September S&P 500 E-Mini futures (ESU25) are up +0.33%, and September Nasdaq 100 E-Mini futures (NQU25) are up +0.41% this morning amid speculation that U.S. interest rate cuts could arrive earlier than expected, following a report that U.S. President Donald Trump may nominate the next Federal Reserve chair early.
The Wall Street Journal reported that President Trump is considering announcing his pick to replace Jerome Powell as early as September amid his frustration over the Fed’s cautious pace on rate cuts. Typically, a Fed chair is nominated 3-4 months before taking office, and with Powell’s tenure not concluding until May 2026, this could effectively result in a shadow central bank chair with the ability to influence sentiment. OCBC strategists said, “Some believe that this may allow for the chair-in-waiting to influence market expectations about the potential path for rates.”
Investors now await a flurry of U.S. economic data, including the third estimate of first-quarter GDP and jobless claims figures, remarks from Federal Reserve officials, and an earnings report from shoemaker Nike.
In yesterday’s trading session, Wall Street’s major indexes ended mixed. Super Micro Computer (SMCI) climbed over +8% and was the top percentage gainer on the S&P 500 after GF Securities Ltd initiated coverage of the stock with a Buy rating and a price target of $59. Also, Nvidia (NVDA) rose more than +4% and was the top percentage gainer on the Nasdaq 100 and Dow after Loop Capital raised its price target on the stock to $250 from $175, citing what it described as a “$2 trillion AI data center opportunity” by 2028. In addition, QuantumScape (QS) jumped over +30% after the company announced it had successfully integrated its advanced Cobra separator process into baseline cell production. On the bearish side, Paychex (PAYX) plunged more than -9% and was the top percentage loser on the S&P 500 and Nasdaq 100 after the company reported in-line FQ4 results.
Economic data released on Wednesday showed that U.S. new home sales fell -13.7% m/m to a 7-month low of 623K in May, weaker than expectations of 694K.
Fed Chair Jerome Powell said during a Senate Banking Committee hearing on Wednesday that the central bank is still struggling to determine the impact of tariffs on consumer prices. “The question is, who’s going to pay for the tariffs?” Powell told lawmakers in response to a question on the second day of his semi-annual testimony to Congress. “How much of it does show up in inflation. And honestly, it’s very hard to predict that in advance.” The Fed chief also stated that the U.S. has the world’s strongest economy and that moving cautiously is appropriate during periods of uncertainty.
“If it were not for the uncertainty created by shifting trade policy, the Fed may have been able to cut interest rates this summer,” said Carol Schleif at BMO Private Wealth. “The Fed’s pause on interest-rate cuts is tariff-induced, and not necessarily reflective of economic progress. We expect one to two cuts in 2025, starting most likely in September.”
U.S. rate futures have priced in a 75.2% probability of no rate change and a 24.8% chance of a 25 basis point rate cut at the next central bank meeting in July.
Today, all eyes are focused on the U.S. Commerce Department’s final estimate of gross domestic product. Economists expect the U.S. economy to contract at an annual rate of 0.2% in the first quarter.
Investors will also focus on U.S. Durable Goods Orders and Core Durable Goods Orders data. Economists expect May Durable Goods Orders to be +8.6% m/m and Core Durable Goods Orders to be +0.1% m/m, compared to the prior figures of -6.3% m/m and +0.2% m/m, respectively.
U.S. Pending Home Sales data will be reported today. Economists foresee the May figure coming in at +0.2% m/m, compared to the previous figure of -6.3% m/m.
U.S. Wholesale Inventories data will come in today. Economists forecast the preliminary May figure at +0.2% m/m, the same as in April.
U.S. Initial Jobless Claims data will be released today as well. Economists estimate this figure will come in at 244K, compared to 245K last week.
In addition, market participants will parse comments today from Richmond Fed President Tom Barkin, Cleveland Fed President Beth Hammack, Fed Governor Michael Barr, and Minneapolis Fed President Neel Kashkari.
Meanwhile, notable companies like Nike (NKE), McCormick & Company (MKC), and Walgreens Boots Alliance (WBA) are set to report their quarterly results today.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.283%, down -0.16%.
The Euro Stoxx 50 Index is up +0.18% this morning, supported by signs that the Israel-Iran ceasefire appeared to be holding, with investors turning their attention to the looming U.S. tariff deadline. Mining stocks led the gains on Thursday. Defense stocks also advanced, supported by NATO’s decision to increase defense spending targets from 2% to 5% of GDP by 2035. A survey released on Thursday showed that German consumer sentiment is set to dip slightly heading into July as households chose to increase savings, despite improved optimism about their income outlook. Rolf Buerkl, consumer analyst at NIM, said, “After three consecutive increases, the consumer climate has thus suffered a slight setback.” Meanwhile, U.S. President Trump’s tariff policies are back in focus as the July 9th deadline for trade agreements draws near. European Union leaders will inform the European Commission on Thursday whether they favor a swift trade agreement with the U.S., even if it involves offering more favorable terms to Washington, or prefer escalating the dispute to try to secure a better deal. In corporate news, H & M Hennes & Mauritz AB (HMB.S.DX) climbed over +5% after the Swedish fashion retailer posted slightly better-than-expected Q2 profit.
Germany’s GfK Consumer Climate Index was released today.
The German July GfK Consumer Climate Index came in at -20.3, weaker than expectations of -19.1.
Asian stock markets today settled mixed. China’s Shanghai Composite Index (SHCOMP) closed down -0.22%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +1.65%.
China’s Shanghai Composite Index closed slightly lower today, retreating from a 7-month high as investors opted to lock in some profits following the recent rally. Brokerage stocks slumped on Thursday, giving up some of the gains recorded on Wednesday. Also, property stocks retreated after Goldman Sachs warned that China’s housing market downturn could persist through 2027, with real prices potentially falling another 10%. At the same time, bank stocks outperformed. Meanwhile, uncertainty persisted around China’s policy direction, despite Premier Li Qiang’s reassurances that Beijing is “strengthening macro policies, actively expanding domestic demand, and forcefully boosting consumption” to bolster economic growth. Investors are shifting their focus back to trade risks as the July 9th deadline for the 90-day suspension of U.S. reciprocal tariffs nears. China’s Finance Minister Lan Foan said on Thursday that the global economic recovery is confronting unprecedented challenges. Investors now await the upcoming July Politburo meeting for signs of potential stimulus measures. Analysts at Goldman Sachs said in a note on Thursday that the upcoming earnings season and second-half outlook will take center stage amid limited clarity on macroeconomic support. In corporate news, SF Holding slid over -4% in Hong Kong after China’s largest courier announced plans to raise over $752 million via a stock placement and a convertible bond offering.
Japan’s Nikkei 225 Stock Index closed higher today, hitting its highest level in nearly five months as risk sentiment continued to improve. Technology stocks led the gains on Thursday. The rally came on the heels of a surge in Nvidia shares, which reached new record highs overnight to reclaim its status as the world’s most valuable public company, driven by ongoing enthusiasm over artificial intelligence. Meanwhile, data from the Ministry of Finance showed on Thursday that foreign investors turned net sellers of Japanese stocks last week for the first time since March. They offloaded a net 524.3 billion yen ($3.62 billion) worth of shares during the week ended June 20th. On the trade front, Japan’s tariff negotiator Ryosei Akazawa said on Thursday that the country will proceed with trade negotiations with the U.S. bearing in mind the July 9th expiration of the suspension on “reciprocal tariffs,” though it will not set a deadline for the talks. “The 25% auto tariff is not something we can accept,” Akazawa said. Morningstar analysts said that Japanese equities could come under pressure as the 90-day pause on U.S. tariffs nears its end, and as a trade agreement between Tokyo and Washington has yet to be reached. In corporate news, Renesas Electronics tumbled nearly -12% on signs that the company would push back its long-term targets by five years to 2035. Investor focus is now on Japan’s retail sales and Tokyo CPI data, scheduled for release on Friday, which will help guide the Bank of Japan’s next policy decisions. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed down -0.73% to 23.12.
Pre-Market U.S. Stock Movers
Micron Technology (MU) rose over +2% in pre-market trading after the memory chipmaker posted upbeat FQ3 results and issued above-consensus FQ4 guidance.
Worthington Steel (WS) surged more than +14% in pre-market trading after the company reported better-than-expected FQ4 results.
H.B. Fuller (FUL) climbed over +5% in pre-market trading after the maker of adhesives and other industrial products boosted its full-year guidance.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Thursday - June 26th
Nike (NKE), McCormick & Company (MKC), Walgreens Boots (WBA), Acuity Brands (AYI), Concentrix (CNXC), Enerpac Tool Group (EPAC), Lindsay (LNN), American Outdoor Brands (AOUT), Orion Energy (OESX).
