Navigating the Downward Trend: A Look at Today’s Futures Market

The futures market is showing a downward trend this morning, with S&P 500 futures dropping by 15 points or 0.4% below fair value. Nasdaq 100 futures are also down by 97 points, a 0.6% decrease from fair value, while Dow Jones Industrial Average futures have fallen by 52 points or 0.2% below fair value.

The market’s weakness seems to be a reaction to Federal Reserve Chair Powell’s recent suggestion that additional rate hikes may be necessary. This has prompted investors to pull back after a recent surge in the market. The Nasdaq 100 futures are particularly affected due to sluggish performance from mega-cap stocks.

The European Central Bank is anticipated to announce a rate hike of 25 basis points at 8:15 a.m. ET.

According to a warning from the National Bureau of Statistics, China’s economic recovery is still on shaky ground. Weaker-than-expected economic data for May, including industrial production, retail sales, and fixed asset investment, support this view. The People’s Bank of China has responded by reducing the 1-year medium-term lending facility rate by 10 basis points to 2.65%.

A busy day lies ahead for U.S. economic data, with reports on retail sales, weekly initial and continuing claims, the Philadelphia Fed Index, Empire State Manufacturing, Export Price Index, Industrial Production, Capacity Utilization, Business Inventories, Weekly EIA Natural Gas Inventories, and Net Long-Term TIC Flows.

Treasury yields are on the rise, with the 2-year note yield increasing by five basis points to 4.75% and the 10-year note yield rising by three basis points to 3.83%.

In other developments, the White House has announced a labor agreement at West Coast ports.

In the corporate world, Lennar has exceeded expectations on revenue and earnings, Patterson-UTI and NexTier Oilfield Solutions are set to merge, Target has announced a slight increase in its quarterly dividend, Morgan Stanley has reinstated T-Mobile as a top pick, Stifel has upgraded Domino’s Pizza, Goldman Sachs has Oppenheimer has downgraded Diageo plc, SoFi Technologies, and AutoZone has authorized a $2.0 billion stock repurchase.

Overnight, Asia-Pacific equity indices ended mixed. Economic data from the region included China’s industrial production, retail sales, fixed asset investment, and house prices; Japan’s core machinery orders, tertiary industry activity index, and trade deficit; India’s trade deficit; Hong Kong’s industrial production and PPI, Singapore’s unemployment rate, Australia’s employment change, participation rate, and unemployment rate, and New Zealand’s GDP.

European indices are mostly down ahead of the expected rate hike announcement from the European Central Bank. Economic data from the region include the Eurozone’s trade deficit, France’s CPI, Italy’s trade surplus, Spain’s trade deficit, and Switzerland’s PPI.

In other news, Switzerland’s KOF Institute has increased its 2023 growth forecast, while British Prime Minister Sunak has reportedly scrapped a plan to impose a price cap on basic goods in supermarkets.

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