Stock Market Update

Equity futures point to a modestly higher opening after yesterday's session resulted in fresh record highs for the S&P 500. The gains came on solid performances across mega-cap and tech names (the financials sector also charted gains with a few notable earnings moves), which saw the Nasdaq Composite notch record highs as well. At the same time, pressure in the broader market pushed the DJIA modestly lower.

The market continues to be supported by an easing geopolitical backdrop, which has stabilized oil prices around the $90 per barrel mark. Bloomberg reports that Pakistan is pushing for a longer ceasefire between the U.S. and Iran in hopes that a more permanent peace plan can be negotiated.

In addition to easing geopolitical volatility, a wave of AI partnerships and announcements has sprung forth recently, which has restored momentum to some of the market's largest components.

Q1 earnings season is also progressing with some solid reports from the big banks. Additionally, a few reports from outside of the financials sector are beginning to trickle in.

On the data front, the market will receive the weekly initial jobless claims report this morning (Briefing.com consensus 215K). Recent labor data still suggests a strong "low firing, low hiring" trend, though labor conditions are likely to come further into focus as rate cut expectations shift in response to oil-driven inflation stemming from the Iran conflict.

In corporate news:

• Abbot Laboratories (ABT 99.05, -2.51, -2.5%) beat EPS expectations by $0.01, beat revenue expectations, and guided Q2 and FY26 EPS below consensus.
• PepsiCo (PEP 156.48, +1.63, +1.1%) beat EPS expectations by $0.07, beat revenue expectations, and reaffirmed its FY26 EPS and revenue guidance.
• Tesla (TSLA 395.13, +3.18, +0.8%) CEO Elon Musk asks chip suppliers to move ahead with his Terafab chip making plan, according to Bloomberg.
• Travelers (TRV 295.00, -4.33, -1.5%) beat EPS expectations by $0.64, missed revenue expectations, and raised its quarterly dividend.

Reviewing overnight developments:

Equity indices in the Asia-Pacific region had a generally positive showing with Japan's Nikkei (+2.4%) rallying to a fresh record high while South Korea's Kospi (+2.2%) approached its record from late February. Japan's Nikkei: +2.4%, Hong Kong's Hang Seng: +1.7%, China's Shanghai Composite: +0.7%, India's Sensex: -0.2%, South Korea's Kospi: +2.2%, Australia's ASX All Ordinaries: -0.1%.

In news:

• China's President Xi pledged to increase cooperation with Russia after meeting with Russia's Foreign Minister Lavrov.
• Russia's President Putin is expected to visit China in late May.
• China's Q1 GDP was in line with expectations, but Retail Sales growth in March decelerated to its slowest pace since December.
• Australia saw in-line job growth in March.

In economic data:

• China's Q1 GDP 1.3% qtr/qtr, as expected (last 1.2%); 5.0% yr/yr (expected 4.8%; last 4.5%). March Fixed Asset Investment 1.7% yr/yr (expected 1.9%; last 1.8%), March Industrial Production 5.7% yr/yr (expected 5.4%; last 6.3%), March House Prices -3.4% yr/yr (last -3.2%), and March Retail Sales 1.7% yr/yr (expected 2.4%; last 2.8%)
• Australia's April MI Inflation Expectations 5.9% (last 5.2%). March Employment Change 17,900 (expected 19,100; last 49,700) and full Employment Change 52,500 (last -27,700). March Unemployment Rate 4.3%, as expected (last 4.3%), and March Participation Rate 66.8% (expected 66.9%; last 66.9%)

Major European indices trade in the green. STOXX Europe 600: +0.3%, Germany's DAX: +0.5%, U.K.'s FTSE 100: +0.6%, France's CAC 40: +0.5%, Italy's FTSE MIB: +0.4%, Spain's IBEX 35: +0.2%.

In news:

• The U.K. reported strong growth for February, prompting an opinion from Deutsche Bank that Q1 growth could be well ahead of expectations.
• However, Gilt yields are lower this morning, suggesting the market believes the strength is temporary.
• European Central Bank officials are reportedly skeptical about an April rate hike due to little evidence of knock-on effects from the energy price spike.
• The European Banking Authority noted that private credit does not pose a systemic risk to banks in the EU.

In economic data:

• Eurozone's March CPI 1.3% m/m (expected 1.2%; last 0.6%); 2.6% yr/yr (expected 2.5%; last 1.9%). March Core CPI 2.3% yr/yr, as expected (last 2.4%) o U.K.'s February GDP 0.5% m/m (expected 0.1%; last 0.1%), February Manufacturing Production -0.1% m/m (expected 0.3%; last 0.2%); -0.5% yr/yr (expected -0.3%; last 1.3%). February Industrial Production 0.5% m/m (expected 0.3%; last -0.1%); -0.4% yr/yr (expected -0.9%; last 0.5%). February Construction Output 1.0% m/m (expected -0.4%; last 0.5%); -1.0% yr/yr (expected -0.4%; last -1.9%). February trade deficit GBP18.79 bln (expected deficit of GBP19.40 bln; last deficit of GBP15.08 bln)
• Italy's March CPI 0.5% m/m, as expected (last 0.7%); 1.7% yr/yr, as expected (last 1.5%)
• Swiss March PPI 0.2% m/m (expected 0.5%; last -0.3%); -2.7% yr/yr (last -2.7%)