1

MARKET RECAP at 4 pm ET Indexes rallied, led by shares of technology and financial companies with banks among the biggest gainers as investors speculated of a rate increase from the Federal Reserve in coming months, which in turned pushed the dollar and Treasury yields higher. Oil prices rose on U.S. crude drawdown hopes and gold extended losses.

Coming Up Costco Wholesale Corp is likely to report third-quarter sales and profit below analysts' average estimates, according to Thomson Reuters StarMine data. The company reported weaker-than-expected comparable sales in April due to lower traffic, falling food prices and as it phases out tobacco sales. HP Inc, which houses former Hewlett-Packard Co's legacy PC and printing businesses, is expected to report second-quarter revenue slightly below the average analyst estimate, according to Thomson Reuters StarMine data. Investors will be looking to gains from the company's efforts to cut costs, especially its 3,000-person workforce reduction program. Federal Reserve Bank of Philadelphia President Patrick Harker speaks on the economic outlook before the Forum on America's Economy 2016. Separately, the Federal Reserve Bank of Minneapolis President Neel Kashkari participates in conversation on the relationship between the energy sector and monetary policy before the Williston Basin Petroleum Conference. The Federal Reserve Bank of Dallas President Robert Kaplan participates in a moderated question-and-answer session before the Greater Houston Partnership Thought Leader Series. Tiffany & Co is expected to report first-quarter sales below analysts' average estimates, according to Thomson Reuters

StarMine data. While the impact of a strong dollar is waning, Tiffany, like other luxury companies, has been struggling with customers preferring to spend more on homes, insurance and travel. Tiffany has said it expected earnings to pick up in the second-half of the year. Investors will watch out for updates to the forecast and comments on strategic changes to the company's operations. Mortgage Bankers Association, a Washington-based industry group, releases its weekly mortgage market index. The index decreased 1.6 percent to 482.6 in the week ended May 13. Separately, the U.S. Federal Housing Finance Agency issues home price index for March. The index rose 0.4 percent in February. Exxon Mobil Corp and Chevron Corp will face their toughest-ever push by shareholders concerned about >>>

KEY ECONOMIC EVENTS

Build permits R number mm for Apr 0730 -- 1.116 mln

Build permits R change mm for Apr 0730 -- 3.6 pct

Advance goods trade balance for Apr 0830 -- -56.90 bln

Monthly home price mm for Mar 0900 -- 0.4 pct

Monthly home price yy for Mar 0900 -- 5.6 pct

Monthly Home Price Index for Mar 0900 -- 231.4

Events ET Poll Prior

STOCKS Close %Chng Yr-high Yr-low Chng

DJIA 17706.05 213.12 1.22 18229.80 15370.30

Nasdaq 4861.06 95.27 2.00 4969.32 4209.76

S&P 500 2076.06 28.02 1.37 2132.82 1810.10

Toronto 13952.85 33.27 0.24 15205.34 11531.22

FTSE 6219.26 82.83 1.35 6427.32 5499.51

Eurofirst 1349.71 30.20 2.29 1436.12 1191.74

Nikkei 16498.76 -155.84 -0.94 18951.12 14865.77

Hang Seng 19830.43 21.40 0.11 21794.84 18278.80

TREASURIES Yield Price

10-year 1.8629 -7 /32

2-year 0.9135 -1 /32

5-year 1.4029 -4 /32

30-year 2.6456 -7 /32

FOREX Last % Chng

Euro/Dollar 1.1138 -0.70

Dollar/Yen 109.99 0.70

Sterling/Dollar 1.4628 1.01

Dollar/CAD 1.3138 -0.02

COMMODITIES ($) Price Chng % chng

Front Month Crude /barrel 48.80 0.72 1.50 Spot gold (NY/oz) 1227.30 -21.19 -1.70 Copper U.S. (front month/lb) 0.0207 0.0001 0.58 Reuters/Jefferies CRB Index 184.11 0.15 0.08

S&P 500 Price $ Chng % Chng

GAINERS Chesapeake Energy 4.06 0.39 10.63 Xilinx 47.45 2.56 5.70 Pultegroup 18.73 0.91 5.11

LOSERS

Best Buy 30.55 -2.45 -7.42 Cf Industries 27.65 -2.20 -7.37 Newmont Mining 31.75 -2.08 -6.15

Vertex Pharmaceuticals 88.42 4.00 4.74

Anthem 128.48 -4.70 -3.53

NORTH AMERICA

REUTERS/ Mike Blake

2

THE DAY AHEAD

>>> a warming world at annual meetings, as the Paris accord to tackle climate change ratchets up investor pressure on two of the world's largest oil companies. BlackRock Inc holds its annual shareholder meeting in New York as the world's largest asset manager has come under pressure on its CEO's pay and its oversight of the companies owned by its funds. Despite a trend to low-cost passive investing and volatile markets that have hurt most fund managers, BlackRock has managed to float above its rivals. US Foods Holding Corp is set to price its $1 billion initial public offering (IPO), the largest IPO of a leveraged buyout since KKR's First Data last year. The highly levered company will test investors' appetite for debt-laden IPOs in a year that has seen investors constantly reject them. Mexico's statistics agency releases trade balance data for April. The new data will give an outlook on exports, which slumped in March for the third month in a row. Mexico posted a $1,956 million trade deficit in March when adjusted for seasonal swings. In non-seasonally adjusted terms, Mexico posted a trade surplus of $155 million.

Senate Banking Committee holds hearing, "Understanding the Role of Sanctions Under the Iran Deal: Administration Perspectives" with Adam J Szubin, acting under secretary of treasury for Terrorism and Financial Crimes at the Office of Terrorism and Financial Intelligence, and other witnesses to be announced, in Washington.

LIVECHAT: BRICS FOCUS: CHINA with Eric Burroughs With China's economy one of the main drivers of market sentiment, we ask Thomson Reuters Buzz editor Eric Burroughs whether growth this year is likely to be strong enough to ease concerns. (0500 ET/0900 GMT) To join the Global Markets Forum, click here

A man walks next to a BlackRock sign pictured in the Manhattan borough of New York, October 11, 2015. REUTERS/Eduardo Munoz

Company Name* Quarter ET EPS Estimates** Year Ago Rev Estimates (mln) Smart Estimates

KEY RESULTS

Costco Wholesale Q3 21:00 $1.21 $1.22 $1.17 $27,067.68

CSRA Q4 AMC $0.48 $0.48 -- $1,306.19

HP Q2 AMC $0.38 $0.38 $0.87 $11,717.84

NetApp Q4 AMC $0.58 $0.58 $0.65 $1,401.94

PVH Q1 AMC $1.43 $1.43 $1.50 $1,897.99

Tiffany & Co Q1 BMO $0.67 $0.68 $0.81 $915.10

*Includes companies on S&P 500 index. **Estimates may be updated or revised; release times based on company guidance or past practice. EPS and Revenue estimates are according to Thomson Reuters I/B/E/S. Smart Estimates are according to Thomson Reuters StarMine.

3

THE DAY AHEAD

Top News

Monsanto rejects Bayer bid, but open to more talks Monsanto turned down Bayer's $62 billion acquisition bid as “incomplete and financially inadequate" but said it was open to engage further in negotiations. and seek a higher price, two people familiar with the matter said. Monsanto's decision puts pressure on Bayer to decide whether to raise its bid, even as the company faces criticism from some shareholders that its $122-per-share cash offer is already too high. It was not clear what price Monsanto would be willing to sell for. Best Buy forecasts profit below estimates Best Buy's earnings beat expectations and the company registered strong online sales growth, but a lower-than-expected outlook for current-quarter profit sent its shares down. The retailer said Q2 profit will be impacted partly due to a supply disruption after an earthquake in Japan and due to investments in services launched last September. Best Buy also said Chief Financial Officer Sharon McCollam will step down on June 14 and will be replaced by Corie Barry, who currently serves as the chief strategy officer. Best Buy forecast adjusted profit of 38 to 42 cents per share for the second quarter. Analysts on average expected 50 cents per share. The net income attributable to shareholders rose 18 percent to $229 million, or 70 cents per share. HP Enterprise to merge enterprise unit with Computer Sciences Corp Hewlett Packard Enterprise said it planned to spin off and merge its enterprise services business with Computer Sciences as the company shifts its focus to the cloud services business. It said the merger of the two businesses is expected to produce cost synergies of about $1 billion in the first year after close. Its net earnings rose to $320 million, or 18 cents per share, in the second quarter, from $305 million, or 16 cents per share, a year earlier. The company's board also authorized additional $3 billion for share repurchases.

Investigators raid Google Paris HQ in tax evasion inquiry French police raided Google's Paris headquarters, escalating an investigation into the digital giant on suspicion of tax evasion. Google, which said it was fully complying with French law, is under pressure across Europe from public opinion and governments angry at the way multinationals exploit their presence around the world to minimise the tax they pay. Google pays little tax in most European countries because it reports almost all sales in Ireland. Toll Brothers revenue jump shows demand robust for luxury homes Toll Brothers' quarterly revenue jumped nearly 31 percent as the company sold more luxury homes at higher prices, underscoring a steady growth in the U.S. housing market. Toll Brothers' orders increased 3.2 percent to 1,993 homes in the second quarter. Its net income jumped 31 percent to $89.1 million, or 51 cents per share, beating the average analyst estimate of 46 cents per share, according

to Thomson Reuters I/B/E/S. Revenue rose for the third straight quarter to $1.12 billion, topping the average estimate of $1.04 billion. Apple rehires prominent security pro as encryption fight boils Apple, which has resisted pressure from U.S. law enforcement to unlock encrypted iPhones, this month rehired a top expert in practical cryptography to bring more powerful security features to a wide range of consumer products. Jon Callas rejoined Apple in May, an Apple spokesman said. Callas had worked at Apple in the 1990s and again between 2009 and 2011, when he designed an encryption system to protect data stored on a Macintosh computer. Callas has said he is against companies being compelled by law enforcement to break into their own encrypted products. But he has also said he supports a compromise proposal under which law enforcement officials with a court order can take advantage of undisclosed software vulnerabilities to hack into tech systems.

4

More challenges than cheer for Apple chief on Asia tour With slowing iPhone sales in China, Apple is having to take India more seriously, but investors hoping for a stock price fillip from CEO Tim Cook's week-long Asia trip instead were given a taste of the daunting challenges that lie ahead. The second leg of Cook's trip, to India, the world's third-largest smartphone market, comes at a crucial time as Apple battles slowing growth in China, its second-biggest market. But the challenges suggest it will be years before India is anything close to a major earnings pillar for the U.S. tech giant. In meetings with India's two largest carriers, Bharti Airtel and Vodafone, Cook discussed ways to work more closely to sell iPhones.

What’s so scary about falling population, growth and prices? It may be time to question our common faith that the only natural and acceptable path is growth: for population, for prices and for the economy itself. From central bank inflation targets to almost all reporting on and analysis of the economy, this assumption is built into our view of the world. With population shrinking in Japan, close to topping out in China and with birth rates in Italy, for example, now at their lowest in its history as a modern state, growth of all sorts may be scarce, leaving us in need of a better way to frame the problem. The question may not be how to get growth, but how best to live without it, even if that brings phenomena like falling prices, or deflation.

POLL-U.S. e-cigarette use stalls as health concerns grow Use of electronic cigarettes and other vaping devices has stalled in the United States as more Americans question their safety, according to a new online Reuters/Ipsos poll. About 10 percent of the 9,766 adults surveyed between April 19 and May 16 use the devices, the same percentage as in a similar Reuters/Ipsos poll in May, 2015. This year, however, a growing percentage of participants expressed negative attitudes toward e-cigarettes. Forty-seven percent of respondents said vaping was not healthier than smoking conventional cigarettes compared with 38 percent who felt that way a year ago.

THE DAY AHEAD

Iraqi federal police advance with Shi'ite fighters towards Falluja, Iraq, May 24, 2016.

Insight and Analysis

5

MARKET MONITOR Coming Up

Top News

Some crude production restarts as cool weather saps Canadian wildfire Some crude producers restarted operations in Canada's energy heartland as a mass evacuation of the Fort McMurray oil town entered its fourth week, though cool weather and light winds were helping firefighters dampen the blaze. No oil facilities or communities were in the fire's path as of Tuesday morning as its footprint grew slightly to 523,000 hectares from roughly 522,900 hectares on Monday, Alberta officials said. The blaze was spreading mainly across forested areas to the east as firefighters were working to hold fire breaks around prized oil sands facilities where crews have stripped away tinder-dry trees and vegetation. Kinross continues processing at strike-hit Mauritania gold mine The processing facility remains in operation at Kinross Gold's Tasiast mine in Mauritania, a spokesman for the miner said after workers at the site went on strike. Management at the mine in western North Africa also have a contingency plan

to minimize the impacts of the strike, which includes processing stockpiled material, Kinross spokesman Louie Diaz said in an email. He did not give details of the plan. Kinross said that unionized

workers at the Tasiast mine had gone on strike. The Toronto-headquartered gold miner said it did not expect the strike to affect an expansion that is currently planned for the mine.

THE DAY AHEAD

TSE's S&P/TSX composite Price $ chng % chng

GAINERS Mitel Network 8.82 0.82 10.25 Dhx Media 6.70 0.40 6.35 LOSERS

Kinross Gold 5.71 -0.79 -12.15 Alamos Gold 8.05 -1.10 -12.02

The Bank of Canada is widely expected to hold interest rates at 0.50 percent but analysts will parse the statement for indications that the central bank might cut its already anemic forecast for second quarter annualized growth amid a slew of gloomy economic data. The bank will also outline the likely economic impact of a massive wildfire in Alberta's oil sands region. The disruption to oil production is likely to dampen growth in the short term. Bank of Montreal releases its results for the second quarter. Canada's fourth-biggest bank is expected to report a rise in loans to oil & gas companies that have

turned bad, offering further evidence that the low oil price is hurting Canada's biggest lenders.

Canada's main stock index closed higher on Tuesday as strength in the financial sector ahead of the bank earnings season helped offset a slump in shares of gold miners. Bank of Nova Scotia advanced 1.05 percent. Suncor Energy gained 2.58 percent. The Toronto Stock Exchange's S&P/TSX composite index rose 0.24 percent, to 13,952.85. The dollar fell 0.02 percent at C$1.3138.

REUTERS/Chris Wattie

Aerial view of the burnt forest in the wildfire is seen over Fort McMurray, Alberta, Canada May 13, 2016

6

HOME SALES DATA U.S. new homes sales hit eight-year high, point to firming economy New U.S. single-family home sales recorded their biggest gain in 24 years in April, touching a more than eight-year high as purchases increased broadly, a sign of growing confidence in the economy's prospects. Tuesday's report from the Commerce Department, which also showed a surge in new home prices to a record high, offered further evidence of a pick-up in economic growth that could allow the Federal Reserve to raise interest rates soon. New home sales jumped 16.6 percent to a seasonally adjusted annual rate of 619,000 units, the highest level since January 2008. The percent increase was the largest since January 1992.

THE DAY AHEAD

FINANCIAL TARGETS REDUCED Wells Fargo lowers financial targets, cuts energy loan exposure Wells Fargo & Co lowered two key financial targets and said it is sharply cutting exposure to troubled energy loans, signaling that tough times for bank profits may continue through the rest of the year.

MEMBERS APPOINTED Sumner Redstone appoints two new members to his trust Sumner Redstone, chairman emeritus of Viacom Inc said he has appointed two new trustees to a trust that will determine the direction of the media conglomerate and CBS in the event of his incapacitation or death.

DEAL Aircraft parts maker TransDigm to buy ILC Holdings for $1 billion Aircraft components maker TransDigm Group Inc said it would buy ILC Holdings Inc from private equity firm Behrman Capital for $1 billion to expand its spare parts business.

PROXY BATTLE Retailer Chico's squares off against activist Barington Capital Chico's FAS Inc is headed for a proxy fight with shareholder Barington Capital, as the women's apparel retailer resists the activist hedge fund's push to put two nominees on the company's board.

YOUR MONEY Three ways to budget for fun in retirement The way retirement is supposed to go is that you scrimp and save for decades while you are working, and then you get to enjoy years of luxurious, worry-free leisure.

DIESELGATE SETTLEMENT Volkswagen, U.S. make substantial progress toward final deal-judge Volkswagen AG has made substantial progress toward reaching a final settlement next month with car owners and the U.S. government over the German automaker's cheating on diesel emissions tests, a federal judge said.

A man walks on a job site of a home under construction in Manhasset, New York September 16, 2015. REUTERS/Shannon Stapleton

7

THE DAY AHEAD

The Day Ahead - North America is compiled by Publishing Team in Bengaluru. For questions or comments about this report, email us at: TheDay.Ahead@thomsonreuters.com. Visit the Thomson Reuters Equities Community Site at: http://customers.reuters.com/community/equities/ For more information about our products: http://thomsonreuters.com/products_services. Send us a sales enquiry at: http://thomsonreuters.com/products_services/financial/contactus/ © 2016 Thomson Reuters. All rights reserved. This content is the intellectual property of Thomson Reuters and its affiliates. Any copying, distribution or redistribution of this content is expressly prohibited without the prior written consent of Thomson Reuters. Thomson Reuters shall not be liable for any errors or delays in content, or for any actions taken in reliance thereon. Thomson Reuters and its logo are registered trademarks or trademarks of the Thomson Reuters group of companies around the world.

Israeli soldiers of the Search and Rescue brigade take part in a training session in Ben Shemen forest, near the city of Modi'in May 23, 2016. REUTERS/Amir Cohen