Morning Call: U.S. stocks climb as T-note yields stabilize; Jun E-mini S&Ps up +0.07%; EUR/USD down -0.39% at a 4-3/4 month low on Italian political risks.
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 ESM18 - S&P 500 E-Mini

Overnight Markets and News

Jun E-mini S&Ps (ESM18 +0.07%) this morning are up +0.07% as T-note yields stabilize. Concern the Fed would speed up the pace of its interest rate increases sent stocks prices reeling Tuesday and pushed the 10-year T-note yield up to a 6-3/4 year high of 3.09%. European stocks are down -0.13% and EUR/USD tumbled to a 4-3/4 month low on increased political risks in Italy after the Five Star Party discussed a potential government debt write-down of 250 billion euros from the ECB. Energy stocks are lower with Jun WTI crude oil (CLM18 -0.15%) down -0.13% after API data late Tuesday showed U.S. crude supplies rose 4.85 million bbl last week. Asian stocks settled mostly lower: Japan -0.44%, Hong Kong -0.13%, China -0.71%, Taiwan +0.21%, Australia +0.15%, Singapore -0.20%, South Korea +0.33%, India -0.44%. The rise in the 10-year T-note yield to a 6-3/4 year high undercut Asian stocks as did Japanese growth concerns after Japan Q1 GDP slid -0.6% (q/q annualized), the steepest pace of contraction in over 2-years.

The dollar index (DXY00 +0.29%) is up +0.30% at a 4-3/4 month high. EUR/USD (^EURUSD -0.45%) is down -0.39% at a 4-3/4 month low. USD/JPY (^USDJPY -0.17%) is down -0.19%.

Jun 10-year T-note prices (ZNM18 +0-030) are up +4 ticks.

San Francisco Fed President Williams said he's "very positive" about the economic outlook both in the U.S. and abroad and that three to four interest rate increases this year are appropriate. He added that "with a new normal for interest rates of around 2.5%, interest rates ae likely to remain low relative to historical experience."

China Apr new home prices rose +0.57% m/m, the largest increase in 10 months.

Japan Q1 GDP fell -0.6% (q/q annualized), weaker than expectations of -0.1% (q/q annualized) and the steepest pace of contraction in over 2-years. Q1 GDP deflator rose +0.5% y/y, stronger than expectations of +0.3% y/y and the biggest increase in 2-years. Q1 GDP private consumption was unch q/q, right on expectations. Q1 GDP business spending unexpectedly fell -0.1% q/q, weaker than expectations of +0.4% q/q.

U.S. Stock Preview

Key U.S. news today includes: (1) weekly MBA mortgage applications (previous -0.4% to 387.1 with purchase sub-index -0.2% to 257.7 and refi sub-index -0.6% to 1098.4), (2) Apr housing starts (expected -0.7% to 1.310 million, Mar +1.9% to 1.319 million), (3) Atlanta Fed President Raphael Bostic (voter) gives an economic update at the August Cotton Exchange in Atlanta, (4) Apr industrial production (expected +0.6%, Mar +0.5%), and (5) EIA weekly Petroleum Status Report, (6) St. Louis Fed President James Bullard (non-voter) speaks with media prior to delivering welcoming remarks at an event in St. Louis.

Notable Russell 1000 earnings reports today include: Cisco Systems (consensus $0.65), Macy's (0.37), Flowers Foods (0.31), Take-Two Interactive Software (0.63).

U.S. IPO's scheduled to price today: Pluralsight (PS), VectoIQ Acquisition (VTIQU).

Equity conferences this week: Barclays Americas Select Franchise Conference on Tue-Wed, Citi Global Energy & Utilities Conference on Tue-Wed, Goldman Sachs Basic Materials Conference on Tue-Wed, Needham Emerging Tech Conference on Tue-Wed, Tudor, Pickering, Holt & Co. Hotter N Hell Energy Conference on Tue-Wed, Bank of America Merrill Lynch Health Care Conference on Tue-Thu, JP Morgan Global Technology, Media and Communications Conference on Tue-Thu, Stephens Energy Executive Summit on Wed, BMO Capital Markets Farm to Market Conference on Wed-Thu, Capital Link Closed-End Funds and Global ETFs Forum on Thu.

Market Comments

June S&P 500 E-minis (ESM18 +0.07%) this morning are up +2.00 points (+0.07%). Tuesday's closes: S&P 500 -0.68%, Dow Jones -0.78%, Nasdaq -1.09%. The S&P 500 on Tuesday gapped lower and finished with moderate losses. Stocks were undercut by global growth concerns after German Q1 GDP rose by only +0.3% q/q and +2.3% y/y (weaker than expectations of +0.4% q/q and +2.4% y/y) and after U.S. retail sales ex autos rose by only +0.3% (weaker than expectations of +0.5%). There were also interest rate concerns after the 10-year T-note yield jumped to a 6-3/4 year high of 3.09%.

June 10-year T-notes (ZNM18 +0-030) this morning are up +4 ticks. Tuesday's closes: TYM8 -20.50, FVM8 -10.75. Jun 10-year T-notes on Tuesday tumbled to a contract low and the 10-year T-note yield rose to a 6-3/4 year high of 3.09%. T-note prices were undercut by stronger-than-expected U.S. economic data on May NAHB housing index and May Empire manufacturing business conditions. T-notes were also undercut by technical selling with the new contract low in Jun 10-year T-notes.

The dollar index (DXY00 +0.29%) this morning is up +0.279 (+0.30%) at a fresh 4-3/4 month high. EUR/USD (^EURUSD -0.45%) is down -0.0046 (-0.39%) at a new 4-3/4 month low. USD/JPY (^USDJPY -0.17%) is down -0.21 (-0.19%). Tuesday's closes: Dollar Index +0.632 (+0.68%), EUR/USD -0.0089 (-0.75%), USD/JPY +0.69 (+0.63%). The dollar index on Tuesday climbed to a 4-3/4 month high and settled higher on the surge in the 10-year T-note yield to a 6-3/4 year high of 3.09%, which boosted the dollar's interest rate differentials. There was also a slump in EUR/USD to a 4-1/2 month low after German Q1 GDP grew less than expected, which is dovish for ECB policy.

Metals prices this morning are mixed with Jun gold (GCM18 -0.02%) +0.4 (+0.03%), Jul silver (SIN18 +0.01%) -0.004 (-0.02%), and Jul copper (HGN18 +0.26%) +0.004 (+0.11%). Tuesday's closes: Jun gold -27.90 (-2.12%), Jul silver -0.376 (-2.26%), Jul copper -0.0370 (-1.20%). Metals on Tuesday closed lower with Jun gold at a 4-1/2 month low and Jul silver at a 1-1/2 week low. Metals prices were undercut by the rally in the dollar index to a 4-3/4 month high and by copper demand concerns after LME canceled copper warrants fell -1,325 MT to a 1-week low of 50,050 MT.

Jun WTI crude oil prices (CLM18 -0.15%) this morning are down -9 cents (-0.13%) and Jun gasoline (RBM18 -0.02%) is -0.0016 (-0.07%). Tuesday's closes: Jun crude +0.35 (+0.49%), Jun gasoline +0.0046 (+0.21%). Jun crude oil and gasoline on Tuesday closed higher with Jun crude oil and gasoline at 3-1/2 year nearest-futures highs. Crude oil prices were boosted by the increase in the crack spread to an 8-month high (which provides added incentive for refiners to boost crude purchases to refine the crude into gasoline) and by expectations for Wednesday's EIA inventory data to show U.S. crude supplies fell -1.5 million bbl. Crude oil prices were undercut by the rally in the dollar index to a 4-3/4 month high.

Overnight U.S. Stock Movers

TripAdvisor (TRIP -0.62%) was downgraded to 'Sell' from 'Neutral' at Guggenheim Securities with a price target of $40.

Micron (MU +1.91%) was rated a new 'Outperform' at RBC Capital Markets with a price target of $80.

Ollies's Bargain Outlet Holdings (OLLI +2.63%) was rated a new 'Buy' at Goldman Sachs with a price target of $78.

PetIQ (PETQ -1.48%) may open to the downside this morning after it forecast full-year revenue of $450 million to $500 million, the midpoint below consensus of $476.4 million.

Monsanto (MON +0.27%) may move higher this morning after Berkshire Hathaway disclosed it had boosted its stake of Monsanto by 62% to 18.9 million shares in Q1.

BioMarin (BMRN -0.94%) was rated a new 'Buy' at Canaccord Genuity with a price target of $101.

Celyad SA (CYAD -7.50%) fell 3% in after-hours trading after it announced that it intends to sell up to 1.8 million ordinary shares in a global offering.

Boot Barn Holdings (BOOT +2.14%) rallied 10% in after-hours trading after it reported Q4 adjusted EPS of 24 cents, well above consensus of 16 cents.

Teva Pharmaceutical Industries Ltd (TEVA -0.39%) gained 1% in after-hours trading after Berkshire Hathaway disclosed it had doubled its stake In TEVA in Q1 from 18.8 million shares to 40.5 million shares.

Arbor Realty Trust (ABR +0.54%) slid more than 3% in after-hours trading after it announced that it plans to make a public offering of 5.5 million shares of its common stock.

Prospect Capital (PSEC -0.30%) lost 2% in after-hours trading after it announced that it is offering senior unsecured convertible notes due 2022 in an underwritten public offering.

Gemphire Therapeutics (GEMP -2.97%) was rated a new 'Outperform' at Raymond James with a price target of $22.

Verastem (VSTM +1.75%) tumbled 11% in after-hours trading after it announced that it had commenced a registered underwritten public offering of $35 million of it shares of common stock.