Stock Market Update

The S&P 500 futures are down 52 points and are trading 0.9% below fair value; the Nasdaq 100 futures are down 240 points and are trading 1.1% below fair value; and the Dow Jones Industrial Average futures are down 403 points and are trading 0.9% below fair value.

There is a risk-off tone following the news that Israel launched airstrikes on Iran's nuclear facilities that killed several top military leaders and nuclear scientists. The U.S. said it had no direct involvement in those strikes. Iran has vowed it will retaliate against Iran, and it has also threatened U.S. interests.

The oil market is a global focal point this morning, and for good reason. WTI crude futures are up 8.3%, or $5.65, to $73.69 per barrel but off an overnight high that stretched to $77.50 per barrel.

The move in oil is propping up many energy stocks; meanwhile, the military action between Israel and Iran is also aiding defense stocks.

Separately, the move in oil is not helping Treasuries. They often enjoy safe-haven buying interest amid heightened geopolitical uncertainty, but in this instance inflation concerns -- and concerns about the Fed holding off on a rate -- are offsetting safe-haven flows. The 2-yr note yield is up one basis point to 3.92%, and the 10-yr note yield is unchanged at 4.36%.

The U.S. Dollar Index is up 0.6% to 98.50, as the dollar has garnered some safe-haven interest.

In corporate news:

• Adobe (ADBE 399.40, -14.28, -3.5%) beats by $0.09, beats on revs; guides Q3 EPS above consensus, revs in-line; raises FY25 EPS and revenue guidance
• RH (RH 211.80, +34.93, +19.8%) beats by $0.22, misses slightly on revs; guides Q2 revs below consensus; reaffirms FY26 revs guidance; delaying launch of new concept
• Sherwin-Williams (SHW 351.35, -4.85, -1.4%): downgraded to Neutral from Buy at Citigroup, tgt $385
• United States Oil Fund (USO 80.22, +5.12, +6.9%): following Israel's strikes on Iran's nuclear sites

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region were on the defensive Friday in response to the news that Israel conducted a preemptive strike against Iran's nuclear facilities, killing several high-ranking military leaders, including the head of Iran's Revolutionary Guard, and nuclear scientists. Japan's Nikkei -0.9%; Hong Kong's Hang Seng -0.6%; China's Shanghai Composite -0.8%; India's Sensex -0.7%; South Korea's Kospi -0.9%; and Australia's All Ordinaries -0.3%.
  • In economic data:
    • China's May New Loans CNY620.0B (expected CNY890.0B; last CNY280.0B)
    • Japan's April Industrial Production -1.1% m/m (expected -1.2%; last 0.2%)
    • New Zealand's May Business NZ PMI 47.5 (last 53.3)
  • In news:
    • Prime Minister Netanyahu says the operation to remove Iran's nuclear threat will take as many days as needed. Oil prices have spiked in response to the strike and worries about potential supply disruptions that will make the use of oil more costly for oil-importing countries in the Asia-Pacific region.
    • Reports indicate Japan is likely to hold an upper house election on July 20.
• Major European bourses have come under some selling pressure in a risk-off move following the news that Israel launched airstrikes on Iran's nuclear facilities. STOXX Europe 600 -0.7%; Germany's DAX -1.3%; U.K.'s FTSE 100 -0.3%; France's CAC 40 -1.0%; Italy's FTSE MIB -1.2%; Spain's IBEX 35 -1.5%.
  • In economic data:
    • Eurozone's April Industrial Production -2.4% m/m (expected -1.6%; last 2.4%) and 0.8% yr/yr (expected 1.4%; last 3.7%); April Trade Balance EUR9.9B (expected EUR18.2B; last EUR37.3B)
    • Germany's May CPI 0.1% m/m (expected 0.1%; last 0.4%) and 2.1% yr/yr (expected 2.1%; last 2.1%)
    • France's May CPI -0.1% m/m (expected -0.1%; last 0.6%) and 0.7% yr/yr (expected 0.7%; last 0.8%)
    • Spain's May CPI 0.1% m/m (expected 0.0%; last 0.6%) and 2.0% yr/yr (expected 1.9%; last 2.2%)
  • In news:
    • Travel and leisure stocks are underperforming, with a spike in oil prices precipitating the underperformance.
    • Industrial production in the eurozone was weaker than expected in April, while May inflation readings for Germany, France, and Spain remained at acceptable levels that validated the ECB's recent rate cut.