Morning Brief

What to watch today: Dow rally continues, Fiat withdraws deal, Trump open to raise China tariffs


Wall Street's strong two-day rally could extend for another day, as U.S. futures reverse early losses and move higher. The major averages are coming off their largest two-day gains since early January, with the Dow now up for three straight days and the S&P 500 and Nasdaq posting their first back-to-back gains in three weeks. Both the S&P 500 and Nasdaq would break four-week losing streaks if current trends continue. (CNBC)

* Stocks gain as oil recovers ground (WSJ)

The markets are getting ahead of themselves in their expectations for the Federal Reserve to make cuts to its key interest rate, according to UBS Chairman Axel Weber and Goldman Sachs President and Chief Operating Officer John Waldron. "I think the market has overpriced the amount of rate cuts that the Fed is likely to do," Weber said. (CNBC)

On today's economic calendar, the Labor Department issues its weekly report on initial jobless claims at 8:30 a.m. ET, along with revised first quarter productivity figures and April trade deficit figures. The European Central Bank will hold a regular policy meeting, issuing its post-meeting statement at 7:45 a.m. ET. (CNBC)

Networking equipment maker Ciena (CIEN), home builder Hovnanian (HOV), food producer J.M. Smucker (SJM), and retailers Signet Jewelers (SIG) and Michaels Companies (MIK) will be out with quarterly earnings this morning. Beyond Meat (BYND) will issue its first quarterly report as a public company after today's closing bell, with DocuSign (DOCU), Guess (GES), Vail Resorts (MTN), and Zumiez also out with their numbers. (CNBC)

* Evercore ISI initiates Apple with an outperform rating, saying its stock will 'grind higher' (CNBC)


President Donald Trump told reporters today that tariffs on China could be raised by another $300 billion if necessary. "But I think China wants to make a deal and I think Mexico wants to make a deal badly," he said on his way to France. (CNBC)

* Trump's Mexico tariff threat worries US farmers already pummeled by China trade war (CNBC)
* US-Mexico negotiators fail to reach a deal on tariffs, immigration; Trump says talks will continue (CNBC)

Some 200 Mexican officials blocked the advance of about 1,000 Central American migrants who were walking north along a southern Mexico highway, once again showing a tougher new stance on attempts to use the country as a stepping-stone to the U.S. And new figures released showed illegal border crossings have risen to a seven-year high. The numbers come as the White House is looking at Mexico to crack down on border security. (AP, NY Times)

* Six undocumented migrants die after Texas police chase (Reuters)

Secretary of State Mike Pompeo said in a closed-door meeting last week that Venezuelan opponents are difficult to keep together and the U.S. efforts have been more difficult than publicly disclosed. "Our conundrum, which is to keep the opposition united, has proven devilishly difficult," Pompeo said in an audio recording obtained by The Washington Post.

Fiat Chrysler (FCAU) withdrew its merger offer with Groupe Renault (RNO), and people close to the negotiations are pointing the finger at what they described as meddling by the French government.The two companies, less than three hours earlier, were preparing to issue a joint statement that said the merger plans were going to move ahead after receiving approval from the Renault board. (CNBC)

* Fiat Pulls Renault Merger Offer After Nissan Balks at Deal (WSJ)

Mondelez (MDLZ) has ended efforts to buy Campbell Soup's (CPB) Arnott's biscuit brand, according to people familiar with the matter who spoke to CNBC. Valuation was said to be a key issue in the unsuccessful talks.

Veterans will have expanded access to medical care beginning today under a law signed last year by Trump. The VA is paying for veterans to see non-VA doctors if they have to wait longer than 20 days or drive more than 30 minutes for coverage, a decrease from the past 28-day or one hour drive requirement. (USA Today)

An opioid manufacturer agreed to pay $225 million after it admitted to bribing doctors to prescribe the company's painkiller. In an agreement, Insys (INSY) admitted to orchestrating a sham "speaker program," where doctors were paid to write prescriptions rather than give speeches. (NPR)

The month of May saw Tesla continue "to extend its lead vs. a still-small group of true [electric vehicle] competitors," Morgan Stanley analyst Adam Jonas wrote in a note to investors. It noted that Tesla's estimated total U.S. sales of 11,300 vehicles in May was 2.6 times the combined total of its competitors' electric vehicle offerings. (CNBC)

U.S. consumers love a good discount, and low-income shoppers are growing their spending more rapidly than middle- and upper-income earners, according to a new report from Bank of America. This one statistic could explain why Walmart (WMT), Target (TGT) and America's dollar stores are thriving, while department stores and specialty apparel chains aren't. (CNBC)

* Bernie Sanders takes his fight against Walmart to its annual meeting as 2020 primary heats up (CNBC)


Stitch Fix (SFIX) reported quarterly profit of 7 cents per share, compared to a consensus estimate of a 3 cents per share loss. Revenue beat estimates, with the online styling service seeing a seventh consecutive quarter of 20% or more revenue growth.

Cloudera (CLDR) lost an adjusted 13 cents per share for its fiscal first quarter, smaller than the 23 cent loss that Wall Street had been expecting. However, the cloud software company's revenue missed forecasts, as did its current quarter revenue guidance, and the company also announced the retirement of CEO Tom Reilly.

MongoDB (MDB) lost an adjusted 22 cents per share for its first quarter, two cents smaller than the 24 cent loss projected by analysts. Revenue did beat estimates, but the database software company gave weaker than expected current quarter earnings guidance.

Five Below (FIVE) beat estimates by 11 cents with quarterly profit of 46 cents per share, while the discount retailer's revenue slightly above Wall Street forecasts. The company raised its earnings forecast, even though the update now includes the impact of higher China tariffs.

Costco (COST) reported a 4.2% increase in comparable store sales for May, missing the 4.6% consensus estimate of analysts polled by StreetAccount.


Charles W. Jackson Jr.'s story of how he won the $344.6 million Powerball jackpot might just cause a spike in fortune cookie sales. The 66-year-old man said he found his winning lottery numbers on the back of a piece of paper found in a fortune cookie. (CNBC's Make It)