July 2nd Pre-Market Brief

Good Morning

The economy added 57k jobs in June, about half what forecasters expected. Normally weak hiring is bad news, but the market has been worried the Fed's next move is a rate hike, so the soft number actually takes pressure off of rate hikes. Futures flipped green on the print and bond yields eased.

Let’s dig in…

Today's Big Picture

The Jobs Miss Eases The Rate-Hike Fear
Payrolls came in at 57,000, half the 115,000 expected and the end of a three-month streak of gains above 100,000. That undercuts the case for a rate hike, the exact fear that pressured tech all week, and the two-year Treasury yield fell on the news. But the jobless rate slipped to 4.2 from 4.3, so hiring looks weak while the broader labor market still looks firm. Softer yields and a softer dollar give stocks room into the open.

Chips Crack Overseas, Bounce Here
The overnight session was ugly: Korea's Kospi fell so hard the exchange halted trading for five minutes, and memory names in Seoul and Tokyo got hit worst. But US chip names turned higher premarket once the soft jobs print landed, since a lower chance of a hike means cheaper financing for the AI buildout. Underneath the selling sits a real worry that the industry built more computing power than buyers need, louder after Meta said it would sell its spare capacity. Today tells us whether US buyers treat the Asian rout as contagion or as a discount.

Cheaper Oil Points The Same Way
Brent crude eased again and now trades under $71 a barrel, below where it sat before the US struck Iran in June. Cheaper oil cools inflation, and paired with this morning's soft print, both now point away from a rate hike. Progress in US-Iran talks and steadier tanker traffic through the Strait of Hormuz are behind the slide. It's the fourth straight weekly decline, the longest losing run in close to two years.

Market Overview

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Stock Spotlight (pre-market)

Alphabet $GOOGL ( ▲ 1.08% )  

Lower premarket after Europe's top court upheld a $4.7 billion fine over how Google favored its own apps on Android. No appeal is left, so the cost is locked in, and holders now have to price a Europe that keeps fining Big Tech rather than letting it settle.

Nvidia $NVDA ( ▼ 1.25% )  

Lower with the chip group, but it rolled out a program handing startups computing power in exchange for a slice of their future revenue. First partners plan to deploy up to 170,000 of its chips, which forces the overcapacity bears to explain fresh demand while everyone else sells the group.

Palantir $PLTR ( ▲ 7.77% )  

Higher premarket after D.A. Davidson lifted it to buy and called the valuation the most attractive in a while. It's set to close the short week as one of the few green names in tech, which puts the shorts who leaned on valuation on the back foot.

Strategy $MSTR ( ▲ 7.43% )  

Higher as bitcoin gets back above $61,000. The catch is the company just dropped its never sell pledge and started selling some bitcoin, so holders have to reconcile a rally with a strategy that is quietly reversing.

Robinhood $HOOD ( ▲ 8.35% )  

Higher after Mizuho raised its target to $130 and pitched it as the online broker that grows across borders, not just at home. That reframes the bear case, since skeptics have priced it as a US only story and now have to weigh the wider runway.

AeroVironment $AVAV ( ▲ 4.47% )  

Higher after winning a $500 million Army contract for systems that knock enemy drones out of the sky. Clean catalyst with real money attached, and it lands while defense budgets stay in focus, so momentum buyers have a reason to stay in.

What to Watch

IPO’s

MarketBeat did an excellent job on this free IPO guide on IPO’s happening this year.

Trump On CNBC (5 PM ET)
The president sits for a live interview after the close, with trade and the Fed both live topics. An offhand line on either could move futures into the evening. Worth half an eye if you hold anything overnight.

Bank Of Korea Decision (July 16)
South Korea's inflation just hit its highest level in more than two years, strengthening the case for a rate hike there. Higher Korean rates would add pressure on the same Seoul chip names that just cracked. If you're watching whether the memory selloff stabilizes, this is the next domino.

- John

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