Overnight Markets and News

Jun E-mini S&Ps (ESM18 unch) this morning are down -0.02% and European stocks are up +0.01% in uninspired trade. European stocks received a boost after the Eurozone Apr unemployment rate fell -0.1 to a 9-1/3 year low of 8.5%, although the upside in stocks was limited as the Italian political crisis remains unresolved. Also, energy stocks are weaker with Jul WTI crude oil (CLN18 -0.65%) down -0.60% after API data late Wednesday showed U.S. crude inventories rose +1.0 million bbl last week, double expectations of +500,000 bbl. Losses in the overall market were contained as Asian equity markets rallied on stronger-than-expected China manufacturing data after the China May manufacturing PMI climbed to an 8-month high. EUR/USD gained while German bund and T-note yields rose on signs that Eurozone inflation accelerated after the Eurozone May CPI rose at a +1.9% y/y pace, the fastest pace in 13-months. Asian stocks settled mostly higher: Japan +0.83%, Hong Kong +1.37%, China +1.78%, Taiwan +0.50%, Australia +0.45%, Singapore -0.46%, South Korea +0.54%, India +1.19%. Asian stocks moved higher on signs of strength in Chinese manufacturing activity after the China May manufacturing PMI unexpectedly rose +0.5 to an 8-month high 51.9. China's Shanghai Composite also rose as investors bought shares of stock that will be included in the MSCI gauges after today's close.

The dollar index (DXY00 -0.29%) is down -0.13%. EUR/USD (^EURUSD +0.31%) is up +0.17%. USD/JPY (^USDJPY -0.02%) is down -0.02%.

Jun 10-year T-note prices (ZNM18 -0-070) are down -8 ticks.

The Eurozone May CPI estimate rose +1.9% y/y, stronger than expectations of +1.6% y/y and the largest increase in 13-months. The May core CPI rose +1.1% y/y, stronger than expectations of +1.0% y/y and the biggest increase in 8 months.

The Eurozone Apr unemployment rate fell -0.1 to a 9-1/3 year low of 8.5%, higher than expectations of -0.1 to 8.4%.

The China May manufacturing PMI unexpectedly rose +0.5 to 51.9, stronger than expectations of no change at 51.4 and the fastest pace of expansion in 8 months.

U.S. Stock Preview

Key U.S. news today includes: (1) May Challenger job cuts (Apr -1.4% y/y), (2) weekly initial unemployment claims (expected -6,000 to 228,000, previous +11,000 to 234,000) and continuing claims (expected -8,000 to 1.733 million, previous +29,000 to 1.741 million), (3) Apr personal spending (expected +0.4%, Mar +0.4%) and Apr personal income (expected +0.3%, Mar +0.3%), (4) Apr PCE deflator (expected +0.2% m/m and +2.0% y/y, Mar unch m/m and +2.0% y/y) and Apr core PCE deflator (expected +0.1% m/m and +1.8% y/y, Mar +0.2% m/m and +1.9% y/y), (5) May Chicago PMI (expected +0.4 to 58.0, Apr +0.2 to 57.6), (6) Apr pending home sales (expected +0.4% m/m, Mar +0.4% m/m and -4.4% y/y), (7) EIA weekly Petroleum Status Report, (8) G7 meeting (Thu-Sat) of finance ministers and central bankers in Whistler, British Columbia.

Notable Russell 1000 earnings reports today include: Costco (consensus $1.69), Dollar Tree (.24), Dollar General (1.40), Ulta Beauty (2.48), VMware (1.15), GameStop (0.37), Marvell Technology (0.31), Lululemon Athletica (0.46).

U.S. IPO's scheduled to price today: none.

Equity conferences this week: Cowen Technology, Media, and Telecom Conference on Wed-Thu, KeyBank Capital Markets Industrials and Basic Materials Conference on Wed-Thu, Bernstein Strategic Decisions CEO Conference on Wed-Fri, RBC Capital Markets Auto Tech: Connected, Autonomous, Shared, Electric Conference on Thu, RBC Capital Markets Consumer & Retail Conference on Wed-Thu, American Society of Clinical Oncology Meeting on Fri.

Market Comments

June S&P 500 E-minis (ESM18 unch) this morning are little changed, down -0.50 points (-0.02%). Wednesday's closes: S&P 500 +1.27%, Dow Jones +1.26%, Nasdaq +0.72%. The S&P 500 on Wednesday closed higher on carry-over support from a rally in European stocks on reduced Italian political risks after the 10-year Italy bond yield fell back below 3.00%. Stocks were also boosted by an upbeat Fed Beige Book that said manufacturing showed "strong" gains and employment and prices continued to post "modest to moderate" gains. Energy stocks rallied as crude oil prices rose +2.22%. Stocks were undercut by the +178,000 increase in the U.S. May ADP employment report, which was slightly weaker than expectations of +190,000. Stocks were also undercut by the unexpected -0.1 point downward revision in U.S. Q1 GDP to 2.2% from expectations of unchanged at 2.3%.

June 10-year T-notes (ZNM18 -0-070) this morning are down -8 ticks. Wednesday's closes: TYM8 -20.00, FVM8 -15.25. Jun 10-year T-notes on Wednesday closed lower on negative carry-over from a slide in German bund futures after German May CPI rose more than expected and after the German May unemployment rate unexpectedly fell to a record low. There was also reduced safe-haven demand due to the rally in stocks.

The dollar index (DXY00 -0.29%) this morning is down -0.119 (-0.13%). EUR/USD (^EURUSD +0.31%) is up +0.0020 (+0.17%). USD/JPY (^USDJPY -0.02%) is down -0.02 (-0.02%). Wednesday's closes: Dollar Index -0.680 (-0.72%), EUR/USD +0.0125 (+1.08%), USD/JPY +0.14 (+0.13%). The dollar index on Wednesday closed lower on strength in EUR/USD as Italian political risks eased and the 10-year Italian government bond yield fell back below 3.00%. The dollar was also undercut by the weaker-than-expected U.S. Q1 GDP and May ADP employment reports.

Metals prices this morning are mixed with Jun gold (GCM18 +0.29%) +2.3 (+0.18%), Jul silver (SIN18 +0.28%) +0.011 (+0.07%), and Jul copper (HGN18 -0.21%) -0.005 (-0.15%). Wednesday's closes: Jun gold +2.50 (+0.19%), Jul silver +0.171 (+1.04%), Jul copper +0.0065 (+0.21%). Metals on Wednesday closed higher on a weaker dollar and on signs of tighter copper supplies after LME copper inventories fell -11,375 MT to a 2-week low of 283,375 MT. Copper was undercut by the downward revision in U.S. Q1 GDP to 2.2% from 2.3%.

Jul WTI crude oil prices (CLN18 -0.65%) this morning are down -41 cents (-0.60%) and Jul gasoline (RBN18 +0.10%) is +0.0031 (+0.14%). Wednesday's closes: Jul crude +1.48 (+2.22%), Jul gasoline +0.0353 (+1.65%). Jul crude oil and gasoline on Wednesday closed higher on the weaker dollar and expectations that Thursday's weekly EIA data will show crude inventories fell -1.0 mln bbl.

Overnight U.S. Stock Movers

Micron (MU -0.08%) fell more than 3% in pre-market trading after it was downgraded to 'Equal-Weight' from 'Overweight' at Morgan Stanley.

Corning (GLW -1.46%) was upgraded to 'Overweight' from 'Equal-Weight' at Morgan Stanley with a price target of $34.

Bluebird Bio (BLUE -1.83%) was rated a new 'Overweight' at Piper Jaffray with a price target of $240.

Loxo Oncology (LOXO +3.12%) was rated a new 'Overweight' at Piper Jaffray with a price target of $200.

HealthEquity (HQY +1.62%) was downgraded to 'Neutral' from 'Overweight' at Cantor Fitzgerald with a price target of $65.

Keysight Technologies (KEYS -0.08%) rose 4% in after-hours trading after it reported Q2 adjusted revenue of $999 million, better than consensus of $965.8 million, and then forecast Q3 adjusted revenue of $942 million to $972 million, well above consensus of $912.5 million.

Agios Pharmaceuticals (AGIO +0.75%) was rated a new 'Overweight' at Piper Jaffray with a price target of $125.

CRISPR Therapeutics AG (CRSP +6.79%) plunged over 20% in after-hours trading after it announced that the FDA had placed a clinical hold on the Investigational New Drug Application for its CTX001 drug for the treatment of sickle cell disease pending the resolution of certain questions that will be provided by the FDA.

Box (BOX +1.94%) slid more than 4% in after-hours trading after it forecast full-year revenue of $603 million to $608 million, the midpoint below consensus of $606.8 million.

Gilead Sciences (GILD +0.53%) was rated a new 'Overweight' at Piper Jaffray with a price target of $85.

Cherry Hill Mortgage Investment (CHMI +0.63%) fell 5% in after-hours trading after it announced that it is offering 2.75 million shares of its common stock in an underwritten public offering.

Quality Systems (QSII -0.82%) was upgraded to 'Overweight' from 'Neutral' at Cantor Fitzgerald with a price target of $21.

Tilly's (TLYS +2.78%) jumped 12% in after-hours trading after it forecast Q2 EPS of 24 cents to 28 cents, well above consensus of 12 cents.