Stock Market Update

Equity futures are little changed this morning after yesterday's session that saw the Nasdaq Composite reach a new all-time high (21,549.73) before the major averages retreated, finishing with modest losses for the day. 

The market's noncommittal move yesterday can be largely attributed to the anticipation of today's 8:30 ET release of July CPI data, which will be a key driver of the FOMC's monetary policy.

The Fed's baseline is that tariff impacts are transitory, but broad-based goods inflation could strengthen the hawkish camp arguing for lasting effects. A hot CPI print could delay or derail expected Fed rate cuts in 2025, while a soft reading would support the transitory narrative and keep September cuts in play.

The market will also receive the Treasury Budget for July at 14:00 ET.

Headlines are relatively quiet elsewhere, and the batch of earnings reports the market will receive before the open today is miniscule in comparison to the past few weeks. 

Yesterday, President Trump signed an executive order that extends the lower tariff rate for China an additional 90 days, though the market was little swayed by the announcement. 

The NFIB Small Business Optimism Index increased 1.7 points in July to 100.3, from a prior level of 98.6.

In corporate news:

• Elon Musk says "Apple (AAPL 225.80, -1.38, -0.6%) is behaving in a manner that makes it impossible for any AI company besides OpenAI to reach #1 in the App Store, which is an unequivocal antitrust violation"; says xAI will take immediate legal action, according to Reuters.
• Chipotle Mexican Grill (CMG 42.08, +0.46, +1.1%) was upgraded to Overweight from Neutral at Piper Sandler with a target of $50.
• Shares of Intel (INTC 21.24, +0.56, +2.7%) trade higher in the pre-market after CEO Lip-Bu Tan visited the White House Monday afternoon. President Trump said via Truth Social that Tan's "success and rise is an amazing story," according to CNBC.
• The Chinese government has asked local companies to avoid using NVIDIA's (NVDA 181.89, -0.26, -0.1%) H20 chips, particularly for government-related work, citing perceived security issues, according to Bloomberg.

Reviewing overnight developments:

Equity indices in the Asia-Pacific ended Tuesday on a mostly higher note with Japan's Nikkei (+2.2%) hitting a fresh record with help from exporters that raised their guidance. Japan's Nikkei: +2.2%, Hong Kong's Hang Seng: +0.3%, China's Shanghai Composite: +0.5%, India's Sensex: -0.5%, South Korea's Kospi: -0.5%, Australia's ASX All Ordinaries: +0.4%.

In news:

• There were no trades in Japan's 10-yr JGBs for the first time since March 2023.
• South Korea's President Lee will meet with President Trump on August 25. Taiwan is seeking to establish a strategic partnership with the U.S. in order to receive a lower tariff rate.
• The Reserve Bank of Australia lowered its cash rate by 25 basis points to 3.60%, as expected. The central bank also lowered its terminal rate forecast to 2.90% from 3.20%.

In economic data:

• Japan's July M2 Money Stock 1.0% yr/yr (expected 0.8%; last 0.9%)
• India's July CPI 1.55% yr/yr (expected 1.76%; last 2.10%)
• Singapore's Q2 GDP 1.4% qtr/qtr, as expected (last -0.5%); 4.4% yr/yr (expected 4.3%; last 4.1%)
• Australia's July NAB Business Confidence 7 (last 5) and Business Survey 5 (last 7)

Major European indices trade mostly higher while Germany's DAX (-0.5%) underperforms. STOXX Europe 600: UNCH, Germany's DAX: -0.5%, U.K.'s FTSE 100: UNCh, France's CAC 40: +0.1%, Italy's FTSE MIB: +0.4%, Spain's IBEX 35: +0.1%.

In news:

• The U.K.'s unemployment rate remained at a four-year high of 4.7% in June.
• Germany's ZEW Economic Sentiment (34.7) improved for the third consecutive month but was still shy of expectations.
• Italy is aiming to reduce Chinese investments in strategic companies.
• The EU is preparing its 19th package of sanctions against Russia.

In economic data:

• Eurozone's August ZEW Economic Sentiment 25.1 (expected 28.1; last 36.1)
• Germany's August ZEW Economic Sentiment 34.7 (expected 39.5; last 52.7) and ZEW Current Conditions -68.6 (expected -65.0; last -59.5)
• U.K.'s June Average Earnings Index + Bonus 4.6% yr/yr (expected 4.7%; last 5.0%). June three-month employment change 238,000 (last 134,000) and June Unemployment Rate 4.7%, as expected (last 4.7%). July Claimant Count -6,200 (expected 19,7000; last -15,500)