Morning Call: U.S. stocks rally on speculation the Syrian crisis will not escalate; Jun E-mini S&Ps up +0.62%; Jun 10-year T-notes down -7.5 ticks to a 3-week low.
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 ESM18 - S&P 500 E-Mini
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Overnight Markets and News

Jun E-mini S&Ps (ESM18 +0.55%) this morning are up +0.62% and European stocks are little changed, down -0.13%, on speculation there will be no retaliation by Russia to the U.S., French and UK airstrikes and missile attacks against Syrian chemical weapons installations late Friday night. May WTI crude oil (CLK18 -1.14%) fell -1.04% and government debt prices tumbled on reduced safe-haven demand as no immediate fall-out was expected from the weekend strikes on Syria. The 10-year T-note yield rose to a 3-week high of 2.86% and the German 10-year bund yield rose to a 3-week high of 0.55%. UN ambassador Haley said Sunday that U.S. Treasury Secretary Mnuchin will announce new sanctions today against Russia that "go directly to any sort of companies that were dealing with equipment" related to Syria's chemical weapons program. Asian stocks settled mixed: Japan +0.26%, Hong Kong -1.60%, China -1.53%, Taiwan -0.10%, Australia +0.21%, Singapore -0.12%, South Korea +0.10%, India +0.33%. Chinese stocks closed lower, led by losses in bank stocks, after Reuters reported the PBOC may remove the current ceiling for commercial banks' deposit interest rates, which could cause the net interest margin at banks to narrow and reduce their profits.

The dollar index (DXY00 +0.05%) is down -0.28%. EUR/USD (^EURUSD +0.33%) is up +0.25%. USD/JPY (^USDJPY -0.05%) is down -0.10%.

Jun 10-year T-note prices (ZNM18 -0-075) are down -7.5 ticks at a 3-week low.

Minneapolis Fed President Kashkari said fiscal stimulus is "big enough" to have an effect on the trajectory of the economy and has him more confident the Fed will achieve its 2% inflation objective, which will allow the Fed to raise interest raises sooner rather than later.

U.S. Stock Preview

Key U.S. news today includes: (1) Mar retail sales (expected +0.4% and +0.2% ex autos, Feb -0.1% and +0.2% ex autos), (2) Apr Empire manufacturing survey general business conditions index (expected -3.9 to 18.6, Mar +9.4 to 22.5), (3) Feb business inventories (expected +0.6%, Jan +0.6%), (4) Apr NAHB housing market index (expected unchanged at 70, Mar -1 to 70), (5) USDA weekly grain export inspections, (6) Atlanta Fed President Raphael Bostic (voter) speaks on the economy and rural market trends to the Shoals Chamber of Commerce in Florence, Alabama, (7) USDA weekly Crop Progress.

Notable S&P 500 earnings reports today include: Bank of America (consensus $0.59), Charles Schwab (0.54), Netflix (0.64), JB Hunt Transport (1.07), M&T Bank (2.76).

U.S. IPO's scheduled to price today: none.

Equity conferences this week: American Association for Cancer Research Meeting on Mon-Wed, RSA Conference on Mon-Thu.

Market Comments

June S&P 500 E-minis (ESM18 +0.55%) this morning are up +16.50 points (+0.62%). Friday's closes: S&P 500 -0.29%, Dow Jones -0.50%, Nasdaq -0.42%. The S&P 500 on Friday closed lower on anticipation of the U.S. military strike on Syria and the -3.6 point decline in the University of Michigan U.S. Apr consumer sentiment to 97.8 (weaker than expectations of -1.0 to 100.4). There was also weakness in bank stocks led by a -2.7% loss in JPMorgan Chase after JPMorgan CEO Dimon said "the environment is intensely competitive and lending was flat for the quarter."

June 10-year T-notes (ZNM18 -0-075) this morning are down -7.5 ticks at a 3-week low. Friday's closes: TYM8 +0.50, FVM8 -0.75. Jun 10-year T-notes on Friday closed higher on anticipation of the U.S. military strike on Syria and on the weaker-than-expected University of Michigan U.S. Apr consumer sentiment report. T-notes were also supported by dovish comments from St. Louis Fed President Bullard who said "the outlook for the policy rate is flat and that we are either at neutral or close to neutral right now," which signals he feels the Fed is close to the end of its tightening cycle.

The dollar index (DXY00 +0.05%) this morning is down -0.251 (-0.28%). EUR/USD (^EURUSD +0.33%) is up +0.0031 (+0.25%) and USD/JPY (^USDJPY -0.05%) is down -0.11 (-0.10%). Friday's closes: Dollar Index +0.049 (+0.05%), EUR/USD +0.0004 (+0.03%), USD/JPY +0.02 (+0.02%). The dollar index on Friday closed higher on strength in USD/JPY which climbed to a 6-week high as an easing of trade war concerns reduced the safe-haven demand for the yen. Trade tensions also eased after President Trump said that the U.S. may rejoin the Trans-Pacific Partnership free-trade deal and that China and the U.S. may ultimately end up not imposing tariffs on each other as they negotiate their trade differences, which would be positive for economic growth.

Metals prices this morning are mixed with Jun gold (GCM18 -0.17%) -1.6 (-0.12%), May silver (SIK18 -0.44%) -0.063 (-0.38%) and May copper (HGK18 +0.23%) +0.006 (+0.18%). Friday's closes: Jun gold +6.00 (+0.45%), May silver +0.185 (+1.12%), May copper +0.075 (+0.24%). Metals on Friday closed higher on increased safe-haven demand for precious metals on heightened tensions ahead of the expected U.S. military strike on Syria. Copper prices were supported by tighter copper supplies after Shanghai copper inventories fell -25,809 MT to a 5-week low of 280,836 MT and LME copper inventories fell -5.675 MT to a 2-1/2 week low of 357,025 MT.

May crude oil prices (CLK18 -1.14%) this morning are down -70 cents (-1.04%) and May gasoline (RBK18 -1.07%) is -0.0209 (-1.01%). Friday's closes: May crude +0.32 (+0.48%), May gasoline +0.0108 (+0.53%). May crude oil and gasoline on Friday closed higher with May crude at a 3-1/3 year high. Crude oil prices rallied on the imminent U.S. military strike on Syria and on the IEA's estimate that less than 10% of the global surplus in oil inventories remains and that OPEC is on the verge of "mission accomplished" in its quest to clear a global supply glut.

Overnight U.S. Stock Movers

Costco (COST +0.05%) was upgraded to 'Outperform' from 'Market Perform' at Wells Fargo Securities with a price target of $220.

Occidental Petroleum (OXY +2.58%) was upgraded to 'Overweight' from 'Neutral' at Piper Jaffray with a price target of $86.

Boston Beer (SAM -1.16%) was upgraded to 'Neutral' from 'Sell' at Goldman Sachs with a price target of $223.

Tractor Supply (TSCO -3.12%) was upgraded to 'Buy' from 'Neutral' at Goldman Sachs with a price target of $72.

Dean Foods (DF +1.47%) was downgraded to 'Sell' from 'Neutral' at Goldman Sachs with a price target of $8.

Kraft Heinz (KHC -0.03%) was downgraded to 'Underperform' from 'Outperform' at Credit Suisse with a price target of $55.

Temper Sealy International (TPX -0.29%) was downgraded to 'Sell' from 'Hold' at Loop Capital Markets with a price target of $36.

Vornado Realty Trust (VNO +0.76%) said a $34.7 million expense from a new GAAP accounting standard, a $23.5 million expense to New York city property transfer taxes, a $14.5 million write off from issuance costs and $6.5 million from "other items" will reduce its Q1 FFO by 37 cents a share.

Illumima (ILMN -0.27%) rise nearly 2% in after-hours trading after it announced a strategic collaboration with Bristol-Myers Squibb to develop and commercialize diagnostic measures to predict genomic biomarkers.

VeriFone (PAY unch) was downgraded to 'Hold' from 'Buy' at Jeffries.

Dynavax Technologies (DVAX -4.82%) jumped 15% in after-hours trading after an abstract for its SD-101 therapy combined with Merck's Keytruda showed a "promising response rate" in patients with head and neck squamous cell carcinoma.

General Electric (GE +2.35%) may open lower this morning after it an accounting rule change prompted it to restate 2017 revenue at $118.2 billion, lower than the previously reported $122.1 billion, and restate 2016 total revenue at $119.5 billion compared with the originally reported $123.7 billion.

President Trump's top economic adviser, Larry Kudlow, said after the markets closed Friday that he supports a currency policy for a steady dollar and he is optimistic the U.S. can avoid a trade fight with China.