June Nasdaq 100 E-Mini futures (NQM26) are trending up +0.69% this morning as sentiment improved after Treasury yields retreated from multiyear highs, with attention now turning to an earnings report from chip giant Nvidia.
The price of WTI crude fell over -1% on Wednesday after Reuters reported that two Chinese supertankers transited the Strait of Hormuz early in the day and a third, South Korean-flagged vessel, was also exiting the waterway. U.S. President Donald Trump suggested on Tuesday that the war with Iran could end “very quickly,” while also cautioning that the U.S. could restart military strikes. “I hope we don’t have to do the war, but we may have to give them another big hit,” Trump told reporters. Meanwhile, Iran warned on Wednesday that it would expand the war beyond the Middle East if the U.S. attacks again.
Treasury yields fell across the curve on Wednesday, with the 10-year rate sliding three basis points to 4.64%. With traders still strongly leaning toward a Fed rate hike in December, markets remain highly sensitive to signs of escalation or de-escalation in the Middle East.
In yesterday’s trading session, Wall Street’s major indexes closed lower. Most members of the Magnificent Seven stocks slid, with Alphabet (GOOGL) and Amazon.com (AMZN) falling over -2%. Also, travel stocks slumped on worries about higher fuel costs, with Carnival (CCL) sliding over -4% and United Airlines Holdings (UAL) slipping more than -3%. In addition, Akamai Technologies (AKAM) sank over -6% and was the top percentage loser on the S&P 500 after the company announced a $2.6 billion convertible notes offering. On the bullish side, some chip and AI infrastructure stocks advanced, with Marvell Technology (MRVL) climbing more than +4% to lead gainers in the Nasdaq 100 and Sandisk (SNDK) rising over +3%.
Economic data released on Tuesday showed that U.S. pending home sales rose +1.4% m/m in April, stronger than expectations of +1.0% m/m.
Economists, however, brushed aside the larger-than-expected increase in pending home sales. “We see little prospect of a marked further recovery in housing market activity in the near term,” said Oliver Allen at Pantheon Macroeconomics. “Slower population growth, due to sharp cuts to immigration, looks set to weigh on housing demand ahead, as does the weak labor market and depressed consumers’ confidence.”
Philadelphia Fed President Anna Paulson said on Tuesday she supported keeping interest rates unchanged and tied lower borrowing costs to sustained progress on inflation. “Keeping rates steady allows us to assess how the economy is evolving and the risks to both price stability and the labor market,” Paulson said.
Meanwhile, U.S. rate futures have priced in a 96.7% probability of no rate change and a 3.3% chance of a 25 basis point rate cut at the June FOMC meeting.
Investors are eagerly awaiting Nvidia’s first-quarter earnings report, scheduled for release after the market close. Wall Street analysts and investors expect the chipmaker to deliver a double beat with another quarterly revenue record and issue strong guidance for the current quarter, fueled primarily by increased demand for Blackwell Ultra GPUs and initial shipments of Rubin GPUs. Investors will also be looking for updates on its $1 trillion data center revenue target, with some analysts anticipating an upward revision.
“We fully expect the leading supplier of AI silicon will again exceed estimates and guide above Street given continued positive data points,” Wedbush analyst Matt Bryson said. “The question rather is will we finally see a more positive stock reaction after a series of blasé moves following solid prints.”
Retailers such as The TJX Companies (TJX), Lowe’s (LOW), and Target (TGT), along with prominent companies like Analog Devices (ADI) and Intuit (INTU), are also slated to release their quarterly results today.
Market watchers will also pay close attention to the publication of the minutes from the Fed’s April 28-29 meeting. The FOMC left interest rates unchanged last month, but three officials dissented from the easing bias in the central bank’s post-meeting statement in favor of more neutral language suggesting the next move could be either a cut or a hike. The minutes will help clarify how many non-voting policymakers also supported such a shift. HSBC economists noted that “the minutes from the April meeting should show considerable discussion about the outlook and risks related to inflation and inflation expectations.”
In addition, market participants will be anticipating a speech from Fed Governor Michael Barr.
On the economic data front, investors will focus on the EIA’s weekly crude oil inventories report, set to be released in a couple of hours. Economists expect this figure to be -2.5 million barrels, compared to last week’s value of -4.3 million barrels.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.64%, down -0.58%.
The Euro Stoxx 50 Index is up +0.34% this morning, buoyed by gains in technology stocks, while investors continued to closely monitor U.S.-Iran developments. Oil prices fell after a report said that three supertankers were transiting the Strait of Hormuz. Technology and mining stocks outperformed on Wednesday. Also, defense stocks gained, with CSG (CSG.NA) surging over +12% following its Q1 results. At the same time, media stocks sank. Final data from Eurostat confirmed on Wednesday that the Eurozone’s annual inflation rate rose to 3.0% in April. Separately, data showed that the U.K. annual inflation rate eased more than expected in April, but it is projected to accelerate again amid rising oil and gas prices tied to the Middle East conflict. Meanwhile, Eurozone government bond yields retreated from multiyear highs on Wednesday as traders scaled back aggressive bets on European Central Bank interest-rate hikes this year. In other news, the European Union early on Wednesday finalized the text of its long-delayed U.S. trade deal after months of negotiations, removing a key obstacle to ratifying the pact before U.S. President Trump’s threatened July 4th deadline to impose higher tariffs. The deal would see the EU eliminate tariffs on U.S. industrial goods in exchange for a 15% tariff cap on the bloc’s exports. In other corporate news, Euronext (ENX.P.DX) rose over +4% after the exchange operator posted better-than-expected Q1 earnings.
U.K. CPI, U.K. Core CPI, Eurozone’s CPI, and Eurozone’s Core CPI data were released today.
U.K. April CPI rose +0.7% m/m and +2.8% y/y, weaker than expectations of +0.9% m/m and +3.0% y/y.
U.K. April Core CPI rose +0.7% m/m and +2.5% y/y, weaker than expectations of +0.8% m/m and +2.6% y/y.
Eurozone’s April CPI rose +1.0% m/m and +3.0% y/y, in line with expectations.
Eurozone’s April Core CPI rose +0.9% m/m and +2.2% y/y, in line with expectations.
Asian stock markets today settled in the red. China’s Shanghai Composite Index (SHCOMP) closed down -0.18%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -1.23%.
China’s Shanghai Composite Index closed slightly lower today, tracking broad declines across Asia amid uncertainty surrounding the Middle East conflict. Real estate and financial stocks led the declines on Wednesday. Limiting losses, semiconductor stocks climbed after Yangtze Memory Technologies, the country’s largest flash memory chipmaker, filed its IPO tutoring registration report. New energy stocks also advanced as stalled U.S.-Iran negotiations kept oil prices elevated. Meanwhile, China kept benchmark lending rates unchanged for the 12th straight month on Wednesday, in line with expectations. The one-year loan prime rate was kept at 3.0% and the five-year LPR at 3.5%, according to the People’s Bank of China. After the Chinese economy posted stronger-than-expected growth in the first quarter, China’s leadership in late April adopted a confident tone on the economic outlook and omitted any direct reference to monetary tools, including rate cuts, during a quarterly economic meeting. Although China’s growth lost momentum in April, economists said authorities are unlikely to shift from a “wait-and-see” stance anytime soon as they assess the fallout from the Middle East conflict. Elsewhere, China agreed to buy 200 Boeing jets and resume imports of certain U.S. beef products, marking one of the most tangible signs yet of easing trade tensions after last week’s summit between U.S. President Donald Trump and Chinese leader Xi Jinping. In corporate news, Hesai Group slumped over -9% in Hong Kong after the car-sensor maker posted a weaker Q1 margin.
Japan’s Nikkei 225 Stock Index closed lower today, hitting a near 3-week low as investors continued to take profits in AI-related stocks that had fueled the market’s recent rally. Technology stocks were among the biggest losers on Wednesday, with tech investor SoftBank Group slumping over -6%. Losses in industrial and real estate stocks also weighed on the Nikkei. Kazuaki Shimada, chief strategist at IwaiCosmo Securities, said, “Market participants sold shares that had driven the Nikkei to record highs earlier this month.” The benchmark index notched its fifth straight session of losses. Meanwhile, long-term Japanese government bond yields retreated from multi-decade and record highs on Wednesday after a 20-year debt auction reflected firm investor demand. The offering came less than 24 hours after the country’s 20-year yield reached its highest level since 1996. Japanese sovereign bonds have faced some of the heaviest pressure amid a global debt selloff as rising energy prices from the Middle East conflict fuel inflation fears. Analysts warned that long-term yields above the 3% level would start to place a tangible strain on the real economy. In corporate news, UBE Corp. jumped over +20% after the cement maker unveiled plans to raise its dividend payouts. Investor focus for the remainder of the week is on Japan’s April inflation data, a key input for Bank of Japan policy as price pressures broaden. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed down -3.17% to 29.96.
Pre-Market U.S. Stock Movers
Chip and AI infrastructure stocks climbed in pre-market trading, with Marvell Technology (MRVL) rising over +5% and Micron Technology (MU) gaining more than +4%.
CAVA Group (CAVA) climbed over +8% in pre-market trading after the Mediterranean fast-casual chain posted better-than-expected Q1 results and raised its full-year same restaurant sales growth guidance.
Toll Brothers (TOL) rose more than +1% in pre-market trading after the luxury home builder reported stronger-than-expected FQ2 results and raised the lower end of its full-year deliveries guidance.
Centene (CNC) gained over +1% in pre-market trading after Deutsche Bank upgraded the stock to Buy from Hold with an $80 price target.
Lowe’s Companies (LOW) fell about -2% in pre-market trading as narrowly better-than-expected Q1 results failed to brighten sentiment around the home-improvement sector.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Wednesday - May 20th
Nvidia (NVDA), Analog Devices (ADI), The TJX Companies (TJX), Lowe’s Companies (LOW), Intuit (INTU), Target (TGT), Nordson (NDSN), Hasbro (HAS), EnerSys (ENS), V.F. Corporation (VFC), StepStone Group (STEP), Urban Outfitters (URBN), Immunovant (IMVT), e.l.f. Beauty (ELF), AEVEX (AVEX), CorVel (CRVL), Universal (UVV), Versamet Royalties (VMET), TAT Technologies (TATT), Nano-X Imaging (NNOX).
