Today’s Big Picture
Asia-Pacific equity indexes ended today’s session up except for India’s Sensex which ended essentially flat, down 0.09%. Korea’s KOSPI rose 0.44%, Australia’s ASX All Ordinaries gained 0.97% and Japan’s Nikkei advanced 1.27%, China, Hong Kong, and Taiwan markets are all closed today to mark the annual Dragon Boat Festival, celebrated by boat races, eating sticky rice dumplings and drinking realgar wine.
By mid-day trading, major European equity indices are up except for the UK which is currently off about 1.00%, and U.S. futures point to a soft market open later this morning.
Before U.S. equity markets open for trading, the May Employment Report will be published. While expectations call for 320K non-farm jobs to have been added during the month, concerns for slower job creation were stoked by the disappointing May ADP Employment Report out earlier this week that not only missed expectations but pointed to continued slowing job creation since February. Also weighing on expectations are recent comments from Uber (UBER), Lyft (LYFT), Microsoft (MSFT), Salesforce (CRM), and others about slowing hiring. This morning Coinbase (COIN) shared it will extend its hiring pause for the foreseeable future and rescind a number of accepted offers, while Reuters reports Tesla (TSLA) is aiming to eliminate 10% of jobs as CEO Elon Musk has a “super bad feeling” about the U.S. economy.
As investors and economists digest and assess the May job creation figures, eyes will also be on the year-over-year pace of average hourly wage gains, one of the driving factors for the inflationary pressures the Fed is looking to address. That metric is expected to cool to +5.2% vs. April’s +5.5% reading. Making this report even more interesting is the word that President Biden will speak about the May jobs report today at 10:30 ET.
Data Download
International Economy
Last night saw the release of Japanese Services PMI for May coming in at 52.6, higher than expectations and the previously reported 50.7. A reminder that PMI figures above 50 indicate growth and below 50 a contraction, so this increase is a positive sign.
Final Services PMI figures for Germany (55.0), France (58.3), Italy (53.7), Spain (56.5), and the Eurozone (56.1) all came in slightly lower than preliminary readings except for Spain which ticked up slightly.
Eurozone YoY Retail Sales growth for April was reported as showing 3.9% growth, which, while more than doubling the last reading, fell short of expectations for 5.4% growth.
Earlier this morning the EU formally adopted its sixth package of sanctions against Russia that contains a complete import ban on all Russian seaborne crude oil and petroleum products. This covers 90% of the block’s current oil imports from Russia and is subject to certain transition periods to allow the sector and global markets to adapt.
Domestic Economy
In addition to the May Employment Report that we discussed above, this morning also brings two takes on how the U.S. Services economy fared in May. At 9:45 AM ET, S&P Global will publish its May U.S. Service PMI, which is expected to remain unchanged MoM at 53.5. Soon after at 10 AM ET, the Institute for Supply Management (ISM) will release its May U.S. Services Index, and it is expected to fall to 56.5 from April’s 57.1. Aside from the headline figures, we expect details on New Orders as well as comments on sequential changes in inflation pressures will be hot topics ahead of the Fed’s next monetary policy meeting scheduled for June 14-15.
Markets
The S&P 500 rallied 1.84% yesterday on the prospect of normalizing oil prices based on OPEC’s willingness to ramp up production. The Nasdaq Composite and the Dow Jones Industrial Average also advanced 2.69% and 1.33%, respectively, while the Russell 2000 rose 2.31%. From a sector perspective, Energy was the only one to decline, assumedly on profit-taking while the market rotated to Materials, Technology, Communications, and Consumer Discretionary names, all of which posted returns over 2.00% on the day.
Including yesterday’s moves, here’s how the major market indicators stack up year-to-date :
- Dow Jones Industrial Average: -8.50%
- S&P 500: -12.37%
- Nasdaq Composite: -21.27%
- Russell 2000: -16.50%
- Bitcoin (BTC-USD): -36.20%
- Ether (ETH-USD): -51.44%
Stocks to Watch
Before trading kicks off for U.S.-listed equities, no companies are expected to report their quarterly results.
Alaska Air (ALK) raised its guidance for the current quarter as it now sees revenue growth of +12%-14% for the quarter vs the same in 2019. This compares to its prior guidance of +5%-8% and implies June quarter revenue in the range of $2.56-2.61 billion vs. the $2.45 billion consensus.
Shares of Kohl’s (KSS) were under pressure last night following reports the company’s auction process may be pushed back following “lowball offers.” Indications are Sycamore Partners offered a price in the mid-$50s per share while Franchise Group’s offer was “around $60” compared to Kohl’s target of “at least $70 a share.”
Costco Wholesale (COST) reported its May sales rose 16.9% YoY to $18.23 billion, Adjusted comp sales that exclude gasoline and foreign exchange rose 11.8% YoY for the month with the U.S. up 10.7%. The company’s e-commerce sales rose 7.7% for the month.
Pinterest (PINS) signed a definitive agreement to acquire THE YES, an AI-powered shopping platform for fashion that enables users to shop a personalized feed based on the user’s active input on brand, style, and size.
Ahead of next week’s 2022 Worldwide Developer Conference, the Apple (AAPL) rumor mill has chins wagging about the potential for a new “user-centric web search engine” that could debut in the coming quarters.
Elon Musk tweeted Tesla (TSLA) is pushing back its Tesla AI Day to September 30 “as we may have an Optimus prototype working by then.”
IPOs
Quiet periods on the shares of Bausch + Lomb (BLCO), PepGen (PEPG), and Austin Gold (AUST) end, allowing analysts at the firms that underwrote those transactions to publish their respective investment ratings. Readers looking to dig more into the upcoming IPO calendar should visit Nasdaq’s Latest & Upcoming IPOs page.
After Today’s Market Close
Once again it is Friday, and that means there are no companies expected to report their quarterly results after equities stop trading today. Those looking for more on which companies are reporting when, head on over to Nasdaq’s Earnings Calendar.
On the Horizon
Monday, June 6
- China: Caixin Services PMI – May
- UK: Retail Sales – May
- US: CB Employment Trends Index – May
Tuesday, June 7
- Japan: Household Spending, Coincident Indicator, Leading Index – April
- Germany: Factory Orders – April
- Germany: S&P Global Construction PMI – May
- UK: Services and Composite PMIs – May
- Eurozone: Sentix Investor Confidence – June
- US: Consumer Credit – April
Wednesday, June 8
- Japan: 1Q 2022 GDP
- Japan: Economy Watchers Current Index – May
- Germany: Industrial Production – April
- Eurozone: Employment Change, GDP – 1Q 2022
- Italy: Retail Sales – April
Thursday, June 9
- China: Imports/Export – May
- European Central Bank Interest Rate Decision
Friday, June 10
- Japan: PPI – May
- China: CPI, PPI – May
- Italy: Industrial Production – April
- US: Consumer Price Index – May
- US: Consumer Sentiment and Inflation Expectations – June
Thought for the Day
“Time in the markets beats timing the markets.” ~Ken Fisher
Disclosures
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.