The stock market put together a good day yesterday, accented with broad-based buying interest and a quick snapback for the mega-cap stocks. It appears this morning that some of Tuesday’s gains will be picked apart at the open.
Currently, the S&P 500 futures are down 11 points and are trading 0.2% below fair value, the Nasdaq 100 futures are down 70 points and are trading 0.4% below fair value, and the Dow Jones Industrial Average futures are down 29 points and are trading fractionally below fair value.
NVIDIA (NVDA) and the chip stocks are a center of attention following reports that the U.S. is considering imposing more restrictions on AI chip exports to China. NVIDIA, the heavyweight of the bunch, is down 3.6% in pre-market trading.
The expected weakness there is the primary drag on the Nasdaq 100 and S&P 500 futures. Otherwise, there isn’t a lot to discuss in terms of catalyst for moving the market in a meaningful way.
There is a bit of a buzz about China’s disappointing industrial profits (-18.8% year-to-date) signaling weak demand there and the potential for additional policy stimulus.
Market participants will be hearing monetary policy views from leading central bankers, including Fed Chair Powell, who will appear at 9:30 a.m. ET in a panel discussion at the ECB’s Central Banking Forum. The element of surprise — at least in terms of what Mr. Powell is apt to say — seems negligible considering he just delivered his semiannual monetary policy report to Congress last week.
It is likely, though, that Mr. Powell and his colleagues will be emphasizing the point that inflation is still too high and that more work needs to be done to get inflation back down to target. Separately, President Biden will be delivering a speech at 1:00 p.m. ET on the economy and his economic plan.
Another Federal Reserve matter will also be in focus after the close. The annual bank stress test results will be released at 4:30 p.m. ET.
There were some economic releases earlier this morning. The Mortgage Bankers Association’s Mortgage Applications Index was up 3.0% week-over-week, bolstered by a 3.0% jump in both purchase and refinancing applications. The Advance International Trade in Goods Report for May showed a decrease in the goods deficit to $91.1 billion from $97.1 billion in April; meanwhile, advance retail inventories were up 0.8%, and advance wholesale inventories were down 0.1%.
There was little reaction in the equity futures market to these releases.
There has been more of a reaction to the latest earnings report from General Mills (GIS), which included lackluster volume and weaker-than-expected sales results. Shares of GIS are down 5.2%.
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Originally Posted June 28, 2023 – Policy views on display today
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