Stock Market Update

The stock market is on track for a modestly lower start with futures on the S&P 500 trading 12 points below fair value.

Equity futures slumped out of the gate on Sunday evening in reaction to news that the U.S. struck Iranian nuclear facilities over the weekend, but the opening drop was followed by a steady rebound that erased the bulk of the initial weakness. The market is hopeful that the strike will not prompt a broader conflict, but Iran has vowed to respond, so there is some persisting uncertainty in the picture.

Crude oil futures rallied past last week's high toward $79/bbl, boosted in part by speculation that Iran could close the Strait of Hormuz after the country's parliament approved the move. That rally has been largely reversed, leaving oil up $0.89, or 1.2% at $74.73/bbl.

The response in Treasuries has been limited with the 10-yr yield up just one basis point at 4.39%.

In U.S. corporate news:

• Exelixis (EXEL 51.50, +11.13, +27.6%): company released positive Phase 3 trial data.
• Tesla (TSLA 324.12, +1.96, +0.6%): company launched robotaxi service in Austin, Texas.
• FactSet (FDS 410.00, -12.34, -2.9%): company missed Q3 EPS expectations, reaffirmed its EPS guidance for FY25, and announced the appointment of a new CEO.
• Super Micro Computer (SMCI 43.45, -1.87, -4.1%): company plans a $2 billion convertible senior note offering.

Reviewing overnight developments:

• Asian markets ended mixed. Japan's Nikkei -0.1%, Hong Kong's Hang Seng +0.7%, China's Shanghai Composite +0.7%
  • In economic data:
    • Japan's flash June Manufacturing PMI 50.4 (expected 49.5; last 49.4) and flash Services PMI 51.5 (last 51.0) 
    • India's flash June Manufacturing PMI 58.4 (expected 57.7; last 57.6) and flash Services PMI 60.7 (expected 58.6; last 58.8)
    • Singapore's May CPI 0.7% m/m (last -0.3%); 0.8% yr/yr, as expected (last 0.9%). May Core CPI 0.6% yr/yr, as expected (last 0.7%)
    • Australia's flash June Manufacturing PMI 51.0 (last 51.0) and flash Services PMI 51.3 (last 50.6)
  • In news:
    • Japan cancelled its planned July 1 security meeting with U.S. officials after the U.S. requested that Japan increase its defense spending to 3.5% of GDP
    • South Korea's exports were up 8.3% through the first 20 days of June with chip exports jumping 21.8% year-over-year
• Major European indices trade lower. Germany's DAX -0.4%, U.K.'s FTSE -0.1%, France's CAC -0.6%
  • In economic data:
    • Eurozone's flash June Manufacturing PMI 49.4 (expected 49.6; last 49.4) and flash Services PMI 50.0, as expected (last 49.7)
    • Germany's flash June Manufacturing PMI 49.0 (expected 47.8; last 47.1) and flash Services PMI 49.4 (expected 47.8; last 47.1)
    • U.K.'s flash June Manufacturing PMI 47.7 (expected 46.9; last 46.4) and flash Services PMI 51.3 (expected 51.2; last 50.9)
    • France's flash June Manufacturing PMI 47.8 (expected 49.8; last 49.8) and flash Services PMI 48.7 (expected 49.2; last 48.9)
  • In news:
    • Stellantis announced changes to its leadership team after a new CEO took charge