Today, there is some relative calm on the news front, yet that will change as the week progresses with a series of newsworthy — and market-moving — items that revolve around economic data and monetary policy.
That spin cycle will get going with the May Consumer Price Index on Tuesday and will be followed by the May Producer Price Index and FOMC decision on Wednesday, Initial Jobless Claims and the ECB policy decision on Thursday, and the May Retail Sales Report and Bank of Japan policy decision on Friday.
Separately, the Treasury will sell nearly $300 billion worth of debt today and tomorrow, with $206 billion in bill issuance and $90 billion in notes and bonds. The 2-yr note yield is currently down six basis points to 4.56% and the 10-yr note yield is down three basis points to 3.72%.
There is a good bit of chatter this morning about the likelihood of the Fed skipping a rate hike at this week’s meeting. That was the chatter last week, too, but it is more than just talk. According to the CME FedWatch Tool, there is only a 20.6% probability of a 25-basis points rate hike at this week’s meeting.
A hot CPI report on Tuesday could change that thinking, but for now, no change by the Fed is the default expectation. What can change — and is likely to change — is the Summary of Economic Projections that will also include an updated dot-plot that captures policy rate projections.
The change in the equity futures market this morning has been positive. The S&P 500 futures are up 13 points and are trading 0.3% above fair value, the Nasdaq 100 futures are up 79 points and are trading 0.6% above fair value, and the Dow Jones Industrial Average futures are up 40 points and are trading 0.1% above fair value.
Relative strength in the usual mega-cap suspects has been an early support factor along with speculation that the S&P 500 can achieve a breakout above 4,300. Goldman Sachs for its part recently raised its 2023 year-end S&P 500 price target to 4,500 from 4,000.
That view has also fostered some hope that the advance by the market-cap weighted S&P 500 this year (+12.0%) will broaden out to include more stocks. There is some ample catching up to do in that respect considering the Invesco S&P 500 Equal-Weight ETF (RSP) is up just 2.8% for the year.
Oracle (ORCL), which reports its quarterly results after today’s close, is a pre-market standout, jumping 3.9% after Wolfe Research upgraded the company to Outperform from Peer Perform, touting in part Oracle’s ability to capitalize on AI tailwinds.
Brokerage actions are also responsible for a 6.0% gain in Carnival Corp. (CCL). That cruise line operator garnered an upgrade to Overweight from Neutral at JPMorgan Chase and an upgrade to Buy from Neutral at BofA Securities.
Nasdaq, Inc. (NDAQ) is another mover of note before the bell, only to the downside. It is off 9.1% following the news that it will acquire software company Adenza in a $10.5 billion cash-and-stock deal. The other M&A deal of note this morning involves Novartis (NVS), which plans to acquire Chinook Therapeutics (KDNY) for $40.00 per share upfront plus a contingent value right of up to $4.00 per share in cash, which equates to a roughly $3.5 billion transaction.
Clearly, then, there is news in today’s mix, but the news everyone is waiting to hear is still out there.
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Originally Posted June 12, 2023 – Poised for a big week of market-moving news
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