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September S&P 500 E-Mini futures (ESU24) are down -0.79%, and September Nasdaq 100 E-Mini futures (NQU24) are down -1.22% this morning as concerns over stricter U.S. restrictions on Chinese trade and semiconductor technology weighed on sentiment, while investors awaited a fresh batch of U.S. economic data and the next round of corporate earnings.

Bloomberg News reported on Wednesday that the Biden administration has informed allies that it is contemplating deploying the most stringent trade measures possible if companies like Tokyo Electron and ASML Holding persist in providing China with access to advanced semiconductor technology. Seeking leverage with allies, the U.S. is considering whether to implement a measure known as the foreign direct product rule, which allows the country to impose controls on foreign-made products using even the smallest amount of American technology, according to the report. The U.S. is presenting this idea to officials in Tokyo and the Hague as a scenario that is becoming increasingly probable if these countries do not strengthen their own measures against China.

In yesterday’s trading session, Wall Street’s major indexes ended in the green, with the benchmark S&P 500 and blue-chip Dow notching new all-time highs. Match Group (MTCH) climbed over +7% after activist investor Starboard Value disclosed a stake of around 6.6% in the dating app company and advocated for a turnaround or potential sale. Also, UnitedHealth Group (UNH) advanced more than +6% and was the top percentage gainer on the Dow after the insurer reported upbeat Q2 results and backed its full-year adjusted EPS guidance. In addition, Bank of America (BAC) rose over +5% after the number two U.S. lender reported better-than-expected Q2 net interest income and provided an above-consensus Q4 net interest income forecast. On the bearish side, Charles Schwab (SCHW) plunged more than -10% and was the top percentage loser on the S&P 500 after reporting fewer-than-expected new brokerage accounts in Q2.

Economic data on Tuesday showed that U.S. retail sales were unchanged m/m in June, stronger than expectations of -0.3% m/m, while May’s reading of +0.1% m/m was revised upward to +0.3% m/m. Also, U.S. June core retail sales, which exclude motor vehicles and parts, rose +0.4% m/m, stronger than expectations of +0.1% m/m. In addition, the U.S. import price index was unchanged m/m in June, weaker than expectations of +0.2% m/m.

Meanwhile, U.S. rate futures have priced in a 6.7% chance of a 25 basis point rate cut at the next central bank meeting in July and a 93.3% chance of a 25 basis point rate cut at the September FOMC meeting.

Second-quarter earnings season is gathering pace, with investors awaiting fresh reports from notable companies today, including Johnson & Johnson (JNJ), Elevance Health (ELV), Prologis (PLD), U.S. Bancorp (USB), Kinder Morgan (KMI), United Airlines (UAL), and Ally Financial (ALLY).

On the economic data front, investors will focus on U.S. Industrial Production data, set to be released in a couple of hours. Economists, on average, forecast that June Industrial Production will arrive at +0.3% m/m, compared to the previous figure of +0.9% m/m.

The U.S. Building Permits (preliminary) and Housing Starts data for June will be reported today. Economists forecast Building Permits to be 1.400M and Housing Starts to be 1.300M, compared to the previous numbers of 1.399M and 1.277M, respectively.

U.S. Crude Oil Inventories data will come in today as well. Economists estimate this figure to be -0.900M, compared to last week’s value of -3.443M.

In addition, market participants will be looking toward speeches from Richmond Fed President Thomas Barkin and Fed Governor Christopher Waller.

Later today, the Federal Reserve will release its Beige Book survey of regional business contacts, which includes anecdotes and commentary on business conditions in each of the 12 Fed districts. The Beige Book is published two weeks before each meeting of the policy-setting Federal Open Market Committee.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.159%, down -0.07%.

The Euro Stoxx 50 futures are down -0.78% this morning, extending losses for a third day, with investors evaluating potential stringent trade regulations from the United States. Technology stocks led the declines on Wednesday, with Asml Holding (ASML.NA) plunging over -6% after the company provided a disappointing Q3 sales forecast. The sentiment was further dampened by news that the U.S. administration is contemplating stricter trade restrictions if companies persist in providing China with access to advanced semiconductor technology. Data released by the Office for National Statistics on Wednesday indicated that the U.K.’s annual inflation rate remained unchanged at 2% in June for the second consecutive month, with services inflation, a particular focus of the Bank of England, also holding steady at 5.7%. The central bank had projected services inflation to reach 5.1% by now. Separately, final data from Eurostat released Wednesday showed that the Eurozone’s annual inflation rate eased to 2.5% in June, confirming the preliminary reading. Meanwhile, investors are eagerly anticipating the European Central Bank’s monetary policy decision slated for tomorrow. In other corporate news, Adidas Ag (ADS.D.DX) climbed about +4% after boosting its full-year profit target for the second time in three months.

U.K.’s CPI, U.K.’s Core CPI, Eurozone’s CPI, and Eurozone’s Core CPI data were released today.

U.K. June CPI has been reported at +0.1% m/m and +2.0% y/y, compared to expectations of +0.1% m/m and +1.9% y/y.

U.K. June Core CPI arrived at +0.2% m/m and +3.5% y/y, stronger than expectations of +0.1% m/m and +3.4% y/y.

Eurozone June CPI stood at +0.2% m/m and +2.5% y/y, in line with expectations.

Eurozone June Core CPI came in at +0.4% m/m and +2.9% y/y, compared to expectations of +0.3% m/m and +2.9% y/y.

Asian stock markets today closed in the red. China’s Shanghai Composite Index (SHCOMP) closed down -0.45% and Japan’s Nikkei 225 Stock Index (NIK) closed down -0.43%.

China’s Shanghai Composite Index closed lower today as market participants awaited an official readout from the ongoing Third Plenum. Aluminum and oil stocks led the declines on Wednesday, while property stocks outperformed. The International Monetary Fund on Tuesday upgraded its forecast for China’s gross domestic product to 5% in 2024 from its April projection of 4.6%, citing a rebound in private consumption and strong exports. However, GDP is still projected to slow to 4.5% in 2025, although this is higher than the April projection of 4.1%. Meanwhile, Bloomberg reported on Wednesday that the People’s Bank of China initiated a new round of inspections on commercial banks’ bond holdings as it seeks to curb a prolonged bond bull run. Investors are now anticipating policy updates from the Third Plenum. The outcome of the meeting will be disclosed in a statement on Thursday evening.

Japan’s Nikkei 225 Stock Index reversed earlier gains and closed lower today. Losses in chip-related stocks offset gains in defense and machinery stocks on Wednesday. Chip-related stocks slumped following a Bloomberg News report that the Biden administration has informed allies it is contemplating using the most severe trade restrictions available if companies like Tokyo Electron and ASML Holding persist in providing China with access to advanced semiconductor technology. According to the Reuters Tankan survey, business sentiment among Japanese large manufacturers improved to a 7-month high in July. Meanwhile, the International Monetary Fund on Tuesday cut Japan’s economic growth forecast for this year to 0.7%, a decrease of 0.2 percentage points from its April forecast, attributing it to temporary disruptions in auto output and sluggish private investment in the first quarter. In corporate news, Toho soared about +12% after the film and entertainment company reported a 31% year-over-year jump in net profit in the first quarter, driven by stronger earnings from its movie business. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up +0.50% to 18.00.

Pre-Market U.S. Stock Movers

Aehr Test Systems (AEHR) climbed over +11% in pre-market trading after the semiconductor testing company reported better-than-expected Q4 results and provided above-consensus FY25 revenue guidance.

Five Below (FIVE) tumbled more than -14% in pre-market trading after the discount retailer cut its Q2 guidance and announced the resignation of Joel Anderson from his positions as President and CEO.

JB Hunt (JBHT) slid over -3% in pre-market trading after the trucking company reported weaker-than-expected Q2 results.

Spirit Airlines (SAVE) slumped more than -6% in pre-market trading after the carrier lowered its Q2 revenue guidance.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Wednesday - July 17th

J&J (JNJ), Elevance Health (ELV), Prologis (PLD), U.S. Bancorp (USB), Crown Castle (CCI), Kinder Morgan (KMI), Discover (DFS), Equifax (EFX), Steel Dynamics (STLD), Synchrony Financial (SYF), Northern Trust (NTRS), Citizens Financial Group Inc (CFG), United Airlines Holdings (UAL), Ally Financial Inc (ALLY), First Horizon National (FHN), First Industrial RT (FR), Alcoa (AA), Wintrust (WTFC), Synovus (SNV), FNB (FNB), Home BancShares (HOMB), SL Green (SLG), Cohen Steers (CNS), Liberty Oilfield (LBRT), Triumph Bancorp (TFIN), Banner (BANR), Home Bancorp (HBCP), First Community (FCCO), Martin Midstream (MMLP).

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On the date of publication, Oleksandr Pylypenko did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.

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