Market Overview

The U.S. stock market is poised for a modestly higher opening today, sustaining the upward momentum from yesterday’s broad rally. Mega-cap stocks, which registered losses yesterday, are bouncing back and providing a substantial boost to the overall market. With the June Consumer Price Index (CPI) slated for release tomorrow, market participants are holding their breath and adopting a wait-and-see strategy.

U.S. Economic Data

Economic data from the U.S. today was sparse, with only the NFIB Small Business Optimism Survey for June being released. The survey showed an increase to 91.0 from 89.4 in May, indicating an optimistic outlook among small businesses and offering a positive signal for the broader economy.

International Developments

On the global front, the People’s Bank of China announced a continuation of policies aimed at maintaining a stable and healthy development of the real estate market until the end of 2024. This announcement is expected to have significant implications for the global real estate and financial markets.

Overnight developments show that equity indices in the Asia-Pacific region ended Tuesday on a higher note. Japan’s Nikkei remained unchanged, while Hong Kong’s Hang Seng gained 1.0%, China’s Shanghai Composite increased by 0.6%, India’s Sensex rose by 0.4%, South Korea’s Kospi soared by 1.7%, and Australia’s ASX All Ordinaries jumped by 1.5%. These positive developments can be attributed in part to China’s economic support measures, which have buoyed stocks and commodities.

On the economic data front, China’s new loans and total social financing figures for June exceeded expectations. Australia’s June NAB Business Survey showed an improvement, as did the NAB Business Confidence figures.

In news, the People’s Bank of China reiterated its commitment to the healthy development of the real estate market. The Financial Times reported that China is planning to announce rules for controlling content provided by artificial intelligence services, which could have wide-ranging implications for the tech sector. The Reserve Bank of New Zealand will hold a policy meeting tonight, but the market does not expect the official cash rate to be changed from the current 5.50%.

In Europe, the majority of major indices are trading in positive territory, with the exception of the U.K.’s FTSE 100 which is currently underperforming due to weakness in financials and select consumer names. Economic sentiment surveys for Germany and the Eurozone weakened in their respective July readings with Germany’s survey falling to a level not seen since December. ZEW economists expect additional deterioration by the end of the year due to high short-term interest rates.

The NATO summit began in Lithuania today. Policymakers in Europe and the U.S. are indicating a need for higher interest rates to ensure price stability. However, concerns over the world’s biggest economy potentially tipping into a recession remain.

Corporate News

Several companies have made headlines today:

• Microsoft (MSFT 332.01, +0.18, +0.1%): The tech giant is reportedly planning to cut more jobs, according to CNBC.
• Uber (UBER 42.71, -0.07, -0.2%): The ride-hailing company’s CFO, Nelson Chai, plans to leave the company, as reported by Bloomberg.
• Iovance Biotherapeutics (IOVA 7.75, -1.04, -11.8%): The company announced the pricing of an offering of 20.0 million shares of common stock at $7.50 per share.
• T-Mobile (TMUS 139.38, +1.04, +0.8%): Goldman Sachs has named the telecommunications company’s stock a top pick and reiterated its Buy rating.
• Zillow (ZG 48.70, +2.10, +4.5%): Piper Sandler has upgraded the real estate marketplace company to Overweight from Neutral.
• Amazon (AMZN 128.05, +0.92, +0.7%): Prime Day has commenced, and the company plans to challenge EU digital rules, according to the Financial Times.
• JPMorgan (JPM 146.80, +1.65, +1.1%): Jefferies upgraded the banking giant to Buy from Hold.
• NVIDIA (NVDA 424.90, +3.10, +0.7%): KeyBanc increased its price target for the tech company to $550 from $500 while maintaining its Overweight rating.
• 3M (MMM 99.10, +1.91, +2.0%): The manufacturing conglomerate was upgraded to Neutral from Underperform at BofA Securities.

Looking Ahead

Given the Federal Reserve’s recent signals regarding further tightening this year, U.S. markets are poised for a period of uncertainty and volatility. The second-quarter earnings season will commence in earnest on Friday with reports from JPMorgan Chase & Co., Citigroup Inc., and Wells Fargo & Co., providing further insights into the economic outlook. Investors and market watchers will be paying close attention to these developments.

Closing Remarks

The second half of 2023 is expected to be shaped by key developments in the economic, corporate, and geopolitical spheres. While these developments hint at a cautiously optimistic outlook, the potential for interest rate hikes and further tightening by the Federal Reserve could make for choppy market conditions. As always, it will be crucial for investors to closely monitor domestic and global economic data, as well as unfolding corporate news and international developments.