Stock Market Update

The stock market is on course for a flattish start with futures on the S&P 500 trading seven points above fair value after a quiet night.

Equity futures have seen limited movement this morning, hanging onto their big gains from Tuesday. The overnight session did not cause any notable shifts in sentiment with the market remaining hopeful that the Israel-Iran ceasefire will hold.

President Trump is at the NATO summit in the Netherlands, where members are set to agree to an increase to the defense spending target to 5% of GDP.

Treasuries are little changed with the 10-yr yield up one basis point at 4.30% ahead of today's $70 bln 5-yr note sale at 13:00 ET.

The market received the weekly MBA Mortgage Index this morning, which was up 1.1% to follow last week's 2.6% decrease. Later in the day, the New Home Sales report for May (Briefing.com consensus 700,000; prior 743,000) will be released at 10:00 ET.

Fed Chairman Powell will continue his semiannual testimony on monetary policy to Congress, but today's appearance before the Senate Banking Committee is not expected to produce many headline.

In U.S. corporate news:

• AeroVironment (AVAV 195.00, +1.72, +0.9%): beat Q4 expectations and issued guidance for FY26.
• General Mills (GIS 52.39, -1.02, -1.9%): company beat Q4 EPS expectations, issued its outlook for FY26, and raised its dividend by 2%.
• FedEx (FDX 216.00, -13.51, -5.9%): company beat Q4 expectations and issued below-consensus EPS guidance for Q1.
• QuantumScape (QS 5.84, +1.51, +34.9%): company successfully integrated its Cobra separator process into baseline cell production.

Reviewing overnight developments:

• Asian markets ended higher. Japan's Nikkei +0.4%, Hong Kong's Hang Seng +1.2%, China's Shanghai Composite +1.0%
  • In economic data:
    • Japan's May Corporate Services Price Index 3.3% yr/yr (expected 3.1%; last 3.4%). April Leading Index 104.2 (expected 103.4; last 108.1) and Coincident Indicator 0.2% m/m (expected -0.3%; last -1.4%)
    • Australia's May Monthly CPI Indicator 2.1% yr/yr (expected 2.3%; last 2.4%)
    • New Zealand's May trade surplus NZD1.235 bln (expected surplus of NZD1.060 bln; last surplus of NZD1.285 bln)
  • In news:
    • Bank of Japan policymaker Tamura is becoming a more vocal dissenter, calling on the central bank to "boldly proceed with adjustment" to policy.
    • China's Premier Li said that his country will transition from a major manufacturing power to a big consumer market.
• Major European indices trade in the red. Germany's DAX -0.5%, U.K.'s FTSE -0.1%, France's CAC -0.5%
  • In economic data:
    • France's June Consumer Confidence 88 (expected 89; last 88). May jobseeker total 3.002 mln (last 3.013 mln)
    • Spain's Q1 GDP 0.6% qtr/qtr, as expected (last 0.7%); 2.8% yr/yr, as expected (last 3.3%). May PPI 1.9% yr/yr (last 1.9%)
    • Swiss June ZEW Expectations -2.1 (last -22.0)
  • In news:
    • NATO leaders are expected to agree to the new defense spending target of 5% of GDP at the ongoing summit in the Netherlands, though Spain will receive an exemption.
    • The U.K. is expected to purchase 12 F-35A jets from the U.S.
    • Stellantis has been boosted by an upgrade at Jefferies.