Morning Call: Stocks little changed on higher interest rates; Jun E-mini S&Ps unch; 10-year T-note yield climbs to a 4-1/4 year high of 2.99%.
Related Stocks
 ESM18 - S&P 500 E-Mini
SymLastChgPct
ESM182,776.85s-6.40-0.23%
DXY0094.255+0.122+0.13%
ZNM18119-310s-0-055-0.14%
GCM181,252.8s-3.8-0.30%
SIK1816.305s-0.176-1.07%
HGK183.0520s-0.0150-0.49%
CLM1872.13s-0.11-0.15%
RBM182.1603s-0.0239-1.09%
HAS105.69+0.13+0.12%
OAS13.92unchunch
JBT120.30-0.30-0.25%
HUBS152.15+0.05+0.03%
MRK70.93+0.28+0.40%
STT86.47-0.38-0.44%
KORS67.18-0.83-1.22%
ZG43.05-0.57-1.31%
T33.81+0.05+0.15%
VZ53.47+0.42+0.79%
HNI44.41+0.01+0.02%
SSC4.10-0.29-6.61%

Overnight Markets and News

Jun E-mini S&Ps (ESM18 +0.02%) this morning are unchanged and European stocks are up +0.05% on optimism that the U.S. and China could resolve their trade differences after U.S. Treasury Secretary Mnuchin said he's "cautiously optimistic" of reaching an agreement on trade with China. Higher interest rates are limiting the upside in stocks as the 10-year T-note yield climbed to a 4-1/4 year high of 2.99% and the 10-year German bund yield rose to a 2-1/4 month high of 0.638%. Hawkish comments from San Francisco Fed President Williams fueled losses in T-notes when he said it "makes sense" to keep raising interest rates through next year given improvement in the economy. European stocks were also under pressure on signs of weakness in manufacturing activity after the Eurozone Apr Markit manufacturing PMI fell -0.6 to a 14-month low of 56.0. Asian stocks settled mostly lower: Japan -0.33%, Hong Kong -0.54%, China -0.11%, Taiwan -0.76%, Australia +0.29%, Singapore +0.17%, South Korea unch, India +0.10%. Losses in technology stocks and suppliers to Apple weighed on Asian markets. Apple has fallen for three straight sessions on concern about weakening global demand for iPhones after Morgan Stanley cut their forecasts for iPhone shipments by 1 million in the quarter ending in March and by 6 million for the current quarter.

The dollar index (DXY00 +0.42%) is up +0.46% at a 1-1/2 month high as the push in the 10-year T-note yield to a 4-1/4 year high improves he dollar's interest rate differentials. EUR/USD (^EURUSD -0.43%) is down -0.47% at a 2-week low. USD/JPY (^USDJPY +0.54%) is up +0.54% at a 2-1/4 month high as North Korean geopolitical risks subsided after North Korean leader Kim Jong UN said his country would suspend tests of atomic bombs and intercontinental ballistic missiles.

Jun 10-year T-note prices (ZNM18 -0-070) are down -6.5 ticks at a contract low.

San Francisco Fed President Williams said it "makes sense" to keep raising interest rates through next year given improvement in the economy.

The Eurozone Apr Markit manufacturing PMI fell -0.6 to a 14-month low of 56.0, weaker than expectations of -0.5 to 56.1.

The Eurozone Apr Markit composite PMI was unch at 55.2, stronger than expectations of -0.4 to 54.8.

The German Apr Markit/BME manufacturing PMI fell -0.1 to 58.1, stronger than expectations of -0.7 to 57.5.

U.S. Stock Preview

Key U.S. news today includes: (1) Mar Chicago Fed national manufacturing activity (expected -0.61 to 0.27, Feb +0.86 to 0.88), (2) Apr Markit manufacturing PMI (expected -0.4 to 55.2, Mar +0.3 to 55.6) and Apr Markit services PMI expected +0.1 to 54.1, Mar 54.0, (3) Mar existing home sales (expected +0.2% to 5.55 million, Feb +3.0% to 5.54 million), (4) USDA weekly grain export inspections, (5) USDA Mar Cold Storage, (6) USDA weekly Crop Progress.

Notable S&P 500 earnings reports today include: Alphabet (consensus $9.292), Alaska Air Group (0.11), Kimberly-Clark (1.69), Hasbro (0.32), FirstEnergy (0.68), Halliburton (0.40), Cadence Design Systems (0.37), Ameriprise Financial (3.457), Whirlpool (2.969), Zions Bancorporation (0.82).

U.S. IPO's scheduled to price today: none.

Equity conferences this week: Stifel WasteExpo Investor Summit on Mon, American Academy of Neurology Meeting on Mon-Fri, Capital Link Singapore Maritime Forum on Tue.

Market Comments

June S&P 500 E-minis (ESM18 +0.02%) this morning are unchanged. Friday's closes: S&P 500 -0.85%, Dow Jones -0.82%, Nasdaq -1.58%. The S&P 500 on Friday closed lower on weakness in technology stocks led by a 4% slide in Apple after a downgrade to mixed from positive at OTR Global due to a deteriorating Chinese outlook. There were also increased Chinese trade tensions on concern the U.S. Treasury Department may consider using an emergency law to curb Chinese investments in sensitive technologies. Stocks were also undercut by interest rate concerns after the 10-year T-note yield rose to a 4-1/4 year high of 2.96%.

June 10-year T-notes (ZNM18 -0-070) this morning are down -6.5 ticks at a contract low. Friday's closes: TYM8 -9.00, FVM8 -4.75. Jun 10-year T-notes on Friday fell to a 2-month low and closed lower on Chicago Fed President Evans' comment that he expects higher deficits to lead to a steeper yield curve. T-note prices were also undercut by supply pressures as the Treasury on Apr 24-26 will auction $113 billion of T-notes and floating rate notes.

The dollar index (DXY00 +0.42%) this morning is up +0.41 (+0.46%) at 1-1/2 month high. EUR/USD (^EURUSD -0.43%) is down -0.0058 (-0.47%) at a 2-week low. USD/JPY (^USDJPY +0.54%) is up +0.58 (+0.54%) at a 2-1/4 month high. Friday's closes: Dollar Index +0.376 (+0.42%), EUR/USD -0.0057 (-0.46%), USD/JPY +0.29 (+0.27%). The dollar index on Friday climbed to a 2-week high and closed higher on the increase in the 1-year T-note yield to a 4-1/4 year high, which improves the dollar's interest rate differentials. There was also weakness in EUR/USD which fell to a 2-month low after German Mar PPI rose less than expected, which was dovish for ECB monetary policy.

Metals prices this morning are weaker with Jun gold (GCM18 -0.66%) -8.4 (-0.63%) at a 2-week low, May silver (SIK18 -1.27%) -0.233 (-1.36%), and May copper (HGK18 -0.03%) -0.001 (-0.03%). Friday's closes: Jun gold -10.50 (-0.78%), May silver -0.076 (-0.44%), May copper +0.003 (+0.10%). Metals on Friday settled mixed. Metals prices were undercut by a stronger dollar and by the increase in the 10-year T-note yield to a 2-month high. Copper closed higher on signs of stronger demand after LME copper canceled warrants, or orders to remove copper from LME warehouses, jumped 44% to 46,475 MT, the biggest increase in 2-1/2 years.

Jun WTI crude oil prices (CLM18 -0.23%) this morning are down -32 cents (-0.47%) and Jun gasoline (RBM18 -0.13%) is -0.0058 (-0.28%). Friday's closes: Jun crude +0.07 (+0.10%), Jun gasoline +0.168 (+0.81%). Jun crude oil and gasoline on Friday closed higher on comments from Saudi Energy Minister Khalid Al-Falih who signaled he is in favor of extending OPEC's production cuts when he said "we have seen oil prices significantly higher in the past" and the global economy has the ability to absorb costlier crude. In addition, Russian Energy Minister Novak suggested Russia may be willing to extend its production cuts when he said "there's no obligation to stop production cuts just because global stockpiles have come back toward their 5-year average. Crude oil prices were undercut by the rally in the dollar index to a 2-week high.

Overnight U.S. Stock Movers

Hasbro (HAS -1.40%) slid nearly 4% in pre-market trading after it reported Q1 adjusted EPS of 10 cents, well below consensus of 32 cents.

Oasis Petroleum (OAS +0.10%) was downgraded to 'Sell' from 'Hold' at SunTrust Robinson Humphrey.

John Bean Technologies (JBT +0.04%) was downgraded to 'Neutral' from 'Outperform' at Baird.

HubSpot (HUBS -1.82%) was downgraded to 'Sector Perform' from 'Outperform' at RBC Capital Markets.

Merck & Co (MRK +0.32%) was upgraded to 'Buy' from 'Neutral' at Goldman Sachs with a price target of $73.

State Street (STT -4.34%) was upgraded to 'Buy' from 'Hold' at Deutsche Bank.

Michael Kors (KORS -1.07%) was upgraded to 'Buy' from 'Hold' at Deutsche Bank with a price target of $86/

Zillow (ZG +0.47%) was upgraded to 'Outperform' from 'Neutral' at Macquarie with a price target of $75.

The New York Times reports that according to people familiar with the matter, AT&T (T -0.43%) and Verizon Communications (VZ -1.09%) are under investigation from U.S. antitrust officials for collusion by hindering consumers from easily switching wireless carriers.

BOJ Governor Kuroda said late Friday that the BOJ is still distant from its price target and will continue easing.

HNI Corp (HNI -0.90%) fell 2% in after-hours trading after it reported Q1 net sales of $505.1 million, stronger than consensus of $494.3 million, but then forecast Q2 adjusted EPS of 28 cents to 38 cents, below consensus of 56 cents.

Seven Stars Cloud Group (SSC -3.25%) dropped more than 7% in after-hours trading after it registered 34.7 million shares for holders of its common stock.