Morning in New York: Indices Searching for Direction

A daily review and forecast of events in the U.S. stock market by Mikhail Denislamov, Deputy Director of Freedom Capital Markets Research.

The situation surrounding the Strait of Hormuz will continue to shape the course of the upcoming session. Following the International Maritime Organization’s (IMO) suspension of operations to evacuate ships and seafarers from the Strait of Hormuz, the issue of maritime safety in the area remains unresolved. The Islamic Revolutionary Guard Corps insists on coordinating safe routes with it, while the U.S. and the Gulf states advocate for free and unrestricted shipping through the strait. This points to ongoing disagreements over control of the strait, which could trigger increased intraday volatility in stock markets.

Discussions within OPEC regarding the size of production quotas remain a source of uncertainty in the oil market. Iraq, the organization’s second-largest member after Saudi Arabia, is seeking an increase in its quota and, according to media reports, is threatening to leave the cartel if its demands are not met. However, the country’s oil ministry has denied this information, although it confirmed the need to revise production limits. If an increase is agreed upon, oil prices on the global market will come under additional pressure.

This Friday will see the release of the May goods trade balance data (consensus: -$85 billion, April: -$82.4 billion), the preliminary estimate of wholesale inventories for May (consensus: +0.4%, April: +0.6%), the final reading of the University of Michigan’s Consumer Sentiment Index for June (consensus: 50 points, Ma: 48.9), and the Kansas City Fed’s Services Sector Business Activity Index for the same month (Ma: 10 points). Speeches will be delivered by the presidents of the Federal Reserve Banks of Chicago, Minneapolis, and Richmond—Ostan Goolsbee, Neel Kashkari, and Thomas Barkin—whose remarks will provide the market with additional signals regarding interest rate movements.

Futures on U.S. stock indices continue to correct. We assess the risk balance for the upcoming session as neutral, with moderate volatility. Buyers are being supported by the ongoing decline in Treasury yields. Pressure on prices stems from mixed sentiment surrounding the semiconductor sector. On the one hand, the market is reacting positively to Micron Technology’s (MU) strong earnings report; on the other hand, shares of Asian chipmakers are once again declining, and rising production costs for electronics manufacturers remain an unfavorable factor.

— Synaptics (SYNA) shares rose by about 5% on news of a takeover bid by ON Semiconductor (ON). The deal, valued at about $7 billion and to be paid for with stock, aims to strengthen the acquirer’s position in the physical AI segment. Synaptics shareholders will receive 1.35 shares of ON Semiconductor for each Synaptics share they hold; ON Semiconductor shares fell by about 8%.

— INVO Fertility (IVF) shares rose by more than 58% following the closing of the acquisition of the HRCFG clinic network. The company continues to expand the number of specialized medical facilities under its control. Earlier this year, Family Beginnings was acquired as part of this strategy.

— Wise Group (WSE) shares rose by approximately 5% following the release of its earnings report. The company’s net revenue for 2026 increased by 19%. The number of active customers reached 18.9 million, and cross-border transaction volume grew by 31%. The market reacted positively to the guidance for fiscal year 2027 and the announcement of a share buyback program worth over $500 million.

— Rocket Lab (RKLB) shares rose 2% after NASA selected the company to conduct three Electron rocket launches as part of the PolSIR and TSIS-2 missions scheduled for 2027. The contract bolstered the company’s order book and confirmed the demand for its services in launching small satellites for government science missions.

— Shares of small-cap biotech company Creative Medical Technology Holdings (CELZ) are down about 28% following the announcement of a rights offering of 3.05 million shares. This news has heightened concerns about the dilution of existing shareholders’ stakes.

— DLH Holdings (DLHC) will be among the contractors for a five-year U.S. Navy contract worth up to $250 million, which calls for the provision of logistics IT services for the fleet’s integrated platforms. DLHC will have to compete with other participants in the agreement for specific tasks.

Trading on June 25 on U.S. stock markets ended with mixed results. The S&P 500 closed nearly unchanged, while the NASDAQ 100 fell 0.75%, the Dow Jones gained 0.14%, and the Russell 2000 rose 0.71%. Meanwhile, the equally weighted S&P 500 outperformed the market-cap-weighted benchmark by nearly 70 basis points in terms of growth rate.

Trading activity was driven by a resurgence in demand for shares of companies involved in AI infrastructure investments following the release of Micron Technology’s (MU) quarterly results. Active buying of chipmakers’ stocks was accompanied by profit-taking in the “Magnificent Seven,” with capital flowing from those stocks into segments that have underperformed the market.

The industrial sector (XLI: +2.17%) led the gains, while suppliers of cyclical consumer goods (XLY: -1.49%) were the underperformers.

The core PCE deflator for May rose by 0.3% MoM and 3.4% YoY, in line with consensus estimates. Household income and spending exceeded market consensus estimates. Orders for durable goods fell by 4.5% MoM, while the median forecast had called for a 5% decline. The final estimate for first-quarter GDP was revised upward by 0.5 percentage points to 2.1%, while the price index was raised by 0.1 percentage points to 3.6%. PCE data, which came in line with expectations, eased concerns about the Fed’s “hawkish” plans and supported the rally in Treasury bonds that had begun the previous day. The yield on 10-year Treasuries fell below 4.4%, reaching a seven-week low.

Oil prices recovered some of their earlier losses. WTI rose 2.3% following an attack by Iranian forces on a cargo ship in the Strait of Hormuz, although the market largely ignored this incident, focusing instead on falling bond yields.

Ostin Goolsbee, president of the Federal Reserve Bank of Chicago, noted that core inflation remains too high and is moving in the wrong direction. His counterpart in New York, John Williams, confirmed that the current policy is appropriate and suggested that price growth may gradually slow in the coming quarters.

— Apple (AAPL: -6.12% at the close of trading on June 25) came under heavy pressure along with the entire semiconductor sector following Micron’s (MU) earnings report. Investors were concerned about rising costs amid five-year agreements with key customers and forecasts that the memory chip shortage will persist beyond 2027. An additional negative factor was the announcement of price increases for Macs and iPads, which the company itself attributed to rising memory costs.

— Anthropic accused Alibaba (BABA: -4.74%) of unauthorized access to Claude's capabilities.

— Merck KGaA is acquiring Bio-Techne (TECH: +20.08%) for $11.3 billion ($73 per share), which represents a premium of about 24% over the closing price on June 24.

— Acuity (AYI: +17.64%) reported better-than-expected results for the third fiscal quarter. Sales in the Intelligent Spaces (AIS) segment grew by approximately 15% year-over-year. Management noted an uptick in orders as the backlog normalized, a return of conversion rates to historical levels, and announced a steady increase in margins, driven in part by the data center segment.

— CarMax (KMX: +4.15%) CEO Keith Barr purchased 9,400 shares of the company, bringing his total holdings to 33,400 shares.

— McCormick & Co’s (MKC: +1.58%) revenue, gross margin, and earnings per share exceeded market consensus estimates. Net sales rose 17% year-over-year. The Flavor Solutions segment offset the underperformance of the consumer division. Management expects to maintain the momentum gained by Flavor Solutions.

This article was AI-translated and verified by a human editor