September S&P 500 futures (ESU23) are down -0.12%, and September Nasdaq 100 E-Mini futures (NQU23) are down -0.22% this morning as market participants looked ahead to the release of the Fed’s favorite inflation gauge while awaiting a speech from Fed Chair Jerome Powell.

In Friday’s trading session, Wall Street’s major indexes closed lower, with the tech-heavy Nasdaq 100 snapping its eight-week winning streak and the benchmark S&P 500 breaking its five-week rally. Utility stocks were the biggest drag on the market. Interest-sensitive megacap stocks also lost ground, with Tesla Inc (TSLA) falling about -3% and NVIDIA Corporation (NVDA) slumping nearly -2%. In addition, U.S.-listed Chinese stocks were among the top percentage losers on the Nasdaq 100, with JD.com Inc (JD) and PDD Holdings (PDD) plunging more than -4%. On the positive side, CarMax Inc (KMX) climbed about +10% and was the top percentage gainer on the S&P 500 after reporting better-than-expected Q1 results.

Economic data on Friday showed the U.S. June Manufacturing PMI fell to a 6-month low of 46.3, weaker than expectations of 48.5. Also, U.S. Services PMI decreased to 54.1 in June from 54.9 last month, slightly surpassing expectations of 54.0.

San Francisco Fed President Mary Daly said Friday that two additional interest rate increases this year is a “very reasonable” projection. Also, Atlanta Fed President Raphael Bostic said Friday that tackling high inflation was the primary focus of the Federal Reserve, expressing optimism that this objective could be accomplished without hammering the labor market. “Getting inflation down is Job One, inflation is too high,” he said.

Meanwhile, U.S. rate futures have priced in a 70.7% probability of a 25 basis point rate increase and a 29.3% chance of no hike at next month’s policy meeting.

In other news, Russian mercenaries made a short-lived rebellion on Saturday, raising questions about Russian stability and crude supply. The private Wagner army then withdrew after reaching an agreement that ensured their safety and guaranteed the passage of their leader, Yevgeny Prigozhin, to neighboring Belarus.

In the coming week, the May reading of the U.S. core personal consumption expenditures price index, the Fed’s preferred inflation gauge, will be the main highlight. Also, market participants will be eyeing a spate of economic data, including the U.S. Building Permits, Core Durable Goods Orders, Durable Goods Orders, S&P/CS HPI Composite - 20 n.s.a., CB Consumer Confidence, New Home Sales, Goods Trade Balance (preliminary), Crude Oil Inventories, GDP, GDP Price Index, Initial Jobless Claims, Pending Home Sales, Personal Income, Personal Spending, Chicago PMI, Michigan Consumer Expectations, and Michigan Consumer Sentiment.

In addition, Federal Reserve Chair Jerome Powell is scheduled to deliver a speech at the ECB forum in Sintra on Wednesday, which could provide further insights into the monetary policy outlook. 

The U.S. economic data slate is mainly empty on Monday. 

In the bond markets, United States 10-Year rates are at 3.688%, down -1.37%.

The Euro Stoxx 50 futures are up +0.07% this morning as investors weighed the risks stemming from an attempted armed uprising in Russia and evaluated the outlook for economic growth and monetary policy. Chemical and retail stocks gained ground on Monday, while financial and defense stocks underperformed. According to a survey released Monday, German business morale deteriorated for the second consecutive month in June. In corporate news, shares of Deutsche Bank Ag (DBK.D.DX) fell over -1% following a Reuters report stating that the bank told clients it could no longer guarantee full access to their Russian stocks. At the same time, Aston Martin Lagonda Global Holdings Plc (AML.LN) climbed more than +7% after the luxury carmaker announced it would enter into a strategic supply agreement with Lucid Group to produce electric vehicles.

Germany’s Ifo Business Climate Index, Germany’s Business Expectations, and Germany’s Current Assessment data were released today.

The German June Ifo Business Climate Index has been reported at 88.5, weaker than expectations of 90.7.

The German June Business Expectations stood at 83.6, weaker than expectations of 88.0.

The German June Current Assessment came in at 93.7, stronger than expectations of 93.5.

Asian stock markets today settled in the red. China’s Shanghai Composite Index (SHCOMP) closed down -1.48%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -0.25%.

China’s Shanghai Composite today closed sharply lower as investors digested tourism data from the last week’s holiday, which indicated a sluggish economic recovery and fell short of expectations. Tourism and consumer staples stocks lost ground on Monday after data revealed that tourist trips in China during the Dragon Boat Festival holiday increased by 32.3% compared to the previous year. However, the rebound was smaller than that observed during the five-day May Day holiday. Artificial intelligence stocks also underperformed. Meanwhile, S&P Global on Sunday cut its forecast for China’s GDP growth this year to 5.2% from 5.5% amid weaker-than-expected May data. Focus is now squarely on Chinese purchasing manager indexes for June, due on Friday.

“Tourism and mobility data during the three-day Dragon Boat Festival point to fading post-Covid recovery momentum for in-person services,” said Ting Lu, a chief China economist at Nomura.

Japan’s Nikkei 225 Stock Index ended lower, falling for a third straight session after spending the day fluctuating between slight gains and losses. According to Melbourne-based Talaria Capital, the remarkable stock rally in Japan could lose momentum in the latter half of this year due to the market’s high cyclicality and its vulnerability to an anticipated global economic slowdown. The yen strengthened Monday after Japan’s top currency official stated he wouldn’t rule out any options to handle currency matters effectively. Meanwhile, chip-related stocks retreated, with Advantest Corp falling -1% and Tokyo Electron dropping about -0.8%. In other news, JSR Corp surged over +21% at the close after remaining untraded most of the day as bids outweighed offers following the announcement that the semiconductor materials maker was contemplating a potential acquisition by state-backed Japan Investment Corp. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up 4.30% to 21.11.

Pre-Market U.S. Stock Movers

Tesla Inc (TSLA) slid about -2% in pre-market trading after Goldman Sachs downgraded the stock to Neutral from Buy.

MoonLake Immunotherapeutics (MLTX) climbed over +8% in pre-market trading after the company announced positive Phase 2 results for Nanobody sonelokimab in hidradenitis suppurativa.

89bio Inc (ETNB) surged about +7% in pre-market trading after the company presented data from ENLIVEN Phase 2b trial of pegozafermin in NASH and published results from Phase 2 ENTRIGUE trial of pegozafermin in SHTG.

Alphabet Inc (GOOGL) fell over -1% in pre-market trading after UBS downgraded the stock to Neutral from Buy.

Celanese Corporation (CE) dropped more than -2% in pre-market trading after BMO Capital downgraded the stock to Market Perform from Outperform.

Moderna Inc (MRNA) gained over +2% in pre-market trading after UBS upgraded the stock to Buy from Neutral. 

You can see more pre-market stock movershere

Today’s U.S. Earnings Spotlight: Monday - June 26th

Carnival Corp (CCL), Daktronics (DAKT), Mesabi Trust (MSB), Transphorm Tech (TGAN), Yatra Online (YTRA), Anixa Biosciences (ANIX).

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