MARKET WRAPS
Watch For:
ADP National Employment Report for May, Weekly Jobless Claims, Revise Productivity and Costs, ISM Report on Business Manufacturing PMI, EIA Weekly Petroleum Status Report
Today's Headlines/Must Reads
- House Approves Debt-Ceiling Deal Struck by Biden and McCarthy
- Profit Numbers Get Spruced Up as Business Slows
- ESG Blowback: Exxon, Chevron Investors Reject Climate Measures
- Traders Unfazed by Potential OPEC Production Cuts
Follow WSJ markets coverage here .
Opening Call:
Stocks were on course for a muted start on Thursday, but with support provided by easing debt-ceiling angst, better China data and hopes official U.S. interest rates would not rise this month.
The House of Representatives voted 314-117 in favor of a crucial debt-ceiling bill on Wednesday night, keeping Washington on track to avoid a technical default by June 5.
There was no great relief bounce in futures, however. The S&P 500 sits just shy of 10-month highs suggesting many investors were not pricing in the default scenario.
Investors were also parsing the latest comments from Federal Reserve officials who implied the central bank should not raise interest rates in less than two weeks time.
The chances of a 25 basis point rate hike by the Fed to a range of 5.25% to 5.5% on June 14 has fallen from 67% on Wednesday to 36% on Thursday.
Read Fed Prepares to Skip June Rate Rise but Hike Later
There was also better news on China's economy. The Caixin survey of smaller manufacturers released earlier on Thursday showed the sector expanding slightly in May, better than expected.
Read China Caixin Manufacturing PMI Returns to Expansion
Stock Fallers
Premarket fallers were dominated by software names as several companies failed to meet expectations when it came to forward guidance.
https://urldefense.com/v3/__http://C3.ai__;!!F0Stn7g!Ha5tmRz5IyjN7PCtdRx_R2b6YrVMEQvnehiLUlyT_OGcRg7k8QfhdbjNTGxPVXJLgIs89drucFn-Epvgcb0b4cSghtvt7jPi6cPBG1s56Ac$ stock fell 20% in premarket trading after its earnings outlook failed to live up to the hype.
CrowdStrike stock fell close to 11% as revenue growth slowed and the company's full-year forecast fell short of expectations.
Shares of Okta were down 19% ahead of the open despite it beating earnings estimates and raising full-year guidance. A warning from its CEO about increasing macroeconomic pressures appeared to spook investors.
Salesforce shares fell more than 5% after investors were left disappointed that the company didn't raise its full-year guidance following better-than-expected first-quarter earnings.
Stock Risers
Nordstrom stock was up 7.5% ahead of the open after it beat earnings and sales estimates in the first quarter. The company also reiterated its outlook for the full fiscal year
Forex:
The dollar has stalled, pulling away from recent highs, after two Fed officials suggested the central bank could opt to keep interest rates steady in June and raise them in July instead.
As a result, the dollar shrugged off approval of the debt-ceiling deal, and the comments will make upcoming data key in determining whether the Fed does indeed skip a rate rise in June, ING said.
The dollar could edge marginally lower if Thursday's ADP, jobless claims and ISM manufacturing data are on the weak side, although moves should be limited ahead of Friday's key monthly jobs figures, ING said.
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The euro was little moved even after data showed eurozone inflation eased by more than expected in May.
Lower-than-expected Spanish, French and German inflation data earlier in the week had the market speculating about a soft eurozone inflation print so was unlikely to materially impact the euro, ING said.
Read Cooling Eurozone Inflation Opens Path for ECB Rate Pause
Bonds:
The current economic cycle is looking good for the performance of bonds, with the asset class likely to generate "very strong" returns in 2023 and 2024, Schroders said.
It said bond markets generally perform strongly when inflation is decelerating, growth is softening, and when central banks cut interest rates.
"It is highly likely all those three play out this year," Schroders said.
Under certain conditions including the duration of a fund, interest rate cuts could mean very high single digit, or potentially double digit returns from fixed income, it added.
"The environment to me feels like the 90s when we saw 600 basis points in bond yield, and that was in 1994."
Energy:
Oil prices edged higher as Chinese data pointed to expanding factory activity.and with expectations for an OPEC+ meeting this weekend fluctuating.
Most bank analysts take the view the cartel will hold off from adjusting production levels for now. Investors had been concerned the group could cut production to counter a decline in oil prices.
"We don't expect the group to announce production cuts at the 4 June meeting, but bullish rhetoric is likely to continue," ANZ said.
Metals:
Base metals edged higher, while gold faltered, as expectations that strong jobs data will likely cement further Fed rate hikes this year counterbalanced more positive economic data from China.
Gold
Gold faces increasing risk of bearish reversal, based on charts, UOB Global Economics & Markets Research said.
Following its recent slide, gold fell further to a low of $1,932/oz on Tuesday, which seems to have slightly broken the 21-week exponential moving average and the rising trendline connecting the lows of October 2022 and March 2023, UOB said.
These price actions, together with weekly moving average convergence divergence indicator turning negative last week suggest an increasing risk of a bearish reversal, UOB said, pegging support at bottom of daily Ichimoku cloud, now at $1,920/oz.
Read Gold Prices Likely to Find Support in Recession Risks, Central Bank Demand
Copper
The copper market looks to be closing in on a fundamental inflection point, UBS said. copper market looks to be closing in on a fundamental inflection point, UBS said. copper market looks to be closing in on a fundamental inflection point, UBS said. copper market looks to be closing in on a fundamental inflection point, UBS said.
UBS, which said it has done a detailed review of its supply and demand estimates for the metal, now forecast only a modest surplus in 2023 and expect a growing deficit from 2025.
"This increases the risk of material price upside over the next 2-3 years [potentially copper's 'lithium moment']," it said.
Prices could dip in the near term if "already weak physical signals deteriorate further," but UBS said it doesn't expect any oversupply to push prices down into the cost curve for an extended period.
TODAY'S TOP HEADLINES
ESG Blowback: Exxon, Chevron Investors Reject Climate Measures
An investor-driven climate change push at some of the world's largest oil companies has stalled out.
On Wednesday, Exxon Mobil and Chevron's shareholders struck down a raft of proposals urging the companies to cut greenhouse-gas emissions derived from fuel consumption, put out new reports on climate benchmarks and disclose certain oil-spill risks, among other initiatives.
Broadcom Is a Bellwether for Chips. Earnings Will Be Focused on AI.
Chip investors are eagerly awaiting the latest results from semiconductor bellwether Broadcom after the market close to get an update on its businesses and progress in the artificial intelligence market.
Some of the company's chips have exposure to generative AI systems, which has been a popular investment theme this year. The technology ingests text, images, and videos in a brute-force manner to create content. Interest in this form of AI was sparked by OpenAI's release of ChatGPT late last year.
Jamie Dimon Says He Never Discussed Jeffrey Epstein's Accounts at JPMorgan; Jes Staley Says Dimon Did
A former top JPMorgan Chase executive said in legal documents that for years he communicated with Chief Executive Jamie Dimon about the bank's business with convicted sex offender Jeffrey Epstein-setting the stage for a conflict with his former boss, who maintains he had no such conversations.
Jes Staley's statements, made in documents viewed by The Wall Street Journal that haven't been made public, are his first remarks to emerge about conversations between him and Dimon regarding Epstein. The bank on Tuesday said Staley's statements are false.
Purdue Appeals Court Ruling Curbs Lawsuits Against Corporate Leaders
An appeals court's ruling this week that corporate bankruptcy filings can protect insiders from liability cements the chapter 11 system as a powerful tool for resolving misconduct claims.
The Second Circuit Court of Appeals backed a chapter 11 plan for drugmaker Purdue Pharma that releases its owners, members of the wealthy Sackler family, from civil lawsuits related to the opioid crisis. In return, the family members will pay up to $6 billion over time to Purdue's creditors, believed to be the largest settlement ever by shareholder parties to a bankruptcy case.
Facebook Parent Threatens to Remove News From Its Platforms in California
Facebook parent Meta Platforms is threatening to pull news from its sites in California if the state passes a law requiring technology platforms to pay publishers, the latest in a series of warnings from the company as various governments consider similar legislation.
The bill is set to receive a vote on the California assembly floor Thursday and, if it passes, would move next to the state Senate. The legislature's final deadline for passing bills this year is Sept. 14.
New Pfizer RSV Vaccine Rolls Out Into Headwinds of Hesitancy
Vaccine makers are confronting a post-Covid conundrum: New shots are taming a widening range of diseases, but people are more skeptical of them than ever.
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06-01-23 0611ET
