June S&P 500 E-Mini futures (ESM24) are trending down -0.11% this morning as market participants awaited minutes of the Federal Reserve’s latest policy meeting as well as an earnings report from artificial intelligence bellwether Nvidia.
In yesterday’s trading session, Wall Street’s main stock indexes ended in the green. First Solar (FSLR) climbed over +8% and was the top percentage gainer on the S&P 500 after UBS and Piper Sandler raised their price targets on the stock. Also, Tesla (TSLA) advanced more than +6% and was the top percentage gainer on the Nasdaq 100 as a coalition of Tesla shareholders is urging peers to oppose a $56 billion pay package for CEO Elon Musk and to vote against the reelection of directors Kimbal Musk and James Murdoch, citing concerns that the board is not acting in the company’s best interests. In addition, International Business Machines (IBM) rose over +2% and was the top percentage gainer on the Dow after the tech giant revealed several artificial intelligence updates. On the bearish side, Nordson (NDSN) slumped more than -9% and was the top percentage loser on the S&P 500 after the company reported weaker-than-expected Q2 sales and cut its full-year guidance. Also, Palo Alto Networks (PANW) fell over -3% after the cybersecurity company gave a Q4 billings forecast that disappointed investors.
Fed Governor Christopher Waller said Tuesday that he needs to see several more favorable inflation reports before considering interest-rate cuts, adding that keeping rates steady for “three or four” months won’t harm the economy. “In the absence of a significant weakening in the labor market, I need to see several more months of good inflation data before I would be comfortable supporting an easing in the stance of monetary policy,” Waller said. In a discussion following his prepared remarks, he added that he expects the next move in borrowing costs will be downward. Also, Atlanta Fed President Raphael Bostic stated that the central bank will be in a position to begin cutting interest rates “by the end of the year,” though he does not anticipate this happening before the fourth quarter. In addition, Fed Vice Chair for Supervision Michael Barr reiterated that officials should keep interest rates steady for a longer duration than previously anticipated to effectively cool inflation. Finally, Cleveland Fed President Loretta Mester stated her preference for observing “a few more months of inflation data that looks like it’s coming down” before cutting interest rates.
Meanwhile, U.S. rate futures have priced in a 0% chance of a 25 basis point rate cut at the next central bank meeting in June and an 18.3% probability of a 25 basis point rate cut at the July FOMC meeting.
On the earnings front, major companies like Nvidia (NVDA), TJX Companies (TJX), Analog Devices (ADI), Target (TGT), and Snowflake (SNOW) are slated to release their quarterly results today.
Today, investors will also closely monitor the publication of the Federal Reserve’s minutes from the April 30-May 1 meeting to gauge how close the central bank is to lowering borrowing costs.
On the economic data front, investors will focus on U.S. Existing Home Sales data due later in the day. Economists, on average, forecast that April Existing Home Sales will stand at 4.21M, compared to the previous value of 4.19M.
U.S. Crude Oil Inventories data will be reported today as well. Economists estimate this figure to be -2.400M, compared to last week’s figure of -2.508M.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.437%, up +0.53%.
The Euro Stoxx 50 futures are down -0.38% this morning as investors digested Britain’s inflation data while awaiting the release of the Fed’s meeting minutes and Nvidia’s earnings. Automobile stocks led the declines on Wednesday following a report regarding potential Chinese tariffs on imported cars. The Office for National Statistics reported Wednesday that Britain’s annual inflation rate slowed less than expected in April, which could potentially delay interest rate cuts from the Bank of England. Meanwhile, investors are anticipating the release of minutes from the Fed’s latest policy meeting and Nvidia’s quarterly earnings to assess whether the recent market rally could continue. In corporate news, Marks And Spencer Group Plc (MKS.LN) gained over +8% after the British retailer posted a 58% increase in full-year profit and issued a strong outlook.
U.K.’s CPI and U.K.’s Core CPI data were released today.
U.K. April CPI has been reported at +0.3% m/m and +2.3% y/y, stronger than expectations of +0.2% m/m and +2.1% y/y.
U.K. April Core CPI arrived at +0.9% m/m and +3.9% y/y, stronger than expectations of +0.7% m/m and +3.6% y/y.
Asian stock markets today settled mixed. China’s Shanghai Composite Index (SHCOMP) closed up +0.02%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -0.85%.
China’s Shanghai Composite Index closed just above the flatline today. Solar stocks rallied on Wednesday following an announcement by the China Photovoltaic Industry Association that it would enhance monitoring of industry competition. At the same time, home-appliance stocks retreated. Meanwhile, the first batch of China’s 1 trillion yuan ($138.14 billion) ultra-long special treasury bonds, which debuted on Wednesday, saw a more than 20% surge during the early session on the Shanghai and Shenzhen stock exchanges, prompting trading suspensions. In other news, a Chinese business group on Tuesday cautioned about potential tariff hikes on car imports in response to actions by the U.S. and the European Union regarding Chinese electric vehicles. In corporate news, Xpeng Inc. surged over +13% in Hong Kong after the Chinese electric vehicle maker reported stronger-than-expected Q1 results and projected higher revenue and deliveries in the second quarter.
Meanwhile, the Reserve Bank of New Zealand held rates steady for the seventh consecutive meeting on Wednesday and indicated that interest rate cuts might begin later in 2025.
Japan’s Nikkei 225 Stock Index closed lower today as investors digested disappointing trade data from the country, while concerns regarding higher borrowing costs also dampened sentiment. Real estate and pharmaceutical stocks underperformed on Wednesday. Data from the Ministry of Finance on Wednesday revealed that Japan’s trade deficit widened to 462.5 billion yen in April from 429.8 billion yen a year earlier as an 8.3% year-over-year export growth was offset by the higher value of imports due to a weaker yen. Separately, the Cabinet Office reported on Wednesday that Japan’s core machinery orders unexpectedly rose in March compared to the previous month. Meanwhile, Japan’s 10-year government bond yield hit the psychological threshold of 1.0% for the first time in 11 years on Wednesday, driven by rising expectations that the Bank of Japan may implement further tightening measures in the coming months. In corporate news, ERI Holdings climbed over +5% after the company announced it would buy Hokkaido-based Fukuda Hydrologic Center for 2.29 billion yen. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed flat at 17.11.
The Japanese April Trade Balance has been reported at -462.5B yen, weaker than expectations of -339.5B yen.
The Japanese April Exports stood at +8.3% y/y, weaker than expectations of +11.1% y/y.
The Japanese April Imports came in at +8.3% y/y, weaker than expectations of +9.0% y/y.
The Japanese March Core Machinery Orders arrived at +2.9% m/m, stronger than expectations of -1.8% m/m.
Pre-Market U.S. Stock Movers
Rezolute (RZLT) soared about +50% in pre-market trading after announcing that a Phase 2 proof-of-concept study for its orally administered drug RZ402 achieved its primary endpoints in treating diabetic macular edema.
Urban Outfitters (URBN) climbed over +8% in pre-market trading after the retailer reported record profit and sales for the first quarter, topping Wall Street’s expectations.
Shopify (SHOP) advanced more than +3% in pre-market trading after Goldman Sachs upgraded the stock to Buy from Neutral with a price target of $74.
Edwards Lifesciences (EW) rose over +1% in pre-market trading after Citi upgraded the stock to Buy from Neutral with a price target of $105.
Kraft Heinz (KHC) gained about +1% in pre-market trading after Piper Sandler upgraded the stock to Overweight from Neutral with an unchanged price target of $42.
ViaSat (VSAT) plunged more than -11% in pre-market trading after the company said it expects “roughly flat” year-over-year revenue growth in fiscal 2025.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Wednesday - May 22nd
NVIDIA (NVDA), TJX (TJX), Analog Devices (ADI), Synopsys (SNPS), Target (TGT), Snowflake (SNOW), Williams-Sonoma (WSM), Vipshop (VIPS), VF (VFC), Dycom Industries (DY), Enersys (ENS), Golden Ocean (GOGL), BBVA Argentina (BBAR), Corporacion America Airports (CAAP), Brady (BRC), Liveramp (RAMP), ePlus (PLUS), GDS Holdings (GDS), Photronics (PLAB), Zuora (ZUO), Universal (UVV), Hovnanian Enterprises (HOV), REX American Resources (REX), Kingsoft Cloud (KC), WalkMe (WKME).
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