This morning, the futures for June S&P 500 E-Mini (ESM24) are showing a decline of -0.11%, while June Nasdaq 100 E-Mini futures (NQM24) are down by -0.09%. Investors are gearing up for the release of quarterly reports from major banks and industry leaders, all while eagerly awaiting the release of fresh U.S. economic data and keenly observing remarks from Federal Reserve officials.
In yesterday’s trading session, Wall Street’s major indexes ended in the red, with the S&P 500 hitting its lowest level in 1-3/4 months, the Dow registering a 2-3/4 month low, and the Nasdaq 100 slipping to a 3-week low. Notable among the decliners was Salesforce (CRM), which tumbled over -7% after reports surfaced of advanced talks to acquire data-management firm Informatica. Tesla (TSLA) also experienced a decline of more than -5% following CEO Elon Musk’s announcement of a global headcount reduction of over 10% due to a slowdown in electric vehicle demand. Furthermore, Apple (AAPL) saw a drop of over -2% following preliminary data showing a decline in global iPhone shipments. However, on the positive side, M&T Bank (MTB) saw an increase of more than +4%, and Goldman Sachs (GS) rose nearly +3% after posting better-than-expected Q1 results.
Craig Johnson at Piper Sandler noted, “Stocks began to violate uptrends and pull back. Interest rates are expected to stay higher for longer. A more cautious and tactical approach is favored as earnings season gets underway.”
Turning to economic data, U.S. retail sales saw a rise of +0.7% month-on-month (m/m) in March, surpassing expectations, while March core retail sales increased by +1.1% m/m. However, the U.S. NY Empire State manufacturing index came in weaker than expected at -14.30 in April.
Federal Reserve Bank of New York President John Williams suggested that the central bank may initiate interest rate cuts later this year if inflation continues to gradually decline. Currently, market expectations project a 1.8% probability of a 25 basis point rate cut at the May FOMC meeting and a 22.7% chance of a similar cut at the conclusion of the Fed’s June meeting.
Federal Reserve Chair Jerome Powell is slated to participate in a “fireside chat” with Bank of Canada Governor Tiff Macklem later today. Additionally, several Fed officials, including Vice Chair Philip Jefferson, New York Fed President John Williams, and Richmond Fed President Thomas Barkin, are scheduled to deliver speeches.
Today, key companies such as UnitedHealth (UNH), Johnson & Johnson (JNJ), Bank of America (BAC), Morgan Stanley (MS), and United Airlines Holdings (UAL) are set to report their quarterly earnings. Economic data releases include U.S. Building Permits, Housing Starts, and Industrial Production figures.
In the bond market, the yield on the 10-year U.S. Treasury note stands at 4.649%, up by +0.43%.
Overseas, Euro Stoxx 50 futures are down by -1.18% amid concerns over geopolitical tensions in the Middle East, higher U.S. interest rates, and China’s sluggish economy. Notably, U.K. wage growth exceeded expectations, but this was accompanied by a rise in unemployment. Additionally, Italy’s annual inflation rate rose less than expected.
Asian stock markets closed lower, with China’s Shanghai Composite Index experiencing a sharp decline following mixed economic indicators and concerns over the country’s economic rebound. Japan’s Nikkei 225 Stock Index also ended lower, hitting an 8-week low, with declines observed in real estate, energy, and financial sectors.
In pre-market trading, notable movers in the U.S. include Macatawa Bank (MCBC), Skillsoft (SKIL), Rivian Automotive (RIVN), and Advanced Micro Devices (AMD).
Today’s earnings spotlight includes UnitedHealth (UNH), Johnson & Johnson (JNJ), Bank of America (BAC), Morgan Stanley (MS), PNC Financial (PNC), and others.
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