June S&P 500 E-Mini futures (ESM25) are trending up +0.45% this morning on signs that the heated dispute between U.S. President Donald Trump and Tesla CEO Elon Musk may ease, while investors await the all-important U.S. payrolls report.
Musk, who sparked the public feud by criticizing Trump’s signature tax bill, later indicated that he’s eager to tone down the hostility. Politico reported overnight that the White House has arranged a call with Musk on Friday to negotiate a peace deal. As a result, shares of Tesla (TSLA) rose over +5% in pre-market trading.
Investor focus is now on the monthly nonfarm payrolls report, which could offer further insight into whether the Federal Reserve can deliver at least two interest rate cuts in 2025.
In yesterday’s trading session, Wall Street’s major indices closed lower. Brown-Forman (BF.B) tumbled over -17% and was the top percentage loser on the S&P 500 after the spirits maker posted weaker-than-expected FQ4 results and cautioned about further challenges in the year ahead. Also, Tesla (TSLA) sank more than -14% and was the top percentage loser on the Nasdaq 100 after U.S. President Trump proposed terminating Elon Musk’s government contracts and subsidies. In addition, PVH Corp. (PVH) plunged over -17% after the owner of the Calvin Klein and Tommy Hilfiger brands cut its full-year profit guidance. On the bullish side, Dollar Tree (DLTR) climbed more than +9% and was the top percentage gainer on the S&P 500 after JPMorgan upgraded the stock to Overweight from Neutral with a price target of $111.
The Labor Department’s report on Thursday showed that the number of Americans filing for initial jobless claims in the past week unexpectedly rose +8K to a 7-3/4 month high of 247K, compared with the 236K expected. Also, U.S. Q1 nonfarm productivity was revised lower to -1.5% q/q from -0.8% q/q, while unit labor costs were revised upward to +6.6% q/q from +5.7% q/q. In addition, the U.S. trade deficit stood at -$61.60B in April, narrower than expectations of -$67.60B.
Fed Governor Adriana Kugler said on Thursday she supports maintaining interest rates at their current “moderately restrictive” level as long as tariffs continue to pose a risk of pushing inflation higher. “Disinflation has slowed, and we are already seeing the effects of higher tariffs, which I expect will continue to raise inflation over 2025,” Kugler said. Also, Philadelphia Fed President Patrick Harker said the U.S. economy remains resilient and policymakers should continue with a wait-and-see approach until there is greater clarity on how tariffs and other policies will affect the outlook. In addition, Kansas City Fed President Jeff Schmid said policymakers will need to remain flexible as they evaluate how tariffs will affect the economy. “While the tariffs are likely to push up prices, the extent of the increase is not certain, and likely will not be fully apparent for some time,” Schmid said.
“The Federal Reserve is navigating a narrow path. While they expect the economy to soften, persistent trade uncertainty is ripe ground for monetary policy missteps,” said Seema Shah at Principal Asset Management.
Meanwhile, U.S. rate futures have priced in a 97.6% chance of no rate change and a 2.4% chance of a 25 basis point rate cut at June’s policy meeting.
Today, all eyes are focused on the U.S. monthly payroll report, which is set to be released in a couple of hours. Economists, on average, forecast that May Nonfarm Payrolls will come in at 126K, compared to the April figure of 177K.
U.S. Average Hourly Earnings data will also be closely watched today. Economists expect May figures to be +0.3% m/m and +3.7% y/y, compared to the previous numbers of +0.2% m/m and +3.8% y/y.
The U.S. Unemployment Rate will be reported today. Economists forecast that this figure will remain steady at 4.2% in May.
U.S. Consumer Credit data will be released today as well. Economists expect this figure to be $11.30B in April, compared to the previous figure of $10.17B.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.376%, down -0.39%.
The Euro Stoxx 50 Index is down -0.18% this morning as investors digest a slew of regional economic data and cautiously await the key U.S. jobs report. Investors also weighed global trade developments, as a phone call between U.S. President Donald Trump and Chinese President Xi Jinping failed to boost sentiment. Healthcare stocks led the gains on Friday, while mining and automobile stocks underperformed. The benchmark index is on track to post modest gains for the week. Final data from Eurostat released on Friday showed that the Eurozone economy expanded by 0.6% in the first quarter, twice the initial estimate of 0.3% and marking the strongest growth since the third quarter of 2022. At the same time, data showed that the Eurozone’s monthly retail sales rose less than expected in April. In addition, data showed that German exports and industrial production fell more than expected in April as demand from the U.S. weakened after months of robust purchases ahead of U.S. tariffs. Meanwhile, European Central Bank Governing Council member Francois Villeroy de Galhau said on Friday, “We have won the battle against inflation in Europe.” Also, ECB policymaker Yannis Stournaras said that if the European economy deteriorates further, then the ECB could lower interest rates again, noting that “this is not expected.” The ECB on Thursday cut its key interest rate to 2% from 2.25%, marking its eighth reduction since June 2024, while President Christine Lagarde signaled that the easing cycle is nearing its end.
Germany’s Exports, Germany’s Industrial Production, Eurozone’s GDP, Eurozone’s Employment Change, and Eurozone’s Retail Sales data were released today.
The German April Exports came in at -1.7% m/m, weaker than expectations of -0.5% m/m.
The German April Industrial Production arrived at -1.4% m/m, weaker than expectations of -0.9% m/m.
Eurozone’s GDP has been reported at +0.6% q/q and +1.5% y/y in the first quarter, stronger than expectations of +0.4% q/q and +1.2% y/y.
Eurozone’s Employment Change arrived at +0.2% q/q and +0.7% y/y in the first quarter, weaker than expectations of +0.3% q/q and +0.6% y/y.
Eurozone’s April Retail Sales came in at +0.1% m/m and +2.3% y/y, compared to expectations of +0.2% m/m and +1.4% y/y.
Asian stock markets today closed in the green. China’s Shanghai Composite Index (SHCOMP) closed up +0.04%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.50%.
China’s Shanghai Composite Index closed just above the flatline today as talks between U.S. President Donald Trump and Chinese leader Xi Jinping failed to lift sentiment. Investors were disappointed that the Xi-Trump call didn’t deliver any major breakthroughs. Trump only stated that talks would commence soon at a location to be determined as the countries sought to resolve disputes over tariffs and rare earth minerals. Guo Jianwen, partner at Shanghai-based hedge fund Haiyi Capital, said, “If you look at the conversation between the Chinese and U.S. presidents, there’s nothing concrete that’s positive. So little impact on stocks.” Meanwhile, the benchmark index notched a weekly gain. In other news, China’s central bank injected around 1 trillion yuan ($139.35 billion) of medium-term liquidity into the banking system through outright reverse repos on Friday, likely in an effort to ease a looming cash crunch amid ongoing trade tensions. In corporate news, Hunan Goke Microelectronics climbed over +5% after Semiconductor Manufacturing International Corp. announced that its unit, SMIC Holdings, had agreed to sell a 14.8% stake in Semiconductor Manufacturing International (Ningbo) to the company. Investor focus now shifts to China’s inflation and trade data for May, scheduled for release on Monday, which may provide further clues about the country’s economic trajectory.
Japan’s Nikkei 225 Stock Index closed higher today as a weaker yen buoyed sentiment. Analysts also noted the Nikkei found technical support ahead of the June 13th special quotation price fixing, which is used to set values on index options and futures. Automobile and chip stocks gained ground on Friday. Still, the benchmark index ended the week lower. Meanwhile, Japanese ultra-long bond yields fell, extending the drop from Thursday. Expectations are growing that the Japanese government may revise its debt issuance as early as next month by boosting sales of shorter-term securities and reducing offerings of longer-dated ones. On the economic front, government data showed on Friday that Japanese annual household spending unexpectedly fell in April, as consumers cut back amid rising prices. Daiwa Securities analyst Eiji Kinouchi said that the data indicates households have begun dipping into their savings, as spending hasn’t declined as sharply as real wages. Separately, preliminary data from the Cabinet Office showed that Japan’s leading economic indicators index, which gauges the economic outlook for a few months ahead based on data such as job offers and consumer sentiment, fell in April to the lowest level since August 2020. On the trade front, the Asahi newspaper reported on Friday that Japan has softened its stance on a full repeal of the 25% U.S. auto tariff and is now proposing a mechanism to gradually reduce the rate based on each country’s contribution to the U.S. auto industry. Japan’s chief tariff negotiator, Ryosei Akazawa, is currently in Washington for a fifth round of talks with U.S. officials, including Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick. In corporate news, ispace Inc. plummeted over -28% after the moon exploration company said its uncrewed lunar lander likely crashed during its attempt to touch down on the moon’s surface. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed up +0.17% to 23.56.
The Japanese April Household Spending came in at -1.8% m/m and -0.1% y/y, weaker than expectations of -0.8% m/m and +1.5% y/y.
The Japanese April Leading Index stood at 103.4, weaker than expectations of 104.0.
Pre-Market U.S. Stock Movers
Tesla (TSLA) rose over +5% in pre-market trading on signs that the heated spat between the U.S. president and CEO Musk may ease.
Broadcom (AVGO) slid over -3% in pre-market trading after the semiconductor and software company gave a tepid FQ3 revenue forecast.
Lululemon Athletica (LULU) plummeted more than -21% in pre-market trading after the retailer cut its full-year EPS guidance.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Friday - June 6th
ABM Industries (ABM), Manchester United (MANU), G-III Apparel (GIII), Children’s Place (PLCE).
On the date of publication, Oleksandr Pylypenko did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
