The next snapshot of the U.S. economy is likely to show another 189,000 jobs added in May, with the unemployment rate holding steady at 3.9% and average earnings expected to have risen 2.7% on an annualized basis. The nonfarm payrolls report will also cement expectations that the Fed will raise interest rates again in June, but chances for a fourth rate hike this year have dimmed to 27%, according to CME Group, down from around 50% last week.

Economy

Besides retaliatory tariffs from the European Union, the U.S. is facing "counter-balancing measures" from its northern and southern neighbors after imposing duties on steel and aluminum. Canada's levies will cover C$16.6B in imports, including whiskey, orange juice and other food products, alongside metal tariffs. Mexico's reciprocal measures will also target steel, as well as pork legs, apples, grapes and cheeses.

Canada will further challenge the new U.S. tariffs under both NAFTA's Chapter 20 and the WTO's dispute settlement process, raising chances that NAFTA negotiations could fall apart. "The U.S. has been taken advantage of for many decades on trade," President Trump declared. "Those days are over. Earlier today, this message was conveyed to Prime Minister Justin Trudeau: The U.S. will agree to a fair deal, or there will be no deal at all."

A coalition deal has been reached in Italy as the Five Star Movement and League officially join forces to govern the eurozone's third-largest economy. Apart from the threat of the euroskeptic administration, periphery risk may also be coming to Spain. Pedro Sanchez has claimed the country's prime minister post after his socialist party secured enough votes to topple Mariano Rajoy in a confidence vote over a corruption case.

The softening of eurozone manufacturing has continued deep into the second quarter and forward-looking indicators suggest it will at best remain subdued in the coming months. IHS Markit's final manufacturing PMI for the bloc slipped to 55.5 in May from 56.2 the previous month. While the reading was well above the 50 marker, it was the weakest rate of expansion in 15 months.

More than 230 Chinese stocks, known as A-shares, have been finally added to MSCI's Emerging Markets Index (ETF: EEM), giving ordinary U.S. investors greater access to mainland China. The move is expected to drive a surge of foreign money into local markets, but with U.S. tariffs reigniting fears of a global trade war, Chinese stocks slid overnight, with the Shanghai Composite Index dropping 0.7%.

Stocks

It's a fresh setback for Deutsche Bank (NYSE:DB) as S&P Global cut the lender's credit rating to BBB+, the third-lowest investment grade. "Deutsche Bank's updated strategy envisages a deeper restructuring than we previously expected... it appears set for a period of sustained underperformance compared with peers." The decision could raise the bank's cost of doing business, and increase the stakes for new CEO Christian Sewing, who replaced John Cryan in April.

Ensuring that "investors cannot lose more money than they put in," an EU ban on binary options sales to retail customers will come into force tomorrow, with restrictions on sales of contract for differences starting in July. Binary options and CFDs are financial products that give an investor exposure to price movements in securities without actually owning the underlying assets.

The U.S. Justice Department has opened a criminal investigation into whether traders manipulated prices in the $550B market for corporate bonds issued by Fannie Mae (OTCQB:FNMA) and Freddie Mac (OTCQB:FMCC), Bloomberg reports. The probe is not looking into the mortgage securities issued by the two companies, but rather at the secondary market for Fannie and Freddie's corporate bonds, which together total $548B.

Sears will be shutting down 72 more stores in 2018 and has identified 100 unprofitable locations in total that it plans to shutter over time. The closures are in addition to the 64 Kmart stores and 39 Sears (NASDAQ:SHLD) stores that have already shut down this year. The company will end 2018 with fewer than 1,000 locations nationwide.

Walmart is launching a new same-day delivery service where customers can place orders using a text message. Called Jetblack, the feature allows shoppers to order items from Walmart.com (NYSE:WMT) and even websites of rival retailers. "The goal is to think about game-changing technologies that will change the way people shop," said Jenny Fleiss, co-founder and chief executive of Jetblack.

Capping months of turbulent talks and several strategy shifts, Facebook (NASDAQ:FB) is close to announcing a first crop of news shows for its video platform Watch, WSJ reports. Content from Fox News (NASDAQ:FOX) and CNN (NYSE:TWX) - financed by Facebook and run exclusively on the platform - could be announced as early as next week and will officially launch in July.

Satya Nadella touted Microsoft's (NASDAQ:MSFT) research in brain technology at the company's eighth Ability Summit, detailing work that could determine how implants could augment a person's intelligence. It's one of the many ways the firm is trying to make technology more accessible to people with various disabilities. Earlier this year, ZDNet reported that Microsoft employees had sought a patent for a system that could take action based on brain input.

China's markets regulator is still reviewing Qualcomm's (NASDAQ:QCOM) proposed $44B acquisition of NXP Semiconductors (NASDAQ:NXPI) and is in talks with the U.S. chipmaker about ways to eliminate negative market impacts from the deal. In response to a question from Reuters, the State Administration for Market Regulation said it will conduct the antitrust review in a fair and open way.

Toshiba is scrapping a plan to build two nuclear reactors for NRG Energy (NYSE:NRG) after long delays in which it failed to find investors because of lower electricity rates and increased global regulation. In 2011, NRG abandoned and wrote off its investment in the joint Toshiba (OTCPK:TOSYY) South Texas Project, citing U.S. regulatory uncertainty in the wake of Japan's 2011 Fukushima nuclear accident.

General Electric plans to end sales of oil and gas equipment in Iran later this year amid U.S. withdrawal from the nuclear deal, sources told WSJ. The industrial conglomerate had big ambitions in Iran after sanctions were eased in 2016, with GE's foreign subsidiaries preparing up to $150M in bids for pipelines, compressors and subsea equipment.

A decade after Chrysler filed for bankruptcy, a nearly debt-free Fiat Chrysler (NYSE:FCAU) - led by Sergio Marchionne - will unveil a five-year growth plan today at a test track outside Milan. He'll likely address how to fix lagging margins in Europe, grow Jeep into a global giant and catch up in electric and self-driving cars - all without him in the driving seat. Marchionne will step down as CEO in early 2019.

Thursday's Key Earnings

Costco (NASDAQ:COST) -2% AH raising minimum wage to $14/hour.
Dollar General (NYSE:DG) -9.4% battling a drop in traffic.
Dollar Tree (NASDAQ:DLTR) -14.3% after weak profit guidance.
GameStop (NYSE:GME) -3.3% AH following a tough quarter.
Lululemon (NASDAQ:LULU) +6.2% AH posting dazzling sales growth.
VMware (NYSE:VMW) +3.3% AH amid upside revenue guidance.
Workday (NYSE:WDAY) -3.3% AH despite beating estimates.

Today's Markets

In Asia, Japan -0.1%. Hong Kong +0.1%. China -0.7%. India -0.3%.
In Europe, at midday, London +0.7%. Paris +1.2%. Frankfurt +1%.
Futures at 6:20, Dow +0.5%. S&P +0.4%. Nasdaq +0.3%. Crude -0.5% to $66.70. Gold -0.2% to $1302.60. Bitcoin +0.8% to $7548.
Ten-year Treasury Yield +6 bps to 2.89%

Today's Economic Calendar
Auto Sales
8:30 Non-farm payrolls
9:45 PMI Manufacturing Index
10:00 ISM Manufacturing Index
10:00 Construction Spending
1:00 PM Baker-Hughes Rig Count