US STOCKS: A Step Closer To ESM5 Support With Latest US-China Tensions

Wednesday's Europe rates/bond options flow included:

• ERM5 97.8125/97.9375/98.125/98.25 call condor bought for 9.75 in 9k
• ERU5 98.25/98.50/98.75c fly sold at 6.5 in 11k
• SFIZ5 95.75/95.65ps, bought for 1 in 22k total

The Atlanta Fed's preliminary GDPNow estimate for Q2 is 2.4% (Q1 actual prelim GDP was -0.3%).

•  In the image below is the initial expectation for sub-categories of GDP which include a strong pickup in private consumption and government spending and much less negative net exports, offset to the downside by a pullback in equipment and residential investment and inventories.
• Note that there is no longer going to be a "gold-adjusted" estimate, as was the case in Q1, because "the gold-adjusted model replaces what was the standard model with the onset of today’s forecast."

• Stocks trade weaker Wednesday, off midmorning lows to near midrange after a flurry of mixed data creates a rather volatile first half. Currently, the DJIA trades down 244.55 points (-0.6%) at 40286.72, S&P E-Minis down 55.5 points (-0.99%) at 5529.5, Nasdaq down 246.7 points (-1.4%) at 17218.69.
• Treasury futures and stocks reversed course - extending lows after this morning's higher than expected GDP Price index, Personal Consumption and Core PCE data. Indexes pared back nearly half of the early session losses after solid PCE income growth reflected in the PCE data partially offset by tariff impacts.
• Pessimistic earnings kept a lid on further dip buying, Caterpillar declined .8% after lowering sales sales targets. Note, Microsoft and Meta trade lower ahead of earnings after the close (*).
• Laggers included Super Micro Computer down over 15.25% after missing earnings expectations late Tuesday, CoStar Group -8.66%, Edison International -8.51% Norwegian Cruise Line -8.03% and Starbucks -7.18% after second quarter sales disappointed.
• Energy stocks retreated as crude prices continued to fall (WTI -2.30 at 58.12): Enphase Energy -5.89%, Expand Energy -5.06% and Targa Resources -5.06%.
• Some tech, industrial and health care stocks rejected the selloff: Seagate Technology +9.53% and  Western Digital +7.07%. Industrials saw Trane Technologies gain 8.05%, Vulcan Materials +5.34% and PPG Industries +3.89%. Elsewhere, GE HealthCare Technologies +4.43%.
• *Earnings expected to release after today's close include: Wingstop, Allstate, Host Hotels & Resorts, QUALCOMM, eBay, Teladoc Health, Microsoft Corp, American Water Works, Crown Castle, Align Technology, Meta Platforms, Robinhood Markets, Equinix, Ventas, Albemarle Corp, MetLife, KLA and MGM Resorts.