[BRIEFING.COM] The S&P 500 (-0.9%) and Nasdaq Composite (-1.2%), are firmly lower this morning as semiconductor stocks and related names face sharp losses, while the DJIA (-0.2%) holds a more modest loss amid relative strength in the broader market. Tech weakness is pronounced, but the major averages are already off their opening lows, suggesting investors may already be stepping in to buy the dip.

Micron (MU 1104.60, -106.78, -8.81%) and other memory names, such as Sandisk (SNDK 1992.91, -280.82, -12.35%) , are pulling back from an extended run of record highs, while other AI-infrastructure names, including Corning (GLW 192.76, -17.07, -8.14%) face similar losses. The PHLX Semiconductor Index is down 5.6%, weighing on the information technology sector (-2.3%).

The semiconductor sell-off also weighs on the industrials sector (-1.8%), with electrical production equipment names such as Vertiv (VRT 326.82, -31.14, -8.70%) retreating, while weakness in precious metals keeps the materials sector (-1.1%) firmly lower as well. 

Meanwhile, six S&P 500 sectors trade higher, with the defensive consumer staples (+1.5%) and health care (+1.0%) holding the widest gains as growth-oriented pockets of the market lag.

The preliminary reading of the S&P Global U.S. Manufacturing PMI for June checked in at 55.7, from the prior level of 55.1.

The preliminary reading of the S&P Global U.S. PMI was 51.3, up from the final reading of 50.7.

The stock market remains on track for a sharply lower opening this morning as semiconductors and other mega-cap tech names face relatively intense selling pressure.

Without an industry-specific or macro catalyst, the selloff appears tied to quarter-end and month-end rebalancing flows. Additionally, the DJIA is poised for a much narrower opening loss than that of the S&P 500 or tech-heavy Nasdaq Composite, suggesting that the retreat is not a broad-market move and could result in some rotational gains elsewhere.

The S&P 500 futures currently trade 95 points below fair value.

Equity indices in the Asia-Pacific region had a poor showing on Tuesday with South Korea's Kospi (-10.0%) being decimated while Japan's Nikkei (-3.6%) also fell sharply from its record high. South Korea's top chipmakers are expected to announce their domestic investment plans on Thursday. MSCI is expected to announce its decision about a potential downgrade to Indonesia's market status tomorrow. The Japanese yen edged up off this year's low against the dollar after it was reported that Japan's Finance Minister Katayama held a lengthy phone call with Treasury Secretary Bessent.

• In economic data:
  • Japan's flash June Manufacturing PMI 54.9 (expected 54.5; last 54.5) and flash June Services PMI 51.8 (last 50.0). April BoJ Core CPI 2.7% yr/yr (last 2.8%)
  • South Korea's June Consumer Confidence 106.6 (last 106.1)
  • Australia's flash June Manufacturing PMI 51.2 (last 50.7) and flash June Services PMI 49.9 (last 48.7)
  • Hong Kong's May CPI 0.0% m/m (last -0.1%); 2.0% yr/yr (last 1.7%)
  • Singapore's May CPI 0.7% m/m (last -0.3%); 1.8% yr/yr (expected 2.0%; last 1.8%) and Core CPI 1.4% yr/yr (expected 1.6%; last 1.4%)
  • India's flash June Manufacturing PMI 54.5 (last 55.0) and flash June Services PMI 57.3 (last 59.8)

---Equity Markets---

• Japan's Nikkei: -3.6%
• Hong Kong's Hang Seng: -1.8%
• China's Shanghai Composite: -1.4%
• India's Sensex: -1.2%
• South Korea's Kospi: -10.0%
• Australia's ASX All Ordinaries: -0.5%

Major European indices trade in the red. Flash June PMI readings from the region's major economies were mixed with roughly half of the readings coming in below 50.0, indicating ongoing contraction in activity. European Central Bank Chief Economist Lane said that he expects energy prices to keep inflation firmly above target into the first half of next year. German Chancellor Merz said that pension reforms will be implemented, including a higher retirement age and no early retirement option without reduction of benefits.

• In economic data:
  • Eurozone's flash June Manufacturing PMI 51.3 (expected 51.6; last 51.6) and flash Services PMI 48.9 (expected 48.6; last 47.7)
  • Germany's flash June Manufacturing PMI 50.0 (expected 50.3; last 50.1) and flash Services PMI 46.8 (expected 49.0; last 48.1)
  • U.K.'s flash June Manufacturing PMI 53.1 (expected 53.5; last 53.9) and flash Services PMI 48.7 (expected 50.1; last 49.3). June CBI Distributive Trends Orders -45 (expected -33; last -41)
  • France's June Business Survey 100 (expected 101; last 102). Flash June Manufacturing PMI 50.7 (expected 50.2; last 49.7) and flash Services PMI 47.4 (expected 45.9; last 44.3)
  • Spain's April trade deficit EUR5.20 bln (last deficit of EUR4.40 bln)

---Equity Markets---

• STOXX Europe 600: -0.8%
• Germany's DAX: -1.0%
• U.K.'s FTSE 100: -0.4%
• France's CAC 40: -0.7%
• Italy's FTSE MIB: -1.4%
• Spain's IBEX 35: -0.9%

The S&P 500 futures currently trade 90 points below fair value as semiconductor and other tech names remain poised for sharp losses at the open.

Elsewhere, Apollo Global Management (APO 133.00, -2.21, -1.6%) has capped redemption requests at 5% of shares outstanding in its main retail-focused private credit fund following redemption requests of 17% in the second quarter, according to CNBC.

Equity futures point to a lower opening this morning, as semiconductor stocks face sharp losses in the premarket. The group was a point of strength in yesterday's session, though pronounced weakness across other mega-cap tech names pushed the major averages to a mostly lower finish.

The selloff comes without a specific catalyst, but losses are particularly sharp across red-hot memory names such as Micron (MU 1,128.00, -83.38, -7.0%), which reports earnings after the close tomorrow.

Global markets have been hit hard by the tech unwind, with South Korea's Kospi falling 10%.

Headlines are relatively quiet elsewhere, with few updates to the U.S.-Iran talks after yesterday's reports of progress, keeping oil prices stable under $74 per barrel.

In corporate news:

• BP (BP 39.40, -0.38, -1.0%) and others will face a lawsuit that says the companies used AI to boost California gas prices, according to Reuters.
• Oracle (ORCL 171.20, -3.87, -2.2%) reduced its workforce by 21,000 according to Reuters.
• Qualcomm (QCOM 208.50, -13.40, -6.0%) is in discussions to acquire AI-software firm Modular, according to Bloomberg.

Reviewing overnight developments:

Equity indices in the Asia-Pacific region had a poor showing on Tuesday with South Korea's Kospi (-10.0%) being decimated while Japan's Nikkei (-3.6%) also fell sharply from its record high. Japan's Nikkei: -3.6%, Hong Kong's Hang Seng: -1.8%, China's Shanghai Composite: -1.4%, India's Sensex: -1.2%, South Korea's Kospi: -10.0%, Australia's ASX All Ordinaries: -0.5%.

In news:

• South Korea's top chipmakers are expected to announce their domestic investment plans on Thursday.
• MSCI is expected to announce its decision about a potential downgrade to Indonesia's market status tomorrow.
• The Japanese yen edged up off this year's low against the dollar after it was reported that Japan's Finance Minister Katayama held a lengthy phone call with Treasury Secretary Bessent.

In economic data:

• Japan's flash June Manufacturing PMI 54.9 (expected 54.5; last 54.5) and flash June Services PMI 51.8 (last 50.0). April BoJ Core CPI 2.7% yr/yr (last 2.8%)
• South Korea's June Consumer Confidence 106.6 (last 106.1)
• Australia's flash June Manufacturing PMI 51.2 (last 50.7) and flash June Services PMI 49.9 (last 48.7)
• Hong Kong's May CPI 0.0% m/m (last -0.1%); 2.0% yr/yr (last 1.7%)
• Singapore's May CPI 0.7% m/m (last -0.3%); 1.8% yr/yr (expected 2.0%; last 1.8%) and Core CPI 1.4% yr/yr (expected 1.6%; last 1.4%)
• India's flash June Manufacturing PMI 54.5 (last 55.0) and flash June Services PMI 57.3 (last 59.8)

Major European indices trade in the red. STOXX Europe 600: -0.9%, Germany's DAX: -1.0%, U.K.'s FTSE 100: -0.6%, France's CAC 40: -0.7%, Italy's FTSE MIB: -1.3%, Spain's IBEX 35: -0.7%.

In news:

• Flash June PMI readings from the region's major economies were mixed with roughly half of the readings coming in below 50.0, indicating ongoing contraction in activity.
• European Central Bank Chief Economist Lane said that he expects energy prices to keep inflation firmly above target into the first half of next year.
• German Chancellor Merz said that pension reforms will be implemented, including a higher retirement age and no early retirement option without reduction of benefits.

In economic data:

• Eurozone's flash June Manufacturing PMI 51.3 (expected 51.6; last 51.6) and flash Services PMI 48.9 (expected 48.6; last 47.7)
• Germany's flash June Manufacturing PMI 50.0 (expected 50.3; last 50.1) and flash Services PMI 46.8 (expected 49.0; last 48.1)
• U.K.'s flash June Manufacturing PMI 53.1 (expected 53.5; last 53.9) and flash Services PMI 48.7 (expected 50.1; last 49.3). June CBI Distributive Trends Orders -45 (expected -33; last -41)
• France's June Business Survey 100 (expected 101; last 102). Flash June Manufacturing PMI 50.7 (expected 50.2; last 49.7) and flash Services PMI 47.4 (expected 45.9; last 44.3)
• Spain's April trade deficit EUR5.20 bln (last deficit of EUR4.40 bln)

[BRIEFING.COM] The major averages started this full week of trading that is sandwiched between two holiday-abbreviated weeks on a mostly lower note, with the S&P 500 (-0.4%) and Nasdaq Composite (-1.3%) pressured by weakness across mega-cap stocks while the DJIA (+0.3%) was supported by some rotational gains in the broader market.

Stocks opened mostly higher, supported by reports from both sides that negotiations between the U.S. and Iran are progressing measurably, while chipmaker stocks showed an extension of recent strength. However, losses across mega-cap stocks outside the semiconductor space quickly widened, pushing the major averages into mostly lower territory, where they traded in a relatively stable range for the remainder of the session.

Alphabet (GOOG 348.78, -18.68, -5.08%) was one of the worst-performing S&P 500 components, sinking below its 50-day moving average (365.20) after a top engineering executive, John Jumper, decided to leave Google DeepMind and join Anthropic. The headline added to lingering concerns over the company's massive AI capital expenditure plans, with the stock now down nearly 8% in June. Meta Platforms (META 563.85, -13.37, -2.32%) also traded lower while Netflix (NFLX 72.88, -4.50, -5.82%) fell to its lowest level since late 2024, and the communication services sector (-3.8%) ended the day as the worst-performing S&P 500 sector.

Amazon's (AMZN 232.79, -11.60, -4.75%) weakness ahead of tomorrow's Prime Day event weighed similarly on the consumer discretionary sector (-2.3%), and the Vanguard Mega Cap Growth ETF finished 1.4% lower.

SpaceX (SPCX 154.60, -30.40, -16.43%) retreated sharply for the third consecutive session, which contributed to the underperformance of the Nasdaq Composite.

Meanwhile, the top-weighted information technology sector had a flat showing today, with Microsoft (MSFT 367.34, -12.06, -3.18%) a "magnificent seven" laggard while NVIDIA (NVDA 208.66, -2.03, -0.96%) also traded lower despite the strength across semiconductor names.

Micron (MU 1211.38, +77.39, +6.82%) was a standout ahead of its earnings release Wednesday evening, while AI-infrastructure names such as Super Micro Computer (SMCI 35.46, +4.80, +15.66%) and Corning (GLW 209.85, +14.93, +7.66%) traded even higher.

Elsewhere, seven S&P 500 sectors traded higher, highlighting some rotational interest across the broader market. The real estate sector (+1.4%) captured the widest gain, while the energy sector (+1.2%) finished similarly despite crude oil retreating today after several sharp retreats last week.

The health care sector (+0.9%) was another outperformer, boosted by a strong showing from AbbVie (ABBV 230.06, +13.57, +6.27%) after the company agreed to acquire Apogee Therapeutics (APGE 132.55, +42.17, +46.66%) for $135.11 per share in cash.

Outside of the S&P 500, the Russell 2000 (+0.8%) and S&P Mid Cap 400 (+0.4%) outperformed, furthering the idea that not all of the money taken out of mega-cap tech today left the stock market entirely.

Overall, today's session was characterized by continued selling pressure across several mega-cap stocks, which obscured otherwise constructive underlying action. Strength across seven S&P 500 sectors and outperformance from both the Russell 2000 and S&P Mid Cap 400 suggest that investors remained engaged in equities, even as leadership continued to shift beneath the surface.

U.S. Treasuries began the week with losses across the curve after a lower start was followed by continued selling as the day went on. Treasuries recorded more than half of their losses at the open after the three-day holiday weekend featured some Friday selling in the futures market. The 2-year note yield settled up five basis points to 4.23%, and the 10-year note yield settled up six basis points to 4.51%.

There was no economic data of note today.

• Russell 2000: +21.1% YTD
• S&P Mid Cap 400: +15.2% YTD
• Nasdaq Composite: +12.6% YTD
• S&P 500: +9.2% YTD
• DJIA: +7.6% YTD