights and Experiences Booked to moderate relative to Q1; Seeing some relative softness in U.S. due to broader economic uncertainty
• LendingTree (TREE 47.00, -7.12, -13.2%): beats by $0.79, misses on revs; guides Q2 revs below consensus; guides FY25 revs below consensus

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region ended the week on a higher note while markets in China remained closed for Labor Day. Japan's Nikkei: +1.0% (+3.2% for the week), Hong Kong's Hang Seng: +1.7% (+2.4% for the week), China's Shanghai Composite: HOLIDAY (-0.5% for the week), India's Sensex: +0.3% (+1.6% for the week), South Korea's Kospi: +0.1% (+0.5% for the week), Australia's ASX All Ordinaries: +1.1% (+3.4% for the week).
  • In economic data:
    • Japan's March jobs/applications ratio 1.26 (expected 1.25; last 1.24). March Unemployment Rate 2.5% (expected 2.4%; last 2.4%). April Monetary Base -5.1% yr/yr (expected -2.0%; last -3.2%)
    • South Korea's April CPI 0.1% m/m, as expected (last 0.2%); 2.1% yr/yr, as expected (last 2.1%). April Manufacturing PMI 47.5 (last 49.1)
    • India's April Manufacturing PMI 58.2 (expected 58.4; last 58.1)
    • Hong Kong's March Retail Sales -3.5% yr/yr (last -13.0%). Q1 GDP 2.0% qtr/qtr (last 0.8%); 3.1% yr/yr (last 2.4%)
    • Australia's Q1 PPI 0.9% qtr/qtr (expected 0.8%; last 0.8%); 3.7% yr/yr (last 3.7%). March Retail Sales 0.3% m/m (expected 0.4%; last 0.8%) and Q1 Retail Sales 0.0% qtr/qtr (last 0.8%)
  • In news:
    • China acknowledged that it is conducting an assessment regarding trade negotiations with the United States.
    • Meanwhile, Japan's Prime Minister Ishiba said that his country's negotiations with the U.S. have not produced common ground yet.
    • Japan's Finance Minister Kato said that Japan's U.S. Treasury holdings will be a card in negotiations.
    • South Korea's Manufacturing PMI (47.5) contracted for the fourth consecutive month, reaching its lowest level since September 2022.
• Major European indices are looking for a higher finish to the week. STOXX Europe 600: +1.1% (+2.5% week-to-date), Germany's DAX: +1.8% (+3.0% week-to-date), U.K.'s FTSE 100: +0.9% (+1.9% week-to-date), France's CAC 40: +1.6% (+2.4% week-to-date), Italy's FTSE MIB: +1.2% (+1.9% week-to-date), Spain's IBEX 35: +0.4% (-0.2% week-to-date).
  • In economic data:
    • Eurozone's April Manufacturing PMI 49.0 (expected 48.0; last 48.3). April flash CPI 0.6% m/m (last 0.6%); 2.2% yr/yr (expected 2.1%; last 2.2%). April Core CPI 1.0% m/m (last 1.0%); 2.7% yr/yr (expected 2.5%; last 2.4%). March Unemployment Rate 6.2% (expected 6.1%; last 6.2%)
    • Germany's April Manufacturing PMI 48.4 (expected 48.0; last 48.3)
    • France's April Manufacturing PMI 48.7 (expected 48.2; last 48.5). March government budget balance -EUR47.0 bln (last deficit of EUR40.3 bln)
    • Italy's April Manufacturing PMI 49.3 (expected 47.1; last 46.6). March Unemployment Rate 6.0%, as expected (last 5.9%)
    • Spain's April Manufacturing PMI 48.1 (expected 50.0; last 49.5)
    • Swiss April Manufacturing PMI 45.8 (expected 48.7; last 48.9)
  • In news:
    • There was some optimism after China's Commerce Ministry said that the country is ready for trade talks with the U.S.
    • EU Commissioner for Trade Sefcovic reportedly proposed buying more U.S. goods to reduce the EU's trade surplus with the U.S.
    • There was some renewed caution about the near-term likelihood of additional rate cuts from the European Central Bank after eurozone's core CPI accelerated to 2.7% yr/yr from 2.4% in the flash reading for April.