Good morning,
 
The S&P’s daily winning streak ended at nine yesterday but fortunately that didn’t stop the Knicks from extending theirs to 12 last night in Game 1 of the NBA Finals. Tech weakness weighed on the market with software pulling back within its 2-month recovery and mega caps mostly lower. Crude and yields rose, providing a headwind for equities overall and driving small caps to underperform (Russell -1.3%, S&P -0.7%).
 
S&P futures are trading lower this morning despite a pullback in crude. There were a few Middle East headlines overnight, which skewed positive. Among the most impactful: a ceasefire in Lebanon and President Trump saying the US will resume full hostilities against Iran only if US troops are killed in the region, as well as saying the US is in “final negotiations” to end the conflict.  In macro data, weekly initial jobless claims rose from last week’s 215K to 225K, and were above consensus. That’s the highest level since early February, but the period includes the Memorial Day holiday, which could have skewed things. Continuing claims, however, fell slightly from last week. Challenger Job Cuts rose to 97K, up from last month’s 83K. It was the highest May total since 2020- the teeth of the pandemic. Tech companies accounted for 38K of the 97K cuts, continuing to be the largest source of cuts, by far (Transportation was next, at 7K). From the report, “we’re seeing a sharp rise in cuts tied to acquisitions and mergers and a jump in bankruptcy-related losses, which tells me companies are restructuring aggressively as they reposition for an AI-driven economy.” Revised Productivity came in at 0.3% q.q, down from the initial 0.8% estimate.  Unit labor costs were also revised down from 2.3% to 1.8%.
 

Despite the sluggish labor data, futures didn’t react too much and are trading within their overnight range. Earnings have been a drag with most reporters lower. For tech, Broadcom is down over 10% with results good but not good enough and concern around share loss for Alphabet’s TPU production. Cybersecurity provider CrowdStrike is down 10% as well. Retailers are getting his with PVH -25% and FIVE -10%, though TLYS is up 10%.  
 
Yields moved steadily lower overnight, following oil lower on the relatively positive Iran headlines. The Dollar is weaker as well. Heading into the Open treasuries have essentially reversed yesterday’s move, down ~5b across the curve.
 

• US 2yr -6bps to 4.03%, 5yr -6bps to 4.17%, 10yr -4bps to 4.46%, 30yr -3bps to 4.96%
• USD index: -$0.33 to $99.18

 
Crude is lower on the geopolitical headlines, though natural gas is higher. Brent is testing support at its 50d ma. Precious metals are gaining as rates and oil fall. Crypto continues to come under pressure with Bitcoin down 3% and falling back towards $60K, currently around Feb lows. High-flying alt-coins are also seeing weakness after weeks of sharp moves for many.
 

 
European indexes are mostly higher (FTSE 100 down slightly) and most near best levels. Financials and luxury are some of the leaders while tech and energy lag. Japan, Hong Kong and S. Korea fell over 1%, with tech weak (Softbank -11%, Samsung, SK Hynix down 2.5%).
 
 

 
 
Earnings:
After-Market: AI, AVGO, CHPT, CRWD, DSGX, FIVE, NTSK, PVH, TLYS, VEEV, WOOF
Pre-Market (Thrs): BF.B, CAL, CIEN, TTC
After-Market (Thrs): AGX, CURV, DOCU, GWRE, IOT, LULU, NX, PL, RBRK, TTAN
     
Economic Data:
US:

• Challenger Job Cuts: 97.006K vs prior 83.387K
• Jobless Claims: 225K vs 213K cons, prior 215K
• Continuing claims: 1777K vs 1780K cons, prior 1786K
• Q1 Nonfarm Productivity q.q (final): 0.3% vs 0.8% preliminary  
• Unit Labor Costs: 1.8% vs 2.3% preliminary
• 10:30am EIA nat gas inventories
• 1:10pm Fed Daly
• 4:30pm Fed Balance Sheet

Global:

• Europe Retail Sales m.m (April): -0.4% vs -0.3% cons, prior 0.8% (revised up from -0.1%)
• Spain Industrial Production y.y (April): 2.0% vs 2.0% cons, prior 1.9%