Today will be one of the biggest and busiest trading days in the U.S. equity market as investment managers adjust their portfolios to the rebalancing of Russell indexes. Why is it so important? Indexes rule the world because passive investing rules the world, and these indexes determine what go into many mutual funds and many ETFs. There's about $8.5T in assets benchmarked to or invested in products based on Russell U.S. indexes.

Economy

Theresa May unveiled an offer last night to allow at least 3M EU citizens living in the U.K. to stay after Brexit, but didn't reveal the exact date after which new arrivals are no longer guaranteed the status. European heads of state, including German Chancellor Angela Merkel and Austrian Chancellor Christian Kern, welcomed the initial offer, which came on the first anniversary of the Brexit vote.

A closely watched survey showing economic growth across the eurozone slipped back to 55.7 in June, from 56.8 the previous month, but the region still enjoyed its best quarter in more than six years. The flash composite PMI index was still way above the 50 level that marks expansion. "At the moment I'm not too worried about it," said Chris Williamson, chief business economist at IHS Markit.

Four Arab states boycotting Qatar over alleged support for terrorism have sent Doha a list of 13 demands, including closing Al Jazeera and reducing ties to their regional adversary Iran. It also demands shuttering of a Turkish military base in Qatar and surrendering all designated terrorists on its territory. The countries gave Doha 10 days to comply, upon which the list would become "void."

North Korea has carried out another test of a rocket engine that the U.S. believes could be part of its program to develop an intercontinental ballistic missile. The news comes a day after Secretary of State Rex Tillerson urged China, Pyongyang's sole ally, to put more pressure on the North to rein in its atomic weapons and ballistic missile programs.

Venezuelan police shot dead a protester who was attacking the perimeter of an airbase on Thursday, bringing renewed scrutiny of the force used to control riots that have killed at least 76 people. Hundreds of thousands of Venezuelans have taken to the streets in recent months to protest against shortages of food and medicine, and President Maduro's plan to overhaul the constitution.

A new ruling from Brazil's Supreme Court says it has the right to reject plea bargains made in corruption probes, potentially undercutting investigations that have threatened President Michel Temer's government. Meanwhile, American imports of fresh Brazilian beef have been halted, according to the USDA, after a high percentage of shipments failed to pass safety checks. Related tickers: BRFS, OTCQX:MRVSY, OTCQX:JBSAY

Stocks

The 34 largest U.S. lenders have all cleared the first stage of the Fed's annual stress test, showing they would be able to maintain enough capital in an extreme recession to meet regulatory requirements. Banks are still subject to a second portion of the test in which the Fed approves or denies their capital plans, which will be released next week.

The healthcare sector closed at the top of yesterday's leaderboard as the Senate released its healthcare reform bill. "The initial proposal I think is more generous and more positive to the industry than expected," said Jeff Jonas, portfolio manager with Gabelli Funds. Changes were aplenty in the new bill, but were not seen as a radical departure from ACA for individuals.

"Yes, are competing for TV ad dollars that were previously exclusively TV ad dollars," said YouTube's (GOOG, GOOGL) head of original programming, adding that the next step is professional-created content with big-name stars. YouTube recently hit the threshold of 1.5B viewers every month, equivalent to one in every five people on the globe, and said its users on average watch more than an hour of mobile videos per day.

Amazon is looking to charge advertisers $2.8M for packages that include 30-second spots during the Thursday night NFL games it will stream this coming season, Reuters reports. Amazon (NASDAQ:AMZN) paid the league $50M to stream the 10 games, taking over from Twitter's (NYSE:TWTR) prior live-streaming deal, as it makes its first high-profile push into live sports.

Estimating bigger losses for the past financial year, Toshiba's (OTCPK:TOSYY) stock listing has been demoted to the second section of the Tokyo Stock Exchange. The conglomerate also received regulatory approval to delay its annual filing by more than a month amid a prolonged accounting investigation. It marks the sixth time since 2015 that Toshiba has delayed an earnings report.

According to a Reuters investigation, Cisco (NASDAQ:CSCO), IBM, SAP and other Western tech firms are acceding to demands by Moscow to access security product source code to determine whether foreign spy agencies hid any "backdoors." While a number of U.S. businesses are playing ball to preserve their entry to Russia's huge tech market, Symantec (NASDAQ:SYMC) has stopped cooperating over security concerns.

The FCC has proposed a record $120M fine against a Miami resident said to be responsible for almost 97M robocalls, which used a tactic known as "neighbor spoofing," over the last few months of 2016. That would be its largest financial penalty ever leveled against an individual. The calls offered deals from companies like TripAdvisor (NASDAQ:TRIP), Expedia (NASDAQ:EXPE), Marriott (NYSE:MAR) and Hilton Worldwide (NYSE:HLT).

It's not been a good few weeks for CenturyLink (NYSE:CTL). While in the midst of a $34B merger, the firm has been hit with a pair of lawsuits seeking up to $12B in damages for a Wells Fargo-like scheme. Now, a video has emerged of Odell Riley, recently VP Human Resources and Chief Diversity Officer at CenturyLink, railing against the sins of homosexuals at a church in Mississippi.

Is Google Glass still alive? The device just received its first update in nearly three years, including bug fixes, performance improvements and Bluetooth input device support. It's a totally unexpected move from Google (GOOG, GOOGL), prompting speculation of an impending return for Glass. Sales of the futuristic gadget were halted back in 2015 after many considered it ugly, creepy and overly expensive.

In a hospitality industry crossover, Ritz-Carlton (MAR) has revealed plans for a luxury cruise line scheduled to hit the water in late 2019. It's building three 298-passenger yachts that will cater to the "1% of global travelers," according to Bloomberg. While home ports for the ships have not yet been announced, bookings will begin next May.

Sears is preparing to close 20 more stores in the United States. That's on top of 245 closings already announced, Sears (NASDAQ:SHLD) employees told Business Insider, and will bring the company's store count down to about 1,180. Yesterday, Sears Canada (NASDAQ:SRSC) announced it would close a quarter of its 59 locations as part of court-ordered restructuring.

Volkswagen has agreed to buy back diesel cars equipped with illicit emissions software after deciding not to appeal a German court ruling backing plaintiffs' calls for compensation. VW (OTCPK:VLKAY) said its decision was an exception to its position to "not compensate, but fix" vehicles of European customers, and stemmed from the low value of the cars in question.

After losing the 2017 Paris Air Show to rival Boeing (NYSE:BA), Airbus (OTCPK:EADSY) sales chief John Leahy, one of the dominant figures of modern aviation, has hinted he would retire this fall. He pledged to ensure a smooth transition to his designated internal successor, Kiran Rao. The 67-year-old New Yorker has overseen the sale of more than 10,000 aircraft worth $1T since 1994.

SpaceX is about to kick off a busy weekend with today's launch of a previously flown Falcon 9 rocket. If successful, it will be the fastest turnaround time between two SpaceX (Private:SPACE) launches ever. The company is also targeting a Sunday launch of more Iridium (NASDAQ:IRDM) satellites, putting it on track to launch more rockets than its competitors for the first time in a calendar year.

Thursday's Key Earnings

Accenture (NYSE:ACN) -4% after lowering guidance.
Bed Bath & Beyond (NASDAQ:BBBY) -7.9% AH on slipping sales.
Carnival (NYSE:CCL) -1.1% despite beating estimates.

Today's Markets

In Asia, Japan +0.1%. Hong Kong flat. China +0.3%. India -0.5%.
In Europe, at midday, London -0.5%. Paris -0.6%. Frankfurt -0.7%.
Futures at 6:20, Dow -0.2%. S&P flat. Nasdaq -0.2%. Crude +0.2% to $42.81. Gold +0.7% to $1257.80.
Ten-year Treasury Yield flat at 2.16%

Today's Economic Calendar

9:45 PMI Composite Flash
10:00 New Home Sales
11:15 Fed's Bullard: U.S. Monetary and Economic Policy
12:40 Fed's Mester speech
1:00 PM Baker-Hughes Rig Count
2:15 PM Fed's Powell speech