June S&P 500 E-Mini futures (ESM26) are down -0.14%, and June Nasdaq 100 E-Mini futures (NQM26) are down -0.01% this morning, taking a breather after a recent rally, while investors assess the prospects for an end to the Middle East conflict.
U.S. President Donald Trump remains optimistic that the U.S. can reach an interim peace deal with Iran “over the next week.” The Lebanese embassy in the U.S. said it had received confirmation of Hezbollah’s acceptance of a U.S. proposal to halt attacks on Israel, with Israel agreeing to refrain from strikes on the Lebanese capital. A halt to Israel’s expanded offensive in Lebanon is becoming increasingly important to U.S. efforts to reach a memorandum of understanding with Iran aimed at reopening the Strait of Hormuz. Meanwhile, Iran’s Mehr news agency reported on Tuesday that officials in Tehran are reviewing their “final text” before sending it to the U.S.
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The price of WTI crude fell over -1%, paring some of Monday’s advance. That helped Treasuries edge higher as lower oil prices eased inflation concerns, with the benchmark 10-year yield falling two basis points to 4.43%.
Investors are now awaiting the U.S. job openings figures and earnings reports from several prominent companies.
In yesterday’s trading session, Wall Street’s main stock indexes closed higher, with the S&P 500, Dow, and Nasdaq 100 notching new record highs. Nvidia (NVDA) climbed over +6% after the world’s most valuable company unveiled the RTX Spark, which it called “the most efficient PC chip ever built.” Also, software stocks rallied after Nvidia CEO Jensen Huang brushed aside concerns about AI disrupting the industry, with Datadog (DDOG) surging more than +12% and Salesforce (CRM) rising over +9% to lead gainers in the Dow. In addition, MGM Resorts International (MGM) jumped more than +16% and was the top percentage gainer on the S&P 500 after Barry Diller’s media conglomerate People Inc. submitted a proposal to acquire all outstanding shares of the casino operator that it does not already own. On the bearish side, Qualcomm (QCOM) slumped over -8% and was the top percentage loser on the Nasdaq 100 after Nvidia announced it was entering the PC market with a new chip.
Economic data released on Monday showed that U.S. factory activity continued to expand in May and construction spending picked up in April. The U.S. ISM manufacturing index rose to 54.0 in May, stronger than expectations of 53.3 and marking its highest level since May 2022. Also, the U.S. May S&P Global manufacturing PMI was revised slightly lower to 55.1, though it remained 0.6 points above April’s final reading. In addition, U.S. construction spending rose +0.4% m/m in April, stronger than expectations of +0.3% m/m.
“U.S. data, such as the ISM manufacturing print we just had, still keeps the Fed/inflation debate alive and limits the scope for a dovish rates repricing, especially if oil remains volatile,” said Alessandro Gabellone at Bank Degroof Petercam.
Meanwhile, U.S. rate futures have priced in a 98.4% probability of no rate change and a 1.6% chance of a 25 basis point rate cut at the conclusion of the Fed’s June meeting.
Today, investors will focus on U.S. JOLTS Job Openings figures, set to be released in a couple of hours. Economists, on average, forecast that April JOLTS Job Openings will come in at 6.860 million, compared to the March figure of 6.866 million.
Investors will also monitor earnings reports from several prominent companies, with cybersecurity firm Palo Alto Networks (PANW), discount retailer Dollar General (DG), and beauty retailer Ulta Beauty (ULTA) set to report their quarterly results today.
In addition, market participants will be looking to a speech from Cleveland Fed President Beth Hammack.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.43%, down -0.49%.
The Euro Stoxx 50 Index is up +1.08% this morning as optimism around AI and renewed hopes for a U.S.-Iran deal boosted sentiment. Technology stocks led the gains on Tuesday, with STMicroelectronics (STMPA.FP) climbing over +10% after the chipmaker lifted its data-center revenue targets. Also, mining stocks advanced. At the same time, energy stocks slid as oil prices fell. Preliminary data from Eurostat released on Tuesday showed that the Eurozone’s annual inflation rate exceeded 3% in May for the first time in more than 2-1/2 years, reinforcing expectations of an interest rate hike when the European Central Bank meets next week. Meanwhile, Eurozone government bond yields declined on Tuesday as oil prices retreated amid renewed hopes for a U.S.-Iran deal. The Mehr News Agency reported that Tehran has not yet responded to a proposed final agreement with the U.S., adding that internal discussions over the text are ongoing. Elsewhere, a European Parliament committee voted to scrap EU import tariffs on many U.S. goods, marking a step toward complying with the trade deal agreed with the U.S. last year. In other corporate news, Abivax (ABVX.FP) cratered over -28% after the biotech company said some patients developed cancer during a late-stage clinical trial of an experimental bowel-disease drug, cases that were deemed unrelated to the treatment.
Eurozone’s CPI (preliminary) and Eurozone’s Core CPI (preliminary) were released today.
Eurozone’s May CPI rose +3.2% y/y, in line with expectations.
Eurozone’s May Core CPI rose +2.5% y/y, stronger than expectations of +2.4% y/y.
Asian stock markets today settled mixed. China’s Shanghai Composite Index (SHCOMP) closed up +0.43%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -0.30%.
China’s Shanghai Composite Index closed higher today, led by gains in the tech sector. Technology stocks rallied on Tuesday, buoyed by sharp gains in Tencent and Meituan. Tencent Holdings jumped over +10% in Hong Kong after the Financial Times reported that the company moved closer to launching an AI agent for WeChat’s 1.4 billion users in China. The report bolstered investor optimism that China’s largest social-media platform could become a key avenue for AI commercialization. Also, Meituan climbed more than +9% in Hong Kong after the food delivery leader reported better-than-expected Q1 results. Investors also continued to monitor developments in the Middle East. Lebanon announced on Monday a partial ceasefire between Hezbollah and Israel after a brief escalation of hostilities. Earlier, Iranian state media said Tehran was suspending indirect talks with the U.S. and could end the ceasefire, citing the war in Lebanon, while U.S. President Trump said negotiations with Iran were continuing “at a rapid pace.” Bob Savage, head of markets macro strategy at BNY, said, “Markets are entering June balancing renewed geopolitical risks from U.S.-Iranian military exchanges against continued enthusiasm for AI-driven growth and technology investment.”
Japan’s Nikkei 225 Stock Index closed lower today, retreating from a record high as investors weighed geopolitical tensions in the Middle East against a new wave of AI-related announcements. U.S. President Donald Trump said on Monday that negotiations with Iran were continuing, while the Tasnim news agency reported that Tehran had suspended indirect talks with Washington in response to Israeli strikes in Lebanon. Daisuke Hashizume, senior strategist at Daiwa Securities, said, “There was caution for the Nikkei’s sharp rally, and the optimism for the early end of the Middle East conflict weakened, and oil prices rose.” The benchmark index initially dropped as much as 2% before trimming most of its losses as investors bought the dip in many AI-related stocks. Investor enthusiasm for AI was fueled by a slew of announcements from Computex, the major technology trade show in Taiwan. At the same time, metal and machinery stocks underperformed on Tuesday. Meanwhile, Japanese government bond yields sank on Tuesday after the 10-year government bond auction drew firm demand, prompting investors to snap up the debt. The yen was steady after Japanese Finance Minister Satsuki Katayama said authorities stand ready to act as needed in the foreign exchange market. In other news, the Mainichi newspaper reported on Monday that Japan is considering a two-year reduction in the 8% tax on food sales starting in April next year. Market participants are now awaiting a speech from Bank of Japan Governor Kazuo Ueda on Wednesday for clues on the timing of the central bank’s next rate hike. Attention will then turn to Japan’s April wage data for indications that pay gains are broadening sufficiently to sustain domestic demand. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed up +18.01% to 33.68.
Pre-Market U.S. Stock Movers
Hewlett Packard Enterprise (HPE) soared more than +25% in pre-market trading after the information technology company posted upbeat FQ2 results and raised its full-year revenue growth guidance amid surging AI-driven demand for its servers and networking products.
Marvell Technology (MRVL) jumped over +24% in pre-market trading after Nvidia CEO Jensen Huang said the chipmaker could reach a trillion-dollar valuation, predicting a surge in demand for AI hardware driven by the rise of autonomous models.
Microchip Technology (MCHP) climbed more than +8% in pre-market trading after the company provided a strong full-year data center revenue forecast.
Alphabet (GOOGL) fell more than -2% in pre-market trading after the Google parent announced plans to issue $80 billion in equity to fund massive capital expenditures linked to the AI race.
Credo Technology (CRDO) slid over -3% in pre-market trading as the electrical cable provider's FQ1 revenue guidance failed to impress investors.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Tuesday - June 2nd
Palo Alto Networks (PANW), Dollar General (DG), Ulta Beauty (ULTA), Donaldson Company (DCI), GitLab (GTLB), Victoria’s Secret & Co. (VSCO), Signet Jewelers (SIG), GMR Solutions (GMRS), Yesway (YSWY), Yext, Inc. (YEXT), Greenwich LifeSciences (GLSI), Citi Trends (CTRN).
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.