Morning in New York: Wall Street expects sell-off in risk assets amid strikes on Iran

Daily review and forecast of events on the U.S. stock market from Mikhail Denislamov, Deputy Director of Freedom Capital Markets Research.

Israel launched Operation Rising Lion in the early morning hours of June 13, launching massive strikes against Iran's nuclear and military facilities, including centrifuges at the Natanz plant and Revolutionary Guard command posts. Tehran announced an impending counter-offensive and launched more than a hundred drones towards Israel. Against this background, Brent crude oil at one moment soared in price by more than 10%, then corrected and at the moment has risen in price by 5-6%. Given these events, we expect increased volatility in the oil market and capital outflow from risky assets.

A significant event on the macroeconomic calendar will be the release of preliminary data from the University of Michigan Consumer Sentiment Index for June (consensus: 53.5 points, May: 52.2). The current levels of the index remain low and reflect serious consumer concerns. At the same time, the actual index is likely to exceed the expected value, as the May results diverge significantly from the growth recorded by the Conference Board index. Futures on U.S. stock indices are trading in the negative. We assess the balance of risks for the upcoming session as negative with increased volatility. We focus on S&P 500 movements in the range of 5920-6060 points (from -2.0% to +0.3% to Tuesday's closing level).

- Restoration Hardware (RH) reported a 12% increase in revenue for the quarter. The main driver was the international segment, with demand outside the US up 47% (offline) and 44% (online). The company reaffirmed its guidances despite tariff pressures and the postponement of the new collection release until spring 2026. RH shares rose 18% on this backdrop.

- Adobe (ADBE) generated revenues of $5.87 billion in the last reported quarter, of which $4.35 billion came from the Digital Media segment (+12% YoY ARR). The number of subscribers to Firefly's service increased 30% quarter over quarter. Target recurring revenue of $250 mln for the year due to the introduction of AI solutions has already been exceeded, but competition and new pricing strategies require more active marketing.

- NextDecade (NEXT) renewed the Train 4 EPC contract with Bechtel for $4.77 billion and signed the same agreement for Train 5 for $4.32 billion, with expected owner costs for each project estimated at $1.8-2 billion.

- Tesla (TSLA) has raised prices for the Model S AWD and Model S Plaid by $5,000 to $84,99,000 and $99,99,000. The Model X lineup in the U.S. has gone up by the same amount.

The trades on June 12, the majority of American stock indices ended in plus. S&P 500 added 0.38%, Nasdaq 100 and Dow Jones grew by 0.24% each, only Russell 2000 decreased by 0.38%. In the focus of attention remained the securities of large technology companies. Quotes Microsoft (MSFT) and Nvidia (NVDA) were moving steadily upward. Tesla (TSLA) and Alphabet (GOOGL) remained under pressure. The utilities sector (XLU: +1.21%) led the gains, while telecoms (XLC: -0.81%) were the outsiders.

The Producer Price Index (PPI) for May rose 0.1% m/m against a consensus of 0.2%, while its April reading was revised from -0.5% to -0.2%. Core PPI added 0.1% mom, while 0.3% growth was expected.

The number of initial applications for unemployment benefits last week amounted to 248 thousand (within expectations), the number of repeated applications reached the maximum since November 2021 at 1.956 million. The market practically did not react to the published statistics.

The placement of $22 billion worth of 30-year treasuries took place at the lowest dealer rate since November. This marked the end of a busy and generally successful week of auctions and allayed concerns about the balance of supply and demand in the market for treasuries.

- GameStop (GME: -22.5%) announced a $1.75 billion private placement of convertible bonds, triggering a selloff in its securities due to concerns of a significant increase in its debt load.

- Quotes of Boeing (BA: -4.8%) fell after the crash of Air India flight AI171, which was carrying a 787-8 Dreamliner. The causes of the crash are under investigation.

- Shares of General Electric (GE: -2.3%) reacted negatively to news of a Boeing airliner crash in India: the pilot's conversations with air traffic controllers revealed the failure of one of GE's engines.