Stock Market Update

Equity futures point to a flat opening this morning as investors contend with another difficult backdrop of elevated interest rates, crude oil above $100 per barrel, and lingering concerns surrounding the pace of AI development.

Stocks are coming off a lower finish yesterday, when semiconductor and AI-infrastructure names faced sharp selling pressure. Those losses were partially offset by a surge across software stocks and a sizable retreat in crude oil from its highest levels of the session.

The 10-year note yield sits at 4.99%, keeping rates near the forefront ahead of Wednesday's FOMC decision. The CME FedWatch Tool currently assigns a 92.5% probability to a 25-basis-point rate hike tomorrow.

Meanwhile, continued uncertainty surrounding AI safety remains an added headwind for technology stocks following yesterday's pronounced semiconductor weakness.

Today's remaining economic calendar:

• 8:30 AM ET: September Empire State Manufacturing; Briefing.com consensus 14.1; prior 20.6

In corporate news:

• NVIDIA (NVDA 212.33, +1.37, +0.7%), Palantir (PLTR 170.76 -2.55, -1.5%), and Booz Allen Hamilton restrict AI model use, according to The Information. 
• Vera Therapeutics (VERA 38.62, +4.57, +13.42%) said atacicept met all final efficacy endpoints in the Phase 3 ORIGIN study in IgA nephropathy.
• Flex (FLEX 113.65, +5.33, +4.92%) named Amy Schwetz CFO of its RMS and ITS segments and said she is expected to become company CFO after the planned separation of its Cloud and Power Infrastructure business.

Reviewing overnight developments:

Equity markets ended mostly lower as investors assessed mixed August growth data from China. Japan's Nikkei: UNCH, Hong Kong's Hang Seng: -1.0%, China's Shanghai Composite: -0.5%, India's Sensex: -1.0%, South Korea's Kospi: -0.9%, Australia's ASX All Ordinaries: -0.8%.

In news:

• China's National Bureau of Statistics said the economy remained steady in August but noted deepening negative effects from the external environment.
• Japan is considering raising its defense spending target to 3.5% of GDP from 2.0%.

In economic data:

• China's August Retail Sales 0.4% yr/yr (expected 0.7%; last 0.6%), Industrial Production 5.2% yr/yr (expected 4.8%; last 4.5%), Fixed Asset Investment -7.2% yr/yr (expected -7-1%; last -6.7%), and House Prices -3.0% (last -3.2%). August Unemployment Rate 5.3% (expected 5.2%; last 5.2%)
• Japan's July Tertiary Industry Activity Index 0.9 (last 5.4)
• South Korea's August Import Price Index 15.6% yr/yr (last 18.8%) and Export Price Index 42.4% yr/yr (last 48.9%). August trade surplus $34.79 bln (expected surplus of $34.75 bln; last surplus of $30.39 bln). August Imports 22.4% yr/yr (expected 22.5%; last 26.5%) and Exports 68.7% yr/yr (expected 68.7%; last 63.0%)
• New Zealand's August Electronic Card Retail Sales -0.9% m/m (last 1.2%); 0.2% yr/yr (last 3.4%)
• India's August trade deficit $26.86 bln (last deficit of $31.98 bln)

Major indices are mixed and little changed overall amid central-bank commentary and a busy slate of economic data. STOXX Europe 600: -0.1%, Germany's DAX: UNCH, U.K.'s FTSE 100: -0.2%, France's CAC 40: -0.2%, Italy's FTSE MIB: UNCH, Spain's IBEX 35: +0.1%.

In news:

• The Bank of England plans to stop active sales of 20- and 30-year Gilts in an effort to slow rising yields.
• European Central Bank policymaker Moulin said last week's rate increase was justified by the inflation outlook and called for member states to reduce budget deficits.

In economic data:

• Eurozone's September ZEW Economic Sentiment 25.8 (expected 39.2; last 31.4) and July trade surplus EUR14.2 bln (expected surplus of EUR3.7 bln; last surplus of EUR7.2 bln)
• Germany's September ZEW Economic Sentiment 34.7 (expected 39.8; last 34.2) and ZEW Current Conditions -47.1 (expected -53.0; last -61.1). August WPI 0.9% m/m (expected 0.1%; last 0.2%); 6.8% yr/yr (last 5.3%)
• U.K.'s July three-month employment change 67,000 (last 83,000), July Average Earnings Index + Bonus 3.9% yr/yr, as expected (last 4.2%), July Unemployment Rate 4.9% (expected 5.0%; last 4.9%), and August Claimant Count Change 27,800 (expected 8,300; last -11,800)
• France's August CPI 0.7% m/m, as expected (last 0.6%); 2.4% yr/yr, as expected (last 2.1%)
• Italy's July trade surplus $8.240 bln (expected surplus of $4.770 bln; last surplus of $4.343 bln)
• Spain's August CPI 0.7% m/m, as expected (last 0.3%); 4.3% yr/yr, as expected (last 3.6%). August Core CPI 2.9% yr/yr, as expected (last 3.0%)