Stocks Reversing Lower into Final Hour on Sector Rotation, Mideast War Resumption Fears, Profit-Taking, Tech/Alt Energy Sector Weakness

Economic/Market Gauges:

• North American Investment Grade CDS Index 51.9 +.01%
• BofA Private Credit Proxy Index 71.1 +.5% 
• Bloomberg US Securitized MBS/ABS/CMBS Avg. OAS .27 -1.0 basis point
• BofA Global Financial Stress Indicator -.22 +3.0 basis points
• European Financial Sector CDS Index 56.5 +.2%
• Emerging Market CDS Index 150.9 -.6%
• Israel Sovereign CDS 54.0 -1.6% 
• Bloomberg Global Trade Policy Uncertainty Index 1.1 -.1
• US Morning Consult Daily Consume Sentiment Index 88.5 -.3

• Citi US Economic Surprise Index 62.2 -.3

• Citi Eurozone Economic Surprise Index -46.0 +1.2

• Citi Emerging Markets Economic Surprise Index 44.3 +4.1
• S&P 500 Current Quarter EPS Growth Rate YoY(497 of 500 reporting) +27.9% unch.
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 363.64 +.59:  Growth Rate +23.6% +.2 percentage point, P/E 20.1 -.4
• S&P 500 Current Year Estimated Profit Margin 15.48% +1.0 basis point
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(10 of 10 reporting) +66.6% unch.
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 906.78 +8.17: Growth Rate +74.9% +1.6 percentage points, P/E 18.5 -.8 
• Bloomberg US Financial Conditions Index 1.07 +13.0 basis points
• US Yield Curve 40.5 basis points (2s/10s) +1.0 basis point
• Bloomberg Industrial Metal Index 181.6 -.8%
• Dutch TTF Nat Gas(European benchmark) 49.3 euros/megawatt-hour -1.1%
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 12.2% -.4 percentage point
• US Atlanta Fed GDPNow Q2 Forecast +3.3% +.3 percentage point
• US 10-Year T-Note Yield 4.53% -3.0 basis points
• 1-Year TIPS Spread 2.62 -5.0 basis points

• Highest target rate probability for July 29th FOMC meeting: 88.0% (+5.0 percentage points) chance of 3.5%-3.75%. Highest target rate probability for Sept. 16th meeting: 60.1%(+2.8 percentage points) chance of 3.5%-3.75%. (current target rate is 3.5-3.75%)
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -710 open in Japan 
• China A50 Futures: Indicating -300 open in China

• DAX Futures: Indicating +109 open in Germany

Portfolio:

• Lower: On losses in my biotech sector longs, index hedges and emerging market shorts
• Disclosed Trades: Added to my (IWM)/(QQQ) hedges, then covered some
• Market Exposure: Moved to 50% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Growth -1.4%

Sector Underperformers:

• 1) Semis -4.6% 2) Computer Hardware -4.6% 3) Alt Energy -4.6%

Stocks Falling on Unusual Volume: 

• MU, VMET, VRT, INTC, STM, MDA, NICE, HPE, ATEX, NXT, POWL, AEVA, SYM, SYNA, HPE, AG, GRRR, USAR, HLIT, RUN, RKLB, FSLR, ASST, LSCC, AMBA, ERIC, LEU, OSS, OPTX, ON, JKS, AMSC, NOK, STRL, IRDM, INOD, PENG, OPTX, PL, CLS, NOW, ALAB, MSTR, CEVA, QUIK, ALM, UUUU, DUOT, DELL, CIEN, TSEM, INFQ, OUST, LPTH, IDYA, NNE, FIVN, ADTN, QCOM, MAMA, SOC, PCT, ADTN, GLW, ARM, NVTS, UMAC, SMCI, UTI, LITE, QBTS, ENPH, AOSL, IONQ, ALOY, VOYG, MXL, RGTI, DXYZ, MRVL, UNFI, SEDG, COHR, SAIL, HIMX, POET, WOLF, AAOI, PRIM, RDW and UEC

Stocks With Unusual Put Option Activity:

• 1) EXE 2) XLP 3) SRAD 4) WMB 5) NXE

Stocks With Most Negative News Mentions:

• 1) UNFI 2) CRM 3) DBI 4) CRNC 5) MRVL

Sector ETFs With Most Negative Money Flow:

• 1) IGV 2) XME 3) XBI 4) IYH 5) ITA

Charts:

• ETFs Falling on Unusual Volume
• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Small-Cap Value -.1%

Sector Outperformers:

• 1) Gambling +3.4% 2) Homebuilding +2.9% 3) Airlines +2.8%

Stocks Rising on Unusual Volume:

• NUVL, ALHC, FCEL, FAC, AIAI, ADUR, VECO, IFS, CECO, AVO, ZVRA, SJM, DKNG, BOT, BAP, SN, ANRO, ACLS, MH, SRAD, APPS, POOL, MGNI, BKD, ASH, WPP, ICHR, PKE, FND, GPCR, SGHC, VNO, SLG, UCTT, KTB, LIFE, ALK, HAE, QXO, LINE, BLLN, RYAN, BCH, APH, ESTA, TOL, APH, ESTA, SKT, ELF, ASH, GRBK, CPNG, AAL, BSAC, MYE, CARR and TRNO

Stocks With Unusual Call Option Activity:

• 1) SRAD 2) SJM 3) IYR 4) TECK 5) PAYO 

Stocks With Most Positive News Mentions:

• 1) NUVL 2) FCEL 3) ZVRA 4) ODC 5) VECO

Sector ETFs With Most Positive Money Flow:

• 1) SOXX 2) DRAM 3) NASA 4) RAAX 5) XLF

Charts: 

• ETFs Rising on Unusual Volume
• Stocks Rising on Unusual Volume

Tomorrow's Earnings/Economic Releases of Note; Market Movers

Earnings of Note 
Company/Estimate 

Before the Open:

• (CHWY)/.24
• (CNM)/.53 

After the Close: 

• (ORCL)/1.96
• (OXM)/1.29
• (SFIX)/-.06 

Economic Releases 

8:30 am EST

• The CPI MoM for May is estimated to rise +.5% versus a +.6% gain in April.
• The CPI Core MoM for May is estimated to rise +.3% versus a +.4% gain in April.
• Real Avg. Weekly Earnings YoY for May. 

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -3,008,200 barrels versus a -7,974,000 barrel decline the prior week. Gasoline supplies are estimated to rise by +402,600 barrels versus a +3,364,000 barrel gain the prior week. Distillate inventories are estimated to fall by -145,800 barrels versus a +1,502,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to rise by +.14% versus a +.2% gain prior. 

2:00 pm EST

• The Federal Budget Deficit for May is expected to come in at -$282.0B versus $215.0B in April.

Upcoming Splits

• KLAC 10-for-1

Other Potential Market Movers

• The 10Y T-Note auction, weekly MBA Mortgage Applications report, Oppenheimer Consumer Growth/E-Commerce Conference, Wells Fargo Industrials/Materials Conference, (NXPI) annual meeting, (DKS) annual meeting, (CAT) annual meeting, (SHAK) annual meeting, (FCX) annual meeting, (AAL) annual meeting, (AGX) annual meeting, (TGT) annual meeting, (DASH) annual meeting, (CGNX) investor meeting and the RBC Mining/Metals Conference could also impact global trading tomorrow.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running +13.9% Above 100-Day Average 
• Nasdaq/NYSE Volume Ratio 15.3 +.5
• 6 Sectors Rising, 5 Sectors Declining
• 46.8% of Issues Advancing, 51.0% Declining 
• TRIN/Arms 1.09 -10.7%
• Non-Block Money Flow +$92.8M
  
• 120 New 52-Week Highs, 85 New Lows
• 52.3% (+1.5%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 50.7 -3.9

Polymarket: 

• Will China invade Taiwan by end of 2026? 7.0% unch.
• Trump announces US blockade of Hormuz lifted by June 30th 38.0% +3.0 percentage points
• US x Iran permanent peace deal by June 30th 20.0% +3.0 percentage points 
• US announces new Iran agreement/ceasefire extension by June 30th 45.0% +1.0 percentage point
• US Invades Iran before 2027 19.0% +2.0 percentage points

Other:

• Bloomberg Global Risk-On/Risk-Off Index 117.5 -2.6%
• Global Monitor Iran Instability Index 72.0 +5.0
• Strait of Hormuz Oil Tanker Traffic Curtailed Estimate 83.0% -2.0 percentage points
• US High-Yield Tech Sector OAS Index 440.75 +5.75 basis points
• Bloomberg Cyclicals/Defensives Index 253.9 -2.3%
• Morgan Stanley Growth vs Value Index 152.4 -3.4%
• CNN Fear & Greed Index 29.0 (FEAR) -14.0
• 1-Day Vix 25.0 +56.1%
• Vix 23.2 +22.4%
  
• Total Put/Call .99 +7.6%

Tuesday Watch

Around X:

• @Business  

• Trump very much seems to want the war in Iran to end, but increasingly, it looks like we may live with a low-grade version of the conflict for months to come. 
• Japan is currently undergoing the greatest budgetary reform process since the end of World War II, Finance Minister Satsuki Katayama says.
• SpaceX CEO Elon Musk unveiled a more detailed look at an initial version of an AI data center satellite that the company plans to build, providing more insight into the project driving SpaceX’s highly anticipated IPO.
• Bank of America Securities sees trouble ahead for the stock market. 
• Get up to speed on what's moving global markets.
• Here’s what you need to know to start your day.    

• @ZeroHedge

• BREAKING: A magnitude 5.0 earthquake struck Sargaz in Iran’s southern Hormozgan province at a depth of 22km, according to Iranian state media, reports Reuters.     
• Chinese Article Warns VPN Use Alone Can Trigger Punishment Under Expanding Censorship Regime.    
• How A Tiny Insect Decimated Florida's Citrus, And What Orchardists Are Doing About It. 
• BREAKING: Iranian leadership loses contact with Supreme Leader Mojtaba Khamenei.
• How safe is the bounce?
• Several people have asked me to share some of the back and forth on that very bizarre chat with Gemini on SpaceX's amended filing. I won't share the whole thing, but here's where things started to go off the rails. (1/3).
• "Replacing Lower Value Human Capital": Banks Cut Staff As Recent Grads Face Off Against AI For Jobs.
• Xi Jinping Applauds Kim's 'Socialist Cause' In Warm North Korea State Visit.
• House Report Finds Minnesota Officials Ignored Fraud To Avoid Racism Accusations.
• *OPENAI SUBMITTED CONFIDENTIAL S-1 TO SEC FOR IPO.
• Campbell's CEO Serves Up Warning For Restaurants As "Resilient" At-Home Cooking Trend Gains Steam.
• Sam Bankman-Fried 'Absolutely' Wants A Presidential Pardon.
• USDA TO TRIAL IVERMECTIN IN FEED TO CONTROL SCREWWORM IN WILD. 
• Bitcoin Bid As Stocks 'Dead Cat Bounce', But History Shows Friday's Low Gets Re-Tested.               

• @CNBC

• CNBC Daily Open: Tim Cook's last WWDC, tech IPOs and Middle East tensions. 
• Tuesday's big stock stories: What’s likely to move the market in the next trading session.
• Stock futures are little changed after chip rebound lifts S&P 500 to winning day: Live updates.      
• The Pentagon added a slew of Chinese companies, including Alibaba Group, Baidu Inc and carmaker BYD, to a list of entities it believes have aided the Chinese military, complicating the fragile diplomatic relationship between Washington and Beijing. The Defense Department will be prohibited from contracting directly with listed companies starting later this month. Click here to read more:The Pentagon added a slew of Chinese companies, including Alibaba Group, Baidu Inc and carmaker BYD, to a list of entities it believes have aided the Chinese military, complicating the fragile diplomatic relationship between Washington and Beijing. The Defense Department will be prohibited from contracting directly with listed companies starting later this month. Click here to read more: 

Night Trading 

• Asian equity indices are -.25% to +1.75% on average. 
• Asia Ex-Japan Investment Grade CDS Index 73.5 -.5 basis point. 
• China Sovereign CDS 40.5 -1.0 basis point.
• China Iron Ore Spot 100.6 USD/Metric Tonne +.32%. 
• Crude Oil 90.62/bbl. -.74% 
• Gold 4,358.80 USD/t oz. -.11%. 
• Swiss Franc/Offshore Chinese Renminbi Cross 8.50 -.02%.
• Bloomberg Emerging Markets Currency Index 34.98 +.03%.
• Bloomberg Global Risk-On/Risk Off Index 121.0 +.4%.
• US 10-Year Yield 4.56% unch.
• Japan 30-Year Yield 3.97% +2.0 basis points. 
• Volatility Index(VIX) futures 20.1 +.5%.
• Euro Stoxx 50 futures -.33%. 
• S&P 500 futures +.04%.
• NASDAQ 100 futures +.07%.

Morning Preview Links

BOTTOM LINE: Asian indices are mostly higher, boosted by technology and financial shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower.  The Portfolio is 25% net long heading into the day.