Stock Market Update

Equity futures are mixed this morning following yesterday's trade that saw the market retreat from opening highs as interest rates rose after the release of the June CPI.

The main catalysts for today's session are quite similar to yesterday; the market awaits the release of a key piece of inflationary data (today is the June PPI) while a slate of large banks have reported their earnings before the open.

Yesterday's CPI release gave the markets an initial boost as the Core CPI number was lower than expected, but a closer look at the report revealed pockets of inflation in several areas that stirred concerns about tariff-driven inflation. In turn, interest rates rose throughout the day, most stocks slipped, and the chance of a September rate cut decreased to 54%.

Today's release of the June PPI could be even more influential, as the report will feed into the PCE Price Index, which is the Fed's preferred gauge of inflation.

Tariff headlines are relatively subdued this morning, with President Trump stating that a tariff on pharmaceuticals will likely begin August 1, though it will likely begin lower than the 200% figure to give companies time to adjust. A tariff on semiconductor imports is also likely, according to a Bloomberg report.

In corporate news:

• ASML Holding (ASML 764.35, -58.67, -7.1%) beats EPS expectations by €0.66, beats on revenues, but guides Q3 revs below consensus and guides FY25 revs below consensus.
• Bank of America (BAC 46.75, +0.60, +1.3%) beats EPS expectations by $0.03, misses on revenues.
• Brighthouse Financial (BHF 51.90, +4.58, +9.7%) shares are rising pre-market after reports that Aquarian is set to acquire the company.
• Goldman Sachs (GS 710.85, +8.34, +1.2%) beats EPS expectations by $1.26, beats on revenues.
• Johnson & Johnson (JNJ 158.00, +2.83, +1.8%) beats EPS by $0.09, beats on revs; raises FY25 EPS above consensus, revs above consensus.
• Morgan Stanley (MS 140.19,-1.49,-1.1% )  beats by $0.15, beats on revs, Investment Banking revenue down 5%; Reauthorizes share repurchase program for up to $20 bln and increases quarterly dividend by $0.075/share to $1.00/share.
• President Trump will sign executive order to make private investments available in 401K plans, according to The Wall Street Journal.  (APO, KKR, ARES, BX)

Reviewing overnight developments:

Asian markets ended mostly lower. Japan's Nikkei -0.1%, Hong Kong's Hang Seng -0.3%, China's Shanghai flat.

• In economic data:
  • Japan's July Reuters Tankan Index 7 (last 6)
  • South Korea's June Export Price Index -4.5% yr/yr (last -2.6%) and Import Price Index -6.2% yr/yr (last -5.1%); June Unemployment Rate 2.6% (last 2.7%)

European indices are mostly higher. Germany's DAX +0.2%, U.K.'s FTSE +0.2%, France's CAC +0.1%.

• In economic data:
  • U.K.'s June CPI 0.3% m/m (expected 0.2%; last 0.2%) and 3.6% yr/yr (expected 3.4%; last 3.4%); June Core CPI 0.4% m/m (expected 0.2%; last 0.2%) and 3.7% yr/yr (expected 3.5%; last 3.5%); June RPI 0.4% m/m (expected 0.3%; last 0.2%) and 4.4% yr/yr (expected 4.3%; last 4.3%); House Price Index 3.9% (expected 3.2%; last 3.5%)
  • Italy's June CPI 0.2% m/m (expected 0.2%; last -0.1%) and 1.7% yr/yr (expected 1.7%; last 1.6%)