Dow futures rise 0.5%, “terrifying data” hits tonight

U.S. stock futures climbed ahead of the opening bell on Monday as global markets calmed and traders speculated that diplomatic efforts would help prevent an escalation in the conflict between Iran and Israel. The dollar and U.S. Treasuries fell, while gold remained strong near $2,350.

As of press time, Dow futures were up 0.5%, S&P 500 futures were up 0.6%, and Nasdaq futures were up 0.6%.

The German DAX index rose 1.1%, the British FTSE 100 index fell 0.3%, the French CAC 40 index rose 1.0%, and the European Stoxx 50 index rose 1.1%.

U.S. Treasuries fell along with the dollar. U.S. WTI crude oil fell below $85 a barrel. Gold prices are hovering at $2,350.

Investor nerves remained high over the prospect of Israeli retaliation against Iran, but investors took some comfort when Iran’s mission to the United Nations said the issue “can be considered closed.” The United States and other countries have also called on all parties to exercise restraint and strive to avoid the outbreak of a full-scale regional war.

According to officials familiar with the development, U.S. President Joe Biden warned Israeli Prime Minister Netanyahu that the United States will not participate in a counterattack against Iran. Netanyahu’s war cabinet favors a counterattack after massive drone and missile attacks on Israeli territory.

“It’s right to build more geopolitical risk premiums into asset prices, but at the end of the day, equities are still only about 2% below their all-time highs,” said Timothy Graf, head of EMEA macro strategy at State Street. “It’s a Very good sign of geopolitical developments. A lot of bad news is already reflected in prices.”

Tensions pushed an index of defense stocks compiled by Goldman Sachs (389.49, 0.00, 0.00%) higher. Dassault Aviation and Saab both rose more than 2%. Shares in Leonardo SpA, Thales SA, BAE Systems Plc and Rheinmetall AG rose at least 1%.

The first-quarter earnings season is in full swing. JPMorgan Chase (182.79, 0.00, 0.00%) strategists said that as investor positions look “very tight” and the indexes are not far from historical highs, an optimistic earnings season is unlikely. Continue to push stocks higher.

“We would need to see significant earnings acceleration to justify current stock valuations, and we fear this may not materialize,” Mislav Matejka wrote in a note.

The “horror data” of the United States (March retail sales data) will be released at 20:30 Beijing time on Monday evening. After the rebound in February was less than expected, growth in March is expected to be even weaker, indicating a slowdown in consumer spending in the first quarter. Against the backdrop of a chaotic geopolitical situation, data may “add to chaos.”

Dallas Fed President Logan and San Francisco Fed President Daly will also speak later in the day. Federal Reserve Chairman Jerome Powell is scheduled to speak on Tuesday.

According to the Chicago Mercantile Exchange’s FedWatch Tool, money market participants currently believe there is a greater than 50% chance that the Fed will initiate an easing cycle in July.

The “Wall Street fortune teller” is firmly bullish on U.S. stocks: the S&P 500 index is expected to hit 5,700 points this year.

Fundstrat Global Advisors co-founder and head of research Tom Lee has recently insisted on a bullish forecast for the U.S. stock market, although Tom Lee admitted that the latest consumer inflation data report complicates the market outlook.

Tom Lee expects the S&P 500 to hit 5,700 this year, one of the most optimistic S&P 500 forecasts on Wall Street.

He said last week’s pullback in the stock market was “a moment of temporary pain and an opportunity to buy the S&P 500 on dips.”

He noted that the CPI report was disappointing, but “it’s driven by what we call stubborn factors: housing, auto insurance… The median core CPI component right now is just 1.7% year-over-year inflation. I mean, Inflation is normalizing, but it is not yet evident overall.”

He also said that even if the Federal Reserve cuts interest rates only once this year, it will still be a relatively good environment for the U.S. stock market.

Today is “Black Monday”? Bank of America warns the sell-off will accelerate.

Bank of America (35.79, 0.00, 0.00%) warned in its latest “Systemic Fund Flow Monitor” report that “the CTA stock sell-off is likely to accelerate on Monday,” which could quickly turn into a self-reinforcing vicious cycle in the United States The start of a ban on stock buybacks caused a sharp drop in stock prices.

According to the bank’s model, U.S. stocks are already very close to the CTA stop-loss trigger point, “which means that further downside may put pressure on CTA U.S. stock bulls.”

Bank of America’s derivatives team found that even though stops were not triggered, the trend force in the stock market was deteriorating, which meant CTAs were selling (albeit more slowly). Therefore, “last Friday’s sharp decline in the S&P 500 should be due to volatility control strategies selling at a reasonable size on the close.”

On top of that, with the BofA CTA model’s S&P 500 stop-loss trigger now only 90 basis points away, “we may see CTA stop-loss triggers, volatility control leverage unwinding, leveraged and inverse ETFs closing on Monday A total sell-off situation.”

Focus stocks

Goldman Sachs rose 4.2% before the market opened, with Q1 revenue exceeding expectations.

Salesforce (294.32, 0.00, 0.00%) fell more than 2% before the market opened, and Informatica (38.48, 0.00, 0.00%) rose more than 6%. News said that the acquisition transaction is nearing completion.

Intel (35.69, 0.00, 0.00%) rose nearly 1% before the market opened and may launch a special version of Gaudi 3 AI accelerator chip for China.

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