Five things you need to know before the market opens on Thursday June 29:
1. -- Stock Futures Nudge Higher As Powell Repeats Hawkish Rate View
U.S. equity futures edged higher Thursday as investors looked to close out the first half of the trading year on a high note ahead of jobs and inflation data over the coming days that could cement the case for hawkish central bank rate signaling.
Federal Reserve Chairman Jerome Powell double-down on his assessment that a 'strong majority' of his colleagues on the central bank's Open Markets Committee see the need for "two or more" rate hikes between now and the end of the year, according to remarks a central bank event in Madrid that echoed his comments Wednesday in Portugal.
Traders have thus far only priced in one more increase -- next month in Washington -- but initial jobs claims data today, and core PCE inflation data tomorrow could convince markets that the Fed's hawkish stance will translate into tighter monetary policy.
An overnight rate hike from Sweden's Riskbank, which lifted its key policy rate by 25 basis points to 3.75%, underscored the determination of western central banks to fight stubborn inflation, although the smaller-than-expected move sent the crown to a fresh record low of 11.821 against the European single currency.
Benchmark 2-year Treasury bond yields were holding at 4.758% in overnight trading while the U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.4% higher at 102.951.
In the U.S., stocks continue to track both stronger-than-expected economic data, subdued market volatility and the relentless advance of mega-cap tech stocks powered in part by ongoing demand for AI-related technologies.
That has the Nasdaq on pace for its best first half start to any year since 1983 and the S&P 500 up 6.5% so far this quarter with a 2023 gain of 14%.
Heading into the start of the trading day on Wall Street, futures contracts tied to the S&P 500 were indicating an 11 point opening bell decline while those linked to the Dow Jones Industrial Average priced for a 75 point move to the upside ahead of trade data and retail inventories at 8:30 am Eastern time. The Nasdaq is looking at a 51 point opening bell gain.
Overnight in Asia, hawkish central bank signaling, alongside weakening China growth prospects, pushed the region-wide MSCI ex-Japan index 0.48% lower into the close of trading, which a softer yen, which traded near the lowest levels against the greenback in 8 months, helped the Nikkei 225 gain 0.12%.
In Europe, the Stoxx 600 was marked 0.1% higher in early Frankfurt trading ahead of key regional inflation data from Germany while the FTSE 100 in London fell 0.25%
2. -- JPMorgan, Morgan Stanley Lead Banks Higher Following Stress Test Results
U.S. bank stocks move higher Thursday, lead by JPMorgan (JPM) and Morgan Stanley (MS), following a successful round of sector stress tests published late Thursday by the Federal Reserve.
All 23 banks passed the Fed's annual assessment, which tests their ability to weather a significant economic downturn that this year included a 38% slump in the housing market, an unemployment rate of more than 10% and a severe recession that would contract GPD by around 8.75%.
Banks would collectively suffer around $541 billion in losses under those adverse scenarios, but still have capital buffers -- which protect depositors -- that are more than twice the minimum requirement under internationally-agreed rules.
"Today's results confirm that the banking system remains strong and resilient," said the Fed's head of supervision Michael Barr said. "At the same time, this stress test is only one way to measure that strength. We should remain humble about how risks can arise and continue our work to ensure that banks are resilient to a range of economic scenarios, market shocks, and other stresses."
Banks are now able to update investors on any plans to return capital to shareholders as a result of passing the stress tests, likely after the close of trading on Friday.
JPMorgan shares were marked 1.02% higher in pre-market trading to indicate an opening bell price of $140.00 each, while Goldman Sachs (GS) gained 1.45% and Morgan Stanley gained 1.8%.
3. -- Micron Leaps After Narrower Q3 Loss, Robust AI Demand Outlook
Micron MU shares moved firmly higher in pre-market trading after the chipmaker posted a narrower-than-expected third quarter loss and said AI demand would help drive near-term profit growth.
Micron said it sees another non-GAAP loss of $1.34 per share for the current quarter, with revenues of around $3.9 billion, following a narrower-than-expected third quarter loss of $1.43 per share and solid revenues of $3.75 billion.
CEO Sanjay Mehrotra said that while "traditional server demand for mainstream data center applications continues to be lackluster", the "recent acceleration in the adoption of generative AI is driving higher-than-expected industry demand for memory and storage for AI servers", which are expected to be a key component of the chipmaker's near-term growth.
"Longer-term, Micron’s technology leadership, product portfolio, and operational excellence continues to strengthen our competitive positioning across diverse growth markets, including AI and memory-centric computing," he added.
Micron shares were marked 3.7% higher in pre-market trading to indicate an opening bell price of $69.56 each.
4. -- Nike Earnings On Deck With Margins, Consumer Demand In Focus
Nike (NKE) shares edged higher in pre-market trading ahead of the sportswear giant's fourth quarter earnings after the closing bell.
Analysts expect Nike to post an adjusted bottom line of 67 cents per share, down 25.5% from last year, as revenues edge 3% higher to $12.59 billion. That difference reflects, in large part, the pressure on profit margins Nike continues to experience as it sheds excess inventory and struggles with an elevated U.S. dollar and higher input costs.
Investors have also become concerned with respect to softening consumer demand, particularly in north American markets, after Foot Locker (FL) -- which relies on Nike for around 60% of its annual revenues -- slashed its full-year profit forecast last month following weaker-than-expected first quarter earnings and "meaningfully softer" overall sales.
Nike shares were marked 0.4% higher in pre-market trading to indicate an opening bell price of $113.247 each.
5. -- Apple On $3 Trillion Watch After Record High Close
Apple (AAPL) shares edged higher in pre-market trading as the tech giant neared the $3 trillion valuation mark for only the second time in its history.
Apple closed at a record high of $189.25 on Wednesday, pegging its market value at $2.98 trillion and extending its year-to-date gain to 45.65% (based on December 30 closing prices). The group hasn't yet closed above the $3 trillion mark, however, after only briefly breaching that milestone during intra-day trading in early January of 2022.
Apple reached the $2 trillion threshold in August of 2020, thanks in part to a surge in iPhones and Mac sales linked to the global pandemic, nearly two years to the day after it became the first U.S. company to breach the $1 trillion mark.
Apple's 2023 gains have also formed the key plank in the Nasdaq's current year-to-date gain of around 30%, the best first half start to any year since 1983.
Apple shares were marked 0.18% higher in pre-market trading to indicate an opening bell price of $189.60 each.
