Overnight Markets And News

Sep E-mini S&Ps (ESU18 -0.17%) this morning are down -0.13% and European stocks are down -0.33%. Weakness in Daimler AG, which is down more than 4%, is leading automakers lower and is weighing on the overall market lower after it cut its full-year earnings forecast due to escalating trade tensions between the U.S. and China. Italian political risks are also weighing on European stocks and pushed the yield on Italy's 10-year government bond up to a 1-week high of 2.721% after two eurosceptics were appointed to head up Italy's lower house budget panel and senate finance committee. The weakness in stocks and increased Italian political risks fueled safe-haven demand for German bunds as the 10-year bund yield fell to a 3-week low of 0.345%. Energy stocks are lower as well with Aug WTI crude oil (CLQ18 -1.55%) down -1.23% on expectations that OPEC and its allies will come to an agreement on crude production at tomorrow's meeting in Vienna. GBP/USD recovered from a 7-1/4 month low and moved higher after the BOE voted 6-3 to keep interest rates unchanged as BOE Chief Economist Haldane switched his vote to support a rate hike, which increases the chance of a BOE rate hike later this year. Asian stocks settled mixed: Japan +0.61%, Hong Kong -1.35%, China -1.37%, Taiwan +0.12%, Australia +0.96%, Singapore -0.48%, South Korea -0.99% India -0.32%. Chinese stocks were knocked lower on an escalation of trade tensions with the U.S after a Chinese commerce ministry spokesman said China is "fully prepared" to respond to any new list of U.S. tariffs. Strength in Japanese exporters lifted the Nikkei Stock Index as USD/JPY climbed to a 4-session high.

The dollar index (DXY00 +0.24%)cis up +0.21% at an 11-1/4 month high. EUR/USD (^EURUSD -0.22%) is down -0.31% at an 11-month low as a decline in the German bund 10-year yield to a 3-week low reduced the euro's interest rate differentials. USD/JPY (^USDJPY +0.16%) is up +0.18%.

Sep 10-year T-note prices (ZNU18 -0-005) are little changed, up +0.5 of a tick.

UK May public sector net borrowing rose +3.4 billion pounds, weaker than expectations of +4.9 billion pounds.

U.S. Stock Preview

Key U.S. news today includes: (1) weekly initial unemployment claims (expected +2,000 to 220,000, previous -4,000 to 218,000) and continuing claims (expected +13,000 to 1.710 million, previous -49,000 to 1.697 million), (2) Jun Philadelphia Fed business outlook survey (expected -5.4 to 29.0, May +11.2 to 34.4), (3) USDA weekly Export Sales, (4) Apr FHFA house price index (expected +0.5% m/m, Mar +0.1% m/m), (5) May leading indicators (expected +0.4%, Apr +0.4%), (6) Treasury auctions $5 billion of 30-year TIPS, (7) Fed releases results of 2018 bank stress tests.

Notable Russell 1000 earnings reports today include: Kroger (consensus $0.63), Darden Restaurants (1.35), Patterson (0.30), Red Hat (0.69).

U.S. IPO's scheduled to price today: DERMAdoctor Inc (DDOC), Autolus Therapeutics (AUTL), Goodbulk Ltd (GBLK).

Equity conferences this week: Citi Chemicals Conference on Thu, National Business Aviation Association Regional Conference on Thu.

Market Comments

Sep S&P 500 E-minis (ESU18 -0.17%) this morning are down -3.50 points (-0.13%). The S&P 500 on Wednesday closed higher: S&P 500 +0.17%, Dow Jones -0.17%, Nasdaq 100 +0.73%. Bullish factors included (1) strength in technology stocks as the Nasdaq Composite climbed to a new record high, and (2) a rally in energy stocks as crude oil prices rose +1.25%. A negative factor was the unexpected -0.4% decline in U.S. May existing home sales to a 4-month low of 5.43 million, weaker than expectations of +1.1% to 5.52 million.

Sep 10-year T-notes (ZNU18 -0-005) this morning are up +0.5 of a tick. Sep 10-year T-notes on Wednesday closed lower: TYU8 -7.50, FVU8 -4.00. Bearish factors included (1) hawkish comments from Fed Chair Powell who said the fed funds rate may be 100 bp below neutral and the case for gradual Fed rate hikes is "strong," and (2) the rally in stocks, which reduced the safe-haven demand for T-notes.

The dollar index (DXY00 +0.24%) this morning is up +0.199 (+0.21%) at an 11-1/4 month high, EUR/USD (^EURUSD-0.22%) is down -0.0036 (-0.31%) at an 11-month low and USD/JPY (^USDJPY +0.16%) is up +0.18 (+0.16%). The dollar index on Wednesday rose to an 11-month high but fell back and closed little changed: Dollar Index -0.030 (-0.03%), EUR/USD -0.00018 (-0.16%), USD/JPY +0.30 (+0.27%). Bullish factors included (1) comments from Fed Chair Powell that the case for gradual Fed rate hikes is "strong," and (2) the increase in T-note yields, which improves the dollar's interest rate differentials. A negative factor was the unexpected decline in U.S. May existing home sales to a 4-month low.

Metals this morning are mostly lower with Aug gold (GCQ18 -0.71%) -9.2 (-0.72%) at a 6-month low, July silver (SIN18 -0.30%) -0.054 (-0.33%) ata 1-1/2 month low, and July copper (HGN18 -0.16%) unch. Metals on Wednesday closed lower with Aug gold at a 6-month low and Jul copper at a 3-week low: Aug gold -4.10 (-0.32%), Jul silver -0.014 (-0.09%), Jul copper -0.65 (-0.21%). Bearish factors included (1) hawkish comments from Fed Chair Powell who said the Fed is still accommodative and may be 100 bp below neutral and that the case for gradual Fed rate hikes is "strong," and (2) the rally in stocks, which curbed the safe-haven demand for precious metals.

Aug WTI crude oil prices (CLQ18 -1.55%)this morning are down -81 cents (-1.23%) and Aug gasoline (RBQ18 -0.67%) is -0.0106 (-0.53%). Aug crude oil and gasoline on Wednesday settled mixed: Aug crude +0.81 (+1.25%), Aug gasoline -1.59 (-0.78). Bullish factors included (1) the -5.91 million bbl decline in EIA crude inventories, more than expectations of -2.5 million bbl, and (2) upbeat comments from Iranian Oil Minister Bijan Namdar Zanganeh, who had been opposed to any OPEC crude production increase, said he was "confident" OPEC will reach an accord on production levels at Friday's meeting. Bearish factors included (1) the unexpected +3.28 million bbl increase in EIA gasoline supplies, more than expectations of -1.0 million bbl, and (2) the +2.72 million bbl increase in EIA distillate stockpiles, more than expectations of -500,000 bbl.

Overnight U.S. Stock Movers

Burlington Stores (BURL -0.73%) were rated a new 'Sell' at UBS with a price target of $135.

DISH Network (DISH  +2.35%) was downgraded to 'Neutral' from 'Buy' at Goldman Sachs.

Micron (MU -0.51%) rose 4% in pre-market trading after it forecast Q4 revenue of $8.0 billion to $8.4 billion, the midpoint above consensus of $8.02 billion.

Wix.com Ltd (WIX +1.03%) lost nearly 2% in after-hours trading after it proposed a private offering of $350 million of convertible senior notes due 2023.

Century Aluminum (CENX +1.02%) was rated a new 'Buy' at B Riley FBR with a price target of $27.

Arris International PLC (ARRS +0.08%) was downgraded to 'Sell' from 'Buy' at Goldman Sachs.

HP (HPQ -0.94%) rose 3% in after-hours trading after it said its board authorized a $4 billion stock buyback plan.

Infinera (INFN +2.78%) was downgraded to 'Neutral' from 'Buy' at Goldman Sachs.

Corning (GLW +0.04%) gained more than 1% in after-hours trading after it was upgraded to 'Neutral' from 'Sell' at Goldman Sachs.

Veritone (VERI  -2.48%) slid more than 9% in after-hours trading after it announced that it had commenced an underwritten public offering of shares of its common stock, although no size was given.

Limoneira (LMNR +2.61%) dropped 10% in after-hours trading after it announced that it intends to offer $50 million of share of its common stock in an underwritten registered public offering.

Steelcase (SCS  +1.30%) rose nearly 3% in after-hours trading after it forecast Q2 adjusted EPS of 28 cents to 33 cents, the midpoint above consensus of 28 cents.

American Outdoor Brands (AOBC  +1.07%) climbed more than 5% in after-hours trading after it forecast Q1 net sales of $130 million to $140 million, better than consensus of $123.6 million.

Barnes & Noble Education (BNED  +4.16%) jumped 8% in after-hours trading after it reported an unexpected Q4 EPS profit of 36 cents, well above consensus of a -2 cents per share loss.