The big picture of today

Asian stock indices ended the day largely higher, led by the 0.9% gain in the Hong Kong Hang Seng and 0.5% in the India Sensex. China’s Shanghai Composite held steady that day, while Japan’s Nikkei fell 0.2%. By midday, European stock indices were mostly down and US futures are pointing to a mixed market open later this morning.

Ahead of the usual weakening in Friday afternoon trading, US stock indices are flirting with their respective highs. Investors will be looking for direction following the Fed’s update to monetary policy and economic projections. The data they will be looking for, however, is not expected to materialize until next week’s economic and earnings reports, both of which will set the table for the upcoming June quarter earnings season.

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International economy

Japan’s inflation rate fell from -0.4% in April to -0.1% year-on-year in May. The Bank of Japan decided to keep its short-term key rate unchanged at -0.1% and the 10-year government bond yield around 0%, as expected.

Germany’s producer price index in May rose 7.2% year-on-year after rising 5.2% in April, well above the expected 6.4% increase.

UK retail sales grew 24.6% yoy in May, down from the 42.4% yoy gain recorded in April and slower than the expected increase of 29.0 % for the month.

After jumping 74.5% yoy in March, construction production in Italy rose 60.2% yoy in April, pushing construction production up 46.6% in year-on-year change in 2021 compared to 2020.

The Singapore government has said it will ease Covid-related restrictions further next week, but at a slower pace than previously announced, as local infections have not declined significantly.

The European Union has recommended that its member states lift the ban on non-essential travel for visitors from the United States. The recommendation is non-binding and each member state can decide what regulations, including quarantines, to impose on visitors.

Domestical economy

Initial jobless claims unexpectedly rose from 36,000 to 412,000 from expectations in a streak of back-to-back declines continuing into the seventh week, dropping 16,000. Not only was this an unexpected reversal , but it was the biggest one-week increase since the last week of March. Continuing claims were also higher than expected, reaching 3.518 million from expectations of a drop to 3.43 million from 3.517 million last month.

Yesterday’s Philly Fed Manufacturing Index fell for the second month in a row, falling to 30.7 for June from 31.5 in May, a larger drop than the expected drop to 31.0. Manufacturing continued to grow in the regions as new orders and shipments remained high. The index of prices paid and received has increased.

The average rate on a 30-year fixed mortgage hit its highest level since mid-April at 3.25% in response to comments made by Federal Reserve Chairman Powell on Wednesday and indications that the Fed believes that two rate hikes are possible in 2023, which is earlier than expected.

Bloomberg reports that moderate Democrats are still working on the details of a bipartisan infrastructure plan and balked at a separate proposal for a $ 6 trillion follow-up because it was too expensive.

Later today we will have the usual weekly Baker Hughes oil rig count report.

Markets

So much for the story of inflation. If investors are really concerned about the Fed rate hike, high growth should be affected and value should be preferred. After two days to digest the Fed’s latest decision, the opposite has happened. The Nasdaq Composite and the Nasdaq 100 closed in the green, up 0.9% and 1.3% respectively, while the rest of the major indices again closed in negative territory. The Dow Jones fell 0.6%, the Russell 2000 lost 0.2% and the S&P 500 closed just in the red. To underscore the absence of long-term inflationary fears, the 10-year Treasury yield fell 6 basis points on Thursday to 1.509% while the 2-year yield rose to 0.21%, its highest in over year while we see the yield curve, the most violent the market has seen since 2014.

Actions to watch

Adobe (ADBE) reported better and worse than expected results for its May quarter. The company’s digital media revenue grew 25% year-on-year to $ 2.79 billion, with the segment’s annualized recurring revenue increasing $ 518 million quarter-on-quarter to $ 11.21 billion at the end of the quarter. Digital experience revenue was $ 938 million, up 21% year-over-year. Adobe has guided its current quarter to roughly $ 3.00 EPS vs. $ 2.90 S&P consensus with digital media revenue up about 22% year-on-year, annualized recurring digital media revenue d ‘about $ 440 million, digital experience revenue up about 21%, and digital experience subscription revenue up ~ 25%.

Genetic Testing Company Actions 23andMe (ME) jumped over 20% more in their first day as a public company following a SPAC merger with Richard Branson’s VG Acquisition Corp.

Reflecting rising steel prices and strong demand for flat rolled steel, American steel (X) released EPS forecast higher for the current quarter of $ 3.08 from the consensus forecast of $ 2.67. The company went on to say, “These market fundamentals show no signs of slowing down and give us more and more confidence in another strong year in 2022.”

CAI International (CAI) announced that it has entered into a definitive acquisition agreement by Mitsubishi HC Capital Inc. Under the terms of the merger agreement with MHC, MHC will acquire all of the outstanding and fully diluted common shares of CAI under a cash transaction for $ 56.00 per share

Amazon (AMZN) Amazon Web Services has agreed with Ferrari SpA (RACE) to become their official cloud, machine learning and artificial intelligence provider.

atai life sciences (ATAI), a clinical-stage biopharmaceutical company aimed at transforming the treatment of mental health disorders using unconventional approaches, including psychedelics, has valued its IPO raised by 15 million shares at $ 15 per share. The shares are expected to start trading later today on the Nasdaq.

After today’s market closes, no company is expected to release quarterly results. Why? Because it’s Friday! Those looking to preview next week’s reports should visit The Nasdaq earnings calendar page.

On the horizon

• June 21: Chicago Fed National Activity Index
• June 22: Existing home sales, weekly API crude oil inventory
• June 23: Current account, Markit Manufacturing & Service PMI, New home sales, EIA energy stock
• June 24: Durable goods orders, wholesale inventories, weekly jobless claims, Q1 GDP price index, merchandise trade balance, Q1 corporate profits
• June 25: Personal income and spending, PCE price index, Michigan consumer sentiment

Thought of the day

“Everything you say must be true, but not everything that is true must not be said.” ~ Voltaire

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.