US Market: Rotation Away

Summary - Yesterday’s weakness in US mega-cap tech widened in overseas trade. South Korea's Kospi lost nearly 10%, the Nikkei fell 3.5%, and the NASDAQ opened down 3%, led by a 7% decline in semiconductors. There wasn’t one specific headline traders pointed to, but rather hand-wringing over the historical boom and bust nature of technology spend outs, as well as a potential hangover from all the AI financing recently raised in both public and private markets. Bond yields came in along with oil prices amid a continued back and forth between the White House and Iran on their own interpretations of the ongoing peace talks. The S&P Manufacturing PMI was particularly strong but included the fastest headcount reductions since the Pandemic. Richmond Fed data missed expectations amid slower new orders growth. Breadth wasn’t nearly as poor as the indices headline performance indicated, suggesting rotation away from large cap tech continued to occur. - - US - - (US) Pres. Trump: Iran has fully and completely agreed to highest level Nuclear inspections long into the future (Infinity!!!) [**Note: contradicts Iran Foreign Ministry statements hours ago] - - (HU) HUNGARY CENTRAL BANK (MNB) CUTS BASE RATE BY 25BPS TO 6.00%; AS EXPECTED - - (US) ADP Preliminary Employment Change for 4-weeks ending Jun 6th: +30.8K v +26.5K prior (first pickup in hiring since week of May 2nd) - - (US) Jun Philadelphia Fed Non-Manufacturing Activity: -25.8 v -16.0e - - (US) Reportedly DOE plan to offer $17.5B of low-interest financing to utilities for Westinghouse AP1000 reactors to speed up construction of 10 reactors in US; Seven utilities have signed formal letters of intent for five available project loans - WSJ - - (CA) Bank of Canada (BOC) Gov Macklem: Canada and EU should deepen open trade as US pulls back; Criticize use of tariffs and currency devaluation; Best to adjust imbalances now before reaching a tipping point - - (US) JUN PRELIMINARY S&P PMI MANUFACTURING: 55.7 V 54.6E; Manufacturing output grew at the fastest rate since July 2021 in response to the largest rise in new orders for just over four years; Manufacturing headcounts were cut at the fastest rate since the COVID-19 lockdowns of early 2020 - - (US) JUN RICHMOND FED MANUFACTURING INDEX: 4 V 8E; Volume of new orders: 9 v 17 prior - - ( US) TREASURY $69B 2-YEAR NOTE AUCTION DRAWS 4.189% V 4.071% PRIOR; BID-TO-COVER RATIO: 2.64 V 2.64 PRIOR AND 2.57 OVER THE LAST 12 AUCTIONS - - Europe and Asia - - (UK) JUN CBI INDUSTRIAL TRENDS TOTAL ORDERS: -45 V -33E - - (IL) Hezbollah says it has complied with the Israel ceasefire “so far”; IDF targeted civilians in South Lebanon attack - press - - (CN) China PBOC adviser: Rebalancing of the domestic economy is “a crucial” next step to head off risks to growth - - (UK) PM Spokesperson Wells: Outgoing PM Starmer agrees no new policies or spending will be initiated until successor appointed; Planning for smooth leadership transition - - (UK) Chancellor Reeves: Defense investment plan will meet scale of challenges; Defense plan will involve more money, spent effectively - - (UK) BOE's Taylor: An extended hold at this level is very much the correct and appropriately measured policy response that we need; Bank rate is 75bps above my estimate of neutral - - (UK) Presumed incoming-PM Burnham will reportedly demote Chancellor Reeves to a lesser Cabinet post - FT - - Corporate Headlines - - SMH traders circulating unverified Counterpoint Research note saying “a sharp correction in memory prices from the second half of 2027 cannot be completely ruled out” if new fab capacity expansions become visible - -BBY CFO Matt Bilunas to step down; Effective July 31st, 2026; Replacement TBA; CEO Bonfi to assume duties during interim - -PFE topline Phase 3 results for Sigvotatug Vedotin in NSCLC did not show a statistically significant improvement in primary endpoint vs Docetaxel - -PRIM cuts FY26 adj EPS to $2.05-2.60 v $5.08e, adj EBITDA $275-$325M (prior: $4.80-5.00, adj EBITDA $480-500M); COO Kinch to depart, effective immediately - -AMC priced 95.3M share offering; Raises about $200M gross proceeds; To redeem $125.5M 6.125% senior subordinated notes due 2027; Closes June 24th - - CCL Q2 $0.41 v $0.35e, Rev $6.66B v $6.64Be; Q3 eps guidance disappoints; Demand for 2027 and beyond remains strong - -KFY Q4 $1.40 v $1.32 y/y, Rev $759.8M v $712M y/y; uides Q1 Adj $1.32- 1.38 v $1.36e - -WEN appoints Steve Cirulis as CFO and chief strategy officer; Effective immediately - - META Reportedly CEO Zuckerberg directed Meta to create a predictions market app; 'Arena' App would be independent of Facebook and Instagram; Users will not wager money, but rely on a points system - NYT - - VRNS Reportedly considers sale following takeover interest - press - - - - After Hours Movers - - CBRS %; earnings - - KBH +3%; earnings in line - - NKE +1.5%; discloses tariff refund; Announces CFO transition - - FDX -4.5%; earnings beat; Changes FY reporting structure post-FDXF spin o