The S&P 500 and Nasdaq have been on a roll this week, while European markets are looking increasingly shaky.

Investors have kept bidding up riskier assets, even after the Federal Reserve signaled it wasn't in a hurry to cut interest rates, despite cooling inflation.

But European markets are showing signs of pressure. French stocks extended declines on Friday and the spread between French and German benchmark bond yields reached its widest since 2017.

This comes after left-wing French parties formed an alliance, further challenging President Emmanuel Macron's centrist party's hold on power.

In recent trading:

U.S. index futures fell, with contracts tied to the Dow industrials down the most.

Treasury bonds edged lower. The 10-year benchmark yield held below 4.3%.

French stocks fell further. The CAC 40 index is down 5% this week so far. Bank stocks extended declines, with Societe Generale down around 5% on Friday.

Safer European bonds rallied, led by German bunds. Germany's bond yield fell more than a tenth of a percentage point. The Stoxx Europe 600 is on track for its worst week in nearly eight months.

The Japanese yen weakened against the dollar after the Bank of Japan kept its policy unchanged and said it would begin reducing bond purchases, putting forward a plan in July.


Tesla is in focus, after shareholders voted to uphold Elon Musk's huge pay package and voted in favor of moving the electric-car maker's legal home to Texas from Delaware.

The outcome was largely expected since Musk had posted on X that the shareholder resolutions were passing by wide margins prior to Tesla's annual shareholder meeting.

Premarket Movers

Adobe reported fiscal second-quarter earnings that were better than expected. The stock rose 15%.

Apple was down 0.1%. Shares rose 0.6% on Thursday and Apple surpassed Microsoft as the most valuable company by market capitalization, according to Dow Jones Market Data.

Arm Holdings rose 2.4%. The U.K.-based chip maker will replace Sirius XM in the Nasdaq 100 index and other Nasdaq indexes before the start of trading on June 24.

Broadcom was up 0.7% after the stock closed at a record high Thursday of $1,678.99, following better-than-expected earnings and after it announced a 10-for-1 stock split.

GameStop fell 0.9%. Keith Gill, the investor known as Roaring Kitty, shared a screenshot on Reddit late Thursday that showed an E*Trade account holding more than 9 million GameStop shares and $6.34 million in cash.

RH reported a first-quarter adjusted loss of 40 cents a share, wider than analysts' expectations. RH shares fell 12%.

Postmarket Movers

Gain Therapeutics is planning to sell common stock in an underwritten public offering. Shares fell 15%.

Vaxart received a project award valued at up to $453 million to evaluate its oral Covid-19-vaccine candidate. Shares more than doubled.

Watch For:

Import Prices for May; University of Michigan Preliminary Consumer Survey for June; Canada Manufacturing Survey for April; Canada Wholesale Trade for April

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The dollar hit a five-week high against a basket of currencies, shrugging off Thursday's weaker-than-expected U.S. producer prices data and helped by weakness in the yen and the euro.

The yen fell after the Bank of Japan opted to maintain government-bond purchases until its next meeting in July while political uncertainty due to prospects of a snap election in France continued to weigh on the euro.

"The U.S. dollar bears couldn't take advantage of softer data yesterday due to contradictory dynamics elsewhere," Swissquote Bank said.

Brown Brothers Harriman said the dollar continues to build on the gains it made after the Federal Reserve's policy meeting on Wednesday.

"The Fed's guidance that it plans to keep the funds rate higher for longer while other major central banks have started to cut rates is dollar supportive."

Brown Brothers Harriman said the dollar's rise reflects rising differentials between Treasury yields versus bond yields of other major economies.

Jitters ahead of French snap elections lifted one-month implied volatility in the euro against the dollar--a measure of options pricing which reflects the perceived risk of future moves--to its highest in nearly eight months, Refinitiv data show.

Investors are concerned about the prospect of outright victory for Marine Le Pen's far-right National Rally party--with polls showing a risk of this--and a move away from European Union fiscal rules, Pepperstone said.

"Traders are expecting increased movement in euro assets."


SEB Research said Treasury yields are likely to fluctuate in a broad range this summer, responding to key individual economic data.

"If the data softens in line with our expectations, yields may temporarily undershoot in the autumn to levels that may not be sustainable if a soft landing is prospectively confirmed."

This implies a temporary decline in yields before a recovery if the U.S. inflation is lowered to target without the economy slipping into recession.

"We expect the 10-year Treasury yield to trade near 4.30% at the end of the year," SEB said.

Citi Research said markets are treating the possibility of a far-right-led government in France as a high-probability, high-risk severity event and suggested there's scope for further widening of the 10-year OAT-Bund yield.

Still, the risk premium and short buildup so far are only half of that seen during the 2017 election, perhaps due to lack of talk of an EU-exit, Citi said.

The yield spread is trading at multiyear highs of 77 basis points, up nine basis points, according to Tradeweb, with 80 basis points being the next level in sight, UniCredit Research said.

"Hopes for serious support around the 2020, 2022 and 2023 peaks were dashed. The next reference point is the peak that occurred around the 2017 presidential election at 80bp," UniCredit said.


Oil prices edged lower but were on track for weekly gains despite mixed signals on the demand outlook.

Stricter adherence to oil production quotas set by OPEC and its allies should offset any potential increases under the group's gradual phase-out plan, according to ANZ Research.

OPEC+'s aim to gradually unwind voluntary cuts of 2.2 million barrels a day starting from October sparked an oil selloff last week, fuelled by fears of an oversupplied market next year. But "stricter adherence to quotas could see non-compliant members reduce output in coming months," ANZ said.

"This should see the crude oil market remain well supported over the next 18 months."


Gold futures remained in a narrow band after the Federal Reserve damped expectations of interest rate cuts soon, but BMI said the metal should remain firmly above the $2,250 mark over the coming months on geopolitical uncertainty.

Further, bullion's non-yielding characteristic is also supporting prices, as a Fed interest rate cut will arrive eventually, BMI added.


Boeing Investigates Quality Issue on Undelivered 787s

Boeing is investigating a quality problem with its undelivered 787 Dreamliner planes after discovering that some fasteners were incorrectly installed on the jets' bodies, adding to the aircraft maker's woes amid heightened scrutiny from U.S. regulators.

The issue involves incorrect torquing, or tightening, of some fasteners in the "side-of-body area" of some planes, which was discovered as part of Boeing's regular quality checks, the aircraft maker said Friday.

Investors continue to flee French stocks, shift toward German bonds on election nervousness

The spread between French and German 10-year government bonds continued to widen and French stocks slumped on Friday on nervousness that the country's parliamentary elections could yield a fractured body.

Having ended on Thursday at its widest since 2017, the spread reached 74 basis points in early action on Friday.

Bank of Japan Plans to Reduce Bond Buying, Yen Weakens

TOKYO-The Bank of Japan said it would reduce government bond purchases in a signal of monetary tightening, as it left its policy interest rate unchanged.

Monetary tightening in general should support the yen, but the Japanese currency instead weakened Friday because the central bank didn't offer specifics on its bond plans.

Macron's Gamble on Stopping Le Pen Now Risks Ushering Her to Power

PARIS-President Emmanuel Macron has always aspired to become one of the great men of history, saving Europe from the fires of populism and setting its economy on course to compete with the U.S. and China.

The question now looming over Macron is whether he will go down in history as the man who ushered Marine Le Pen and her far-right party to the threshold of power in France.

Russia's Devastating Attacks on Ukraine's Grid Spark Fears of Brutal Winter

KYIV, Ukraine-Ukraine is imposing blackouts, launching hasty repairs and hunting for spare parts after a Russian bombing campaign targeting power infrastructure in recent months slashed the country's electricity production by half.

The Russian attacks, using waves of missiles and explosive drones, have sparked fears of a painful winter should the power outages severely hamper the economy and lead to an exodus from cities. Ukraine has long pleaded with the West for more air-defense systems, and Ukrainian officials say deliveries have been insufficient to protect both cities and the front lines.

Abortion-Pill Ruling and IVF Battle Highlight Vulnerability for GOP

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06-14-24 0614ET