Opening Comment — Thursday, June 05, 2025
DJIA: 42,427.74, down 91.90
S&P 500: 5,970.81, up 0.44
NASDAQ: 19,460.49, up 61.53
Stocks mostly lower ahead of trade balance
Stock futures are mostly lower Thursday morning ahead of today’s economic releases, including data on jobless claims, continuing claims, and the trade balance. As of 7:16 AM ET, the Dow is little changed, while the S&P 500 is down 0.1%. The Nasdaq 100 is also falling 0.1% relative to fair value on the GLOBEX.
U.S. equities were mixed on Wednesday as the Institute for Supply Management (ISM) services purchasing managers’ index (PMI) for May unexpectedly fell just into contractionary territory, with the prices paid component coming in higher-than-expected. Meanwhile, the ADP Employment Change Report for May recorded significantly weaker-than-expected private nonfarm payroll gains. The Dow was down 0.2%, while the tech-heavy Nasdaq Composite rose 0.3%. The S&P 500 was little changed with six of 11 sectors finishing in positive territory. The Communication Services sector was the top performer, rising 1.4%, while the Energy sector was the bottom performer, falling 1.9%.
On the data front, the Challenger Report on job cuts for May will be released today. The U.S. trade deficit is expected to narrow in April to $66.0 billion from the prior month’s $140.5 billion. The finalized readings of first-quarter nonfarm productivity growth and unit labor costs are expected to decrease by 0.8% quarter-over-quarter (QOQ) and increase at an annualized pace of 5.7%, respectively, both unchanged from the prior readings. Initial jobless claims for the week ending May 31 are expected to come in at 235,000, slightly lower than the prior week’s 240,000. Continuing claims are expected to slightly fall to 1.91 million for the week ending May 24 from the prior week’s 1.92 million.
Across the pond, European stocks are higher in mid-day trading as Germany’s April factory orders rose by 0.6% month-over-month against expectations of a decline and recorded a greater-than-expected increase of 4.8% year-over-year (YOY). Meanwhile, the U.K.’s construction PMI for May recorded a stronger-than-expected increase and Germany’s construction PMI dropped, with both continuing to remain in contractionary territory.
Overnight in Asia, stocks were mixed as South Korea’s preliminary first-quarter gross domestic product showed little change YOY despite forecasts of a decline and contracted by 0.2% QOQ, consistent with earlier estimates. Japan’s April labor cash earnings posted a smaller-than-expected increase. Australia’s trade surplus experienced a deeper-than-forecasted narrowing in April. China’s private May composite PMI from Caixin fell just into contractionary territory, while the private services PMI rose slightly more than expected, pushing further into expansionary territory.
In FOREX trading, the dollar is little changed ahead of the European Central Bank’s governing council meeting scheduled for today. Yesterday, Canada’s central bank kept its key interest rate steady at 2.75%.
Over in the commodity pits, West Texas Intermediate (WTI) crude oil is 0.5% higher at $63.14/barrel following a greater-than-expected decline in crude oil inventories.
In the metals complex, gold is 0.6% higher at $3,393.30/ounce.