Stock Index Futures Tread Water as Key U.S. Jobs Report Looms

June S&P 500 E-Mini futures (ESM24) are up +0.02%, and June Nasdaq 100 E-Mini futures (NQM24) are up +0.08% this morning as market participants awaited the release of crucial U.S. non-farm payroll data for clues on the timing of Federal Reserve interest rate cuts.

In yesterday’s trading session, Wall Street’s major indexes closed mixed. Five Below (FIVE) slumped over -10% after the retailer posted downbeat Q1 results and cut its full-year guidance. Also, Sprinklr (CXM) tumbled more than -15% after the company lowered its FY25 revenue guidance. In addition, ZIM Integrated (ZIM) plummeted over -18% after Citigroup downgraded the stock to Sell from Neutral with a $13 price target. On the bullish side, Lululemon Athletica (LULU) gained over +4% after the athleisure clothing company reported upbeat Q1 results, boosted its full-year EPS guidance, and authorized a $1 billion increase in its stock repurchase program.

The Labor Department’s report on Thursday showed that the number of Americans filing for initial jobless claims in the past week rose +8K to 229K, compared with 220K expected. Also, U.S. Q1 nonfarm productivity rose +0.2% q/q, just under the +0.3% q/q consensus, while U.S. Q1 unit labor costs came in at +4.0% q/q, weaker than expectations of +4.7% q/q. At the same time, the U.S. trade deficit widened to -$74.60B in April from -$68.60B in March (revised from -$69.40B), the largest deficit in 1-1/2 years.

“The U.S. labor market data – jobless claims and job openings – clearly point to a quiet rebalancing that will be more conducive to further softening in service sector inflation,” said Homin Lee, senior macro strategist at Lombard Odier.

Meanwhile, U.S. rate futures have priced in a 2.3% chance of a 25 basis point rate cut at the Fed’s monetary policy committee meeting next week and a 22.0% probability of a 25 basis point rate cut at the July policy meeting. Also, U.S. rate futures have priced in a 67.2% chance of at least a 25 basis point rate cut at the September FOMC meeting. 

Today, all eyes are focused on U.S. Nonfarm Payrolls data in a couple of hours. Economists, on average, forecast that May Nonfarm Payrolls will come in at 182K, compared to the previous value of 175K.

A survey conducted by 22V Research showed a lack of consensus on the market reaction to the jobs report, with 36% of investors polled predicting a “risk-off” move, 33% expecting “risk-on,” and 31% anticipating “negligible/mixed.”

U.S. Average Hourly Earnings data will also be closely watched today. Economists expect May’s figures to be +0.3% m/m and +3.9% y/y, compared to the previous numbers of +0.2% m/m and +3.9% y/y.

The U.S. Unemployment Rate will be reported today. Economists foresee this figure to remain steady at 3.9% in May.

U.S. Wholesale Inventories data will come in today. Economists expect April’s figure to be +0.2% m/m, compared to the previous number of -0.4% m/m.

U.S. Consumer Credit data will be reported today as well. Economists foresee this figure to stand at $9.30B in April, compared to the previous value of $6.27B.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.298%, up +0.47%.

The Euro Stoxx 50 futures are down -0.35% this morning, a day after the European Central Bank cut interest rates for the first time since 2019, with investors’ focus now turning to the key monthly U.S. jobs report due later in the day. Automobile and real estate stocks underperformed on Friday, while technology stocks gained ground. The Federal Statistical Office said Friday that Germany’s trade surplus in goods slightly narrowed in April as import growth surpassed exports, indicating an uptick in domestic demand. Separately, data showed Friday that German industrial production unexpectedly fell in April compared to the previous month. In addition, Eurostat’s third estimate released Friday showed that the Eurozone’s seasonally adjusted GDP rose 0.3% q/q in the first quarter, in line with the second estimate. Meanwhile, the ECB, as expected, cut the key deposit rate by a quarter-point to 3.75% on Thursday. At the same time, the central bank raised its 2024 Eurozone GDP forecast to +0.9% from +0.6% and increased its 2024 Eurozone core inflation forecast by 0.2 percentage points to +2.8%. ECB President Christine Lagarde said Thursday at a news conference that while the inflation outlook “has improved markedly,” the ECB “will keep policy rates sufficiently restrictive for as long as necessary.” In corporate news, Vonovia Se (VNA.D.DX) fell over -4% after Morgan Stanley downgraded the stock to Sell from Neutral.

Germany’s Exports, Germany’s Imports, Germany’s Industrial Production, Eurozone’s Employment Change, and Eurozone’s GDP data were released today.

The German April Exports stood at +1.6% m/m, stronger than expectations of +1.1% m/m.

The German April Imports arrived at +2.0% m/m, stronger than expectations of +0.6% m/m.

The German April Industrial Production came in at -0.1% m/m, weaker than expectations of +0.1% m/m.

Eurozone Employment Change stood at +0.3% q/q and +1.0% y/y in the first quarter, in line with expectations.

Eurozone GDP has been reported at +0.3% q/q and +0.4% y/y in the first quarter, in line with expectations.

Asian stock markets today settled mixed. China’s Shanghai Composite Index (SHCOMP) closed up +0.08% and Japan’s Nikkei 225 Stock Index (NIK) closed down -0.05%.

China’s Shanghai Composite Index closed just above the flatline today as mixed trade data and concerns about potential U.S. actions against the nation’s top battery makers kept sentiment subdued. Property and retail stocks outperformed on Friday. Customs data revealed on Friday that China saw a larger-than-expected increase in exports in May, boosting the growth prospects of the world’s second-largest economy, while imports rose at a slower rate, underscoring the fragility of domestic consumption. Meanwhile, according to the Wall Street Journal’s report on Thursday, a group of Republican lawmakers called for leading Chinese battery companies with ties to Ford Motor and Volkswagen to be prohibited from exporting goods to the U.S., alleging that their supply chains use forced labor. The WSJ reported that Contemporary Amperex Technology, a Ford partner, and Gotion High Tech, a battery firm partly owned by Volkswagen, should immediately be included on an import ban list. In corporate news, Nio plunged over -7% after the Chinese automaker reported a wider net loss for the first quarter.

The Chinese May Trade Balance came in at $82.62B, stronger than expectations of $72.20B.

The Chinese May Exports stood at +7.6% y/y, stronger than expectations of +6.0% y/y.

The Chinese May Imports arrived at +1.8% y/y, weaker than expectations of +4.2% y/y.

Japan’s Nikkei 225 Stock Index closed slightly lower today. Losses in financial and automobile stocks led the overall market lower on Friday. Data from the Ministry of Internal Affairs and Communications released on Friday indicated that Japanese household spending rose for the first time in 14 months in April compared to the previous year. Separately, preliminary data from the Cabinet Office showed that Japan’s leading economic index for gauging the economic outlook inched down in April, marking the lowest reading since January. Japanese government bond yields rose on Friday as investor focus shifted to the Bank of Japan meeting next week. Meanwhile, more than half of surveyed Bank of Japan watchers anticipate that the central bank will reduce its government bond purchases next week, with a growing number also anticipating a rate hike in July. In other news, Japan’s Finance Minister Shunichi Suzuki said on Friday that recent foreign exchange intervention was aimed at containing excessive volatility, but such action should be carried out in a restrained manner. In corporate news, Shionogi tumbled over -12% after the company reported that its weight-loss drug failed to meet the targeted weight-loss rate of 5% in a trial. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up +0.17% to 17.77.

The Japanese April Household Spending came in at -1.2% m/m and +0.5% y/y, weaker than expectations of +0.2% m/m and +0.6% y/y.

The Japanese April Leading Index was at 111.6, in line with expectations.

Pre-Market U.S. Stock Movers

DocuSign (DOCU) slumped over -6% in pre-market trading after the e-signature company’s Q2 billings guidance failed to impress investors.

Braze (BRZE) surged more than +14% in pre-market trading after the company reported upbeat Q1 results and raised its FY25 guidance.

Biomea Fusion (BMEA) plummeted about -59% in pre-market trading after announcing that the FDA issued a notice of a full clinical hold on ongoing Phase I/II clinical trials for the company’s investigational covalent menin inhibitor BMF-219, intended for type 2 and type 1 diabetes.

3M Company (MMM) gained over +2% in pre-market trading after BofA upgraded the stock to Buy from Neutral with a price target of $120.

Gen Digital (GEN) fell more than -3% in pre-market trading after Morgan Stanley downgraded the stock to Equal Weight from Overweight with a price target of $27.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Friday – June 7th

J. Jill (JILL), Graham (GHM), Cheetah Mobile Inc (CMCM).

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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.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.