US Markets Rise Amid Trade Developments and Economic Insights

The S&P 500 Index ($SPX) (SPY) is up 1.59%, the Dow Jones Industrials Index ($DOWI) (DIA) has risen 1.25%, and the Nasdaq 100 Index ($IUXX) (QQQ) gained 1.93%. June E-mini S&P futures (ESM25) increased by 1.58%, while June E-mini Nasdaq futures (NQM25) rose 1.92%.

Positive sentiment in the stock indexes follows President Trump’s extension of the deadline for potential 50% tariffs on European Union goods to July 9. This decision comes after he threatened to impose tariffs starting June 1. Additionally, National Economic Council Director Hasset indicated that more trade deals, particularly with India, could be finalized this week. Stocks surged as the Conference Board’s US May consumer confidence index rose to a three-month high, surpassing expectations.

Market support also stems from declining bond yields due to speculation that Japan may reduce its debt sales, potentially increasing demand for US securities. The 10-year T-note yield fell by 5 basis points to 4.46%. Bloomberg News reported that Japan’s Finance Ministry is seeking input on appropriate bond issuance amounts, hinting at possible reductions.

In economic data, US April capital goods new orders, excluding defense and aircraft, declined 1.3% month-over-month, below forecasts of a 0.2% drop, marking the largest decrease in six months. Additionally, the US March S&P CoreLogic composite-20 home price index rose 4.07% year-over-year, weaker than the anticipated 4.50% and the smallest increase in 18 months.

The US May Dallas Fed manufacturing survey showed general business activity increased 20.5 points to -15.3, outperforming expectations of -23.1. Minneapolis Fed President Kashkari expressed support for maintaining the current fed funds rate until the impact of tariffs becomes clearer. Market expectations currently indicate a 2% likelihood of a 25 basis point rate cut at the upcoming FOMC meeting on June 17-18.

This week, market attention will center on tariff updates and potential trade agreements. On Wednesday, the minutes from the May 6-7 FOMC meeting will be published. Nvidia is scheduled to release its quarterly earnings after Wednesday’s close. Weekly initial unemployment claims are projected to rise by 3,000 to 230,000. The Q1 GDP is expected to remain unchanged at -0.3% (quarter-over-quarter annualized), and April pending home sales are anticipated to drop 1.0% month-over-month. On Friday, April personal spending is expected to increase 0.2%, and personal income is forecasted to grow by 0.3%. The April core PCE price index, the Fed’s preferred inflation measure, is projected to rise by 0.1% month-over-month and 2.5% year-over-year. The University of Michigan’s May consumer sentiment index is expected to be revised upward by 0.2 points to 51.0.

As Q1 earnings reporting season winds down, more than 90% of S&P 500 companies have reported results, with 77% exceeding estimates—marking the highest percentage since Q2 of 2024. Q1 earnings growth stands at 13.1%, surpassing the 6.6% expected at the season’s start. Full-year 2025 corporate profit forecasts for the S&P 500 have been revised down to a 9.4% increase from an earlier estimate of 12.5%.

International markets show mixed results. The Euro Stoxx 50 is up 0.70%, while China’s Shanghai Composite fell 0.18% to a two-and-a-half-week low. Japan’s Nikkei Stock 225 rose by 0.51%.

Interest Rates

June 10-year T-notes (ZNM25) increased by 8 ticks, with the yield down 5.0 basis points to 4.461%. T-notes benefit from strength in 10-year German bunds and weakened US economic data, including the decline in April capital goods orders. However, rising stock prices limit demand for government debt, and supply pressures loom as the Treasury plans to auction $69 billion of two-year T-notes today, part of a total of $211 billion in T-note and floating-rate note auctions this week.

European government bond yields displayed mixed movements. The 10-year German bund yield dipped to a two-and-a-half-week low of 2.513%. The 10-year UK gilt yield rose by 0.4 basis points to 4.684% after rebounding from a two-week low.

In economic indicators, the Eurozone May economic confidence indicator increased by 1.0 to 94.8, surpassing expectations of 94.1. Eurozone April new car registrations rose by 1.3% year-over-year to 925,000 units, marking the first increase in four months. ECB Council member Holzmann noted that further rate cuts could be riskier than maintaining current levels until September, while swaps suggest a 97% probability of a 25 basis point rate cut at the ECB’s upcoming policy meeting on June 5.

US Stock Movers

The “Magnificent Seven” stocks are driving market gains today, with Tesla (TSLA) up over 4% and Nvidia (NVDA) up more than 3%. Alphabet (GOOGL) also increased by over 2%. Other notable performers include Meta Platforms (META), Amazon.com (AMZN), Apple (AAPL), and Microsoft (MSFT), each up more than 1%.

Chip stocks are rising and contributing to market strength. Marvel Technology (MRVL) is down more than 5%, but Advanced Micro Devices (AMD), Microchip Technology (MCHP), ON Semiconductor (ON), and ARM Holdings Plc (ARM) are each up more than 4%. ASML Holding NV (ASML), KLA Corp (KLAC), and NXP Semiconductors NV (NXPI) are also up more than 3%. A range of other semiconductor companies—including Lam Research (LRCX), Analog Devices (ADI), Micron Technology (MU), Applied Materials (AMAT), GlobalFoundries (GFS), Broadcom (AVGO), Qualcomm (QCOM), and Texas Instruments (TXN)—are up more than 2%.

Travel and cruise line stocks are gaining today, with United Airlines Holdings (UAL) up more than 6%, and Carnival (CCL), Southwest Airlines (LUV), and Royal Caribbean Cruises Ltd (RCL) all up more than 5%.