The stock index futures' muted tone Thursday is less about indecision and more about anticipation. Wednesday's soft private hiring and services data didn't scream recession - but they did whisper concern. Trump's erratic trade brinkmanship, especially with China, now casts a long shadow not only over global supply chains but over domestic payrolls as well.

The labor report will act as a stress test. Will employers slow hiring in anticipation of more tariffs? Will wage growth falter under policy whiplash? Traders already smell a pivot, with expectations building for a Fed rate cut by September - even as Jerome Powell holds his line for now.

Investors aren't simply reacting to headlines; they're pricing in a regime defined by volatility and second-guessing. With steel and aluminum tariffs doubling this week and threats of broader levies looming, corporate planning has grown clouded, if not cautious.

A set of weak data yesterday prompted investors to once again anticipate a Fed rate cut in September. However, this was not enough to completely restore their confidence amid a legislative standoff in Washington and tensions over international trade. 

Yesterday on Wall Street, sentiment oscillated. The prevailing mood had turned cautiously optimistic: interest rates, it seemed, might finally edge downward by September. Yet this glimmer of relief was tempered by a lingering unease - the economic statistics, investors muttered, were still behaving suspiciously. On Tuesday, the tone had been altogether brasher. Talk of rate cuts was cast aside like yesterday's headlines. The narrative then leaned into American economic exceptionalism: robust employment figures and free-spending consumers fed a belief that the US economy was all but unsinkable.

Such is the capricious rhythm of investor sentiment. Each data point becomes either a cause for celebration or consternation. Yet, beneath the daily fluctuations, there remains a quietly enduring optimism. The market, for all its fickleness, prefers a glass half full.

In truth, investors today seem quite content to drift within a sentiment range they deem tolerable. A slight stumble in the data? No matter - investors console themselves with the belief that the Federal Reserve will step in with a timely rate cut. That prospect alone is enough to lift spirits. On the other hand, when the data holds firm despite a backdrop of global uncertainty, the prevailing wisdom becomes that the economy is proving resilient. Cue another wave of satisfaction. This balancing act rests on a delicate premise: that deviations remain mild. As long as the metrics neither soar nor slump too dramatically, the narrative holds. A market reassured by moderation is one that can keep whistling past the economic graveyard - at least for now.

The concern yesterday was that a disappointing employment figure was finally released, accompanied by a poor services statistic - an essential sector of the US economy. Let us take a closer look at this before examining the other side of the picture. On the employment front, the ADP report, which tracks job creation over the past month, indicated that private sector employment in the US rose by just 37,000 in May - around three times less than forecast. This is what one might call a significant blip. The indicator runs somewhat counter to other labour market surveys, which showed some resilience. It therefore comes as something of a surprise and presents a rather ominous signal ahead of the official monthly figures due tomorrow. Except that, in recent months, ADP has struggled to remain in sync with the official data. The indicator still holds relevance over a longer timeframe, but its monthly movements are more erratic than those of the US Department of Labor.

In a similar vein, the market also noted yesterday that a US ISM services indicator came in well below expectations. This led some observers to exclaim, “Oh my God, we need to cut rates.” Yet again, we must keep things in perspective. Two indicators assess the state of the US economy in the manufacturing and services sectors: the ISM and the PMI. However, the PMI, published earlier, paints a different picture: activity in services and industry remains relatively solid. Several official surveys appear to confirm this view. The bottom line is that the reliability of these statistics leaves something to be desired, for reasons I will not delve into today, but which relate mainly to the selected panels, survey response rates, and the timing of the data flow.

A test will take place tomorrow with the release of official monthly employment data for May in the US. This will allow us to compare the dip identified by the ADP study with reality, or at least statistical reality. But let's remember that yesterday, the combination of the two statistics caused bond yields to fall, increased the likelihood of a Fed rate cut in September, and raised some concerns about the strength of the US economy.

In other news, the European Central Bank cut its rates by a quarter of a point. Meanwhile, Republicans are tearing themselves apart over the budget. Donald Trump's big, beautiful tax bill is considered ugly by some in his own camp. Among them is Elon Musk, who has been launching a series of vocal attacks against it. Yesterday, he urged Americans to pressure their representatives to “kill” the bill, which he believes contradicts the goal of reducing spending.

A White House official described his comments as “exasperating,” but another said it was “one disagreement among many in an otherwise cordial relationship.” How long the “otherwise cordial” relationship will last remains to be seen. The Congressional Budget Office estimated yesterday that the bill could add $2.4 trillion to the federal budget deficit over 10 years. This is less than other projections, but still incompatible with reducing the federal debt.

The Trump administration argues that economic growth and tariffs will more than offset these losses. The debate will continue to rage in the Senate, where none of Donald Trump's proposals have been rejected so far. In other news, Ukraine is expecting a Russian response to its surprise attack deep behind the front line. Vladimir Putin told Donald Trump yesterday during a conversation that Moscow would respond. In Asia-Pacific, Tokyo lost 0.5% at the end of trading, while Australia fell less than 0.1%. Other markets were in positive territory, with gains of more than 1% in Hong Kong and Seoul. European indices are in the green, with the Stoxx Europe 600 up 0.3%.

Today's economic highlights:

On today's agenda: the Caixin China Composite PMI; the unemployment rate in Switzerland; factory orders in Germany; PPI in Germany; in the eurozone, the ECB deposit facility rate, refinancing rate, and marginal lending facility; in the United States, Challenger job cuts, new unemployment claims, non-farm productivity, trade balance, and unit labor costs. See the full calendar here.

  • Dollar index: 98,640
  • Gold: $3,395
  • Crude Oil (BRENT):$65.11 (WTI) $62.60
  • United States 10 years: 4.35%
  • BITCOIN: $105,410

In corporate news:

  • Amazon developing humanoid robots and AI-enhanced software for package delivery, planning a $10 billion investment in North Carolina.
  • CrowdStrike collaborates with federal authorities regarding a software outage, facing inquiries from the DOJ and SEC.
  • Chart Industries and Flowserve are merging in a $19 billion deal.
  • Apple lost its bid to pause an app store reform order in the Epic Games case.
  • Citi plans to cut 3,500 technology jobs in China.
  • Boeing entered a non-prosecution agreement with the DOJ, agreeing to pay $1.1 billion over the 737 MAX crashes.
  • Kimberly-Clark close to selling its Kleenex and other tissue businesses outside North America to Suzano for about $3.5 billion.
  • Nippon Steel set to renew its approval for the $14.9 billion acquisition of U.S. Steel by Mexico's antitrust watchdog.

Analyst Recommendations:

  • Ferguson Plc: Berenberg downgrades to hold from buy with a price target raised from USD 200 to USD 215.
  • Microsoft Corporation: Punto Research downgrades to hold from buy with a target price of USD 444.65.
  • Nvidia Corporation: Punto Research upgrades to hold from buy with a price target raised from USD 131 to USD 138.
  • Texas Instruments Incorporated: Bernstein upgrades to market perform from underperform with a price target raised from USD 140 to USD 180.
  • Visa, Inc.: Mizuho Securities upgrades to outperform from neutral with a target price raised from USD 359 to USD 425.
  • Dollar General Corporation: Daiwa Securities maintains a neutral recommendation with a price target raised from 81 to USD 107.
  • Dollar Tree, Inc.: Piper Sandler & Co maintains a neutral recommendation with a price target raised from 72 to USD 93.
  • Five Below, Inc.: Morgan Stanley maintains its market weight recommendation and raises the target price from 110 to USD 135.
  • Healthequity, Inc.: JP Morgan maintains its overweight recommendation and raises the target price from 100 to USD 125.
  • Mongodb, Inc.: Capital One Securities maintains its overweight recommendation and raises the target price from USD 209 to USD 261.
  • Roblox Corporation: Piper Sandler & Co maintains its overweight recommendation and raises the target price from USD 85 to USD 105.
  • Veeva Systems Inc.: CICC maintains its outperform recommendation and raises the target price from USD 270 to USD 325.