The rapid ascent of technology stocks recently might have been too swift, spooking investors and leading to a pause as midyear financial assessments take place. Investors could also be preparing for the potential volatility in the market ahead of the election in November. Or perhaps it’s just a fluke and big tech will be just as popular on Monday… Given the current hype surrounding AI, It's hard to imagine investors doing away with tech altogether. As a Bloomberg editorialist wrote this morning, "when tech CEOs start signing autographs on women's chests at conferences, as has happened recently, you know a certain euphoria is setting in." He's referring to Nvidia boss Jensen Huang, whose autograph was immortalized on video.

Nevertheless, some investors became disheartened yesterday and decided that seven consecutive days of gains for the Nasdaq 100 was too much. They waited for the indices to hit yet another record high in yesterday's session before blowing the whistle. As a result, Nvidia, Broadcom, Applied Materials, Qualcomm, KLA, Micron and the rest of the AI world lost over 3% at the close on Thursday. This was enough to push the S&P500 down by 0.25% and the Nasdaq 100 by 0.8%. Value investment aficionados got a breath of fresh air: +1.7% for energy, +0.9% for utilities and +0.5% for finance.

The focus of investors today is on manufacturing and services sector surveys for more insights into the U.S. economy. The June PMI for the U.S. from S&P Global is scheduled for 9:45 am ET. Existing home sales data for May will be released at 10 am ET.

Economists expect the manufacturing and services PMIs to remain in the expansion zone, above 50 points, but to show a slight deterioration compared with May. This would be the perfect configuration for equity markets, which are still pursuing the goldilocks scenario: not too hot, not too cold, just lukewarm. Such PMIs would send out the message that the US economy is holding up but not overheating, which would reinforce the Fed's ability to cut rates in September. A dream come true.

Today is the 3rd Friday of the 3rd month of the quarter, known on Wall Street since the 1980s as "Witching Days", marks the expiry of certain options. The 3rd Friday of each quarter-end is even more important, as several expiries telescope: equity options, stock index options and index futures - three expiries, hence Triple Witching Day. In other words, there's extra volatility at unwind times. These moments still thrill seasoned traders. After all, we're talking about 5,500 billion dollars' worth of expiring options - that's a lot of money.

Elsewhere, European markets rebounded nicely yesterday, with the French CAC40 in particular up 1.3%, helped by the revival of the banks and, to a lesser extent, the luxury goods sector. The broad European Stoxx Europe 600 index gained 0.9%, with few left behind. So much so that the 30 largest caps in the index gained ground.

In Asia, the yen is back in the black against the dollar, prompting the usual rumors of intervention by the Bank of Japan to support its currency. The yen's weakness remains a huge fool's game, as the BOJ pretends not to normalize its monetary policy while letting the currency slip away, while inflation is on the rise in the archipelago. Prices rose by 2.8% in May, we learned last night. Washington may have found a way to gently twist the arm of local authorities: the Treasury has just added Japan to its "watch list" of foreign exchange practices, the notch just below the countries criticized for currency manipulation. Japan joins China, Germany, Malaysia, Singapore, Taiwan and Vietnam.

Elsewhere in the news, the East-West war over electric vehicles could get tougher, with Canada reportedly considering customs barriers to curb Chinese imports.

In the Asia-Pacific region, Tokyo remained stuck around the equilibrium. China fell, confirming that Wednesday's upturn was a flash in the pan. South Korea and Taiwan were down as US technology stars pulled back. India lost 0.3%. Australia benefited from the over-representation of commodity and financial stocks on the ASX, gaining 0.3%. European indices are bearish.

Today's economic highlights:

June PMI indicators will be published throughout the day for the major economies, from Japan to the USA. There will also be Existing home sales data for May. The full agenda is here. 

The dollar is worth EUR 0.9357 and GBP 0.7908. The ounce of gold rises to USD 2,367. Oil remains firm, with North Sea Brent at USD 85.68 a barrel and US light crude WTI at USD 81.26. The yield on 10-year US debt remains at 4.26%. Bitcoin trades at USD 63,600.

In corporate news:

  • Broadcom, Super Micro Computer, and Qualcomm experienced a drop of 0.8% to 1.2% in pre-market trading, following Nvidia's further decline of 1.5% on Friday, placing it second in market capitalization behind Microsoft.
  • Amazon is reportedly planning a significant revamp of its Alexa voice-assistance service, which has been operating at a loss for ten years. The new service will feature conversational AI with two tiers, and there's talk of a $5 monthly fee for the premium version.
  • Lockheed Martin - China has announced sanctions on specific Lockheed Martin subsidiaries and executives in response to U.S. arms sales to Taiwan.
  • Boeing and Spirit Aerosystems - Boeing is nearing a deal to reacquire its former subsidiary Spirit Aerosystems, which has reportedly made significant progress in asset separation discussions with Airbus. Shares of Spirit Aero rose by 4% in pre-market trading. On another front, Comac is expected to challenge the Airbus and Boeing duopoly in the commercial airliner market, according to the CEO of Dubai Aerospace Enterprise (DAE).
  • Hertz has updated its bond offering plans, now seeking to raise $1 billion instead of the previously announced $750 million.
  • Gilead's shares increased by 6.4% in pre-market trading after revealing that their injectable drug was more effective in preventing HIV in women compared to the Truvada pill.
  • Sarepta Therapeutics' stock surged 34% following FDA approval of its gene therapy for Duchenne muscular dystrophy for patients aged four and older.
  • At&T - The state of California has denied the company's request to stop offering services as an "operator of last resort," according to the California Public Utilities Commission.
  • Visa and Mastercard are reportedly being urged by China to lower credit card transaction fees to facilitate payments for foreign visitors.
  • Southwest Airlines is under FAA investigation after a flight from Oklahoma City airport experienced a significant descent, amid a series of recent incidents involving the airline.
  • American Airlines - The APFA union, representing the airline's flight attendants, is preparing for potential strike action due to stalled contract negotiations.

Analyst recommendations:

  • Alcoa Corporation: Morgan Stanley upgrades to overweight from equal weight with a price target raised from USD 36.50 to USD 50.
  • Cme Group Inc.: JP Morgan downgrades to underweight from neutral with a price target reduced from USD 206 to USD 187.
  • Northrop Grumman Corporation: Bernstein downgrades to market perform from outperform with a price target reduced from USD 535 to USD 477.
  • The Home Depot, Inc.: President Capital Management Corp upgrades to buy from neutral with a target price raised from USD 370 to USD 400.
  • Apple Inc.: Bernstein maintains its outperform recommendation and raises the target price from USD 195 to USD 240.
  • Micron Technology, Inc.: Raymond James maintains its outperform rating and raises the target price from USD 130 to USD 160.
  • Microstrategy Incorporated: TD Cowen maintains its buy recommendation and raises the target price from USD 1450 to USD 1880.
  • Sarepta Therapeutics, Inc.: Barclays maintains its overweight recommendation and raises the target price from USD 185 to USD 226.
  • Solaredge Technologies, Inc.: TD Cowen maintains its buy recommendation and reduces the target price from USD 80 to USD 50.
  • Matador Resources Company: Stephens initiates an overweight recommendation with a target price of USD 83.
  • Palo Alto Networks, Inc.: D.A. Davidson initiates a buy recommendation with a target price of USD 380.
  • Freeport-Mcmoran Inc.: Morgan Stanley upgrades to overweight from equal weight with a target price raised from USD 49.50 to USD 62.
  • Anglo American Plc: BNP Paribas Exane upgrades to outperform from neutral with a target price raised from GBX 2400 to GBX 2900.
  • B&M European Value Retail S.a.: Morgan Stanley downgrades to underweight from equal weight with a target price reduced from GBX 575 to GBX 433.
  • Severn Trent Plc: JP Morgan upgrades to neutral from underweight with a target price raised from GBP 24.50 to GBP 27.
  • Wizz Air Holdings Plc: Barclays downgrades to underweight from equal weight with a target price raised from GBP 19 to GBP 19.50.
  • United Utilities: JP Morgan upgrades to overweight from neutral with a target price raised from GBP 10.50 to GBP 12.50.