The S&P 500 Index ($SPX) (SPY) has increased by +3.30%, while the Dow Jones Industrials Index ($DOWI) (DIA) has risen by +2.80%. The Nasdaq 100 Index ($IUXX) (QQQ) is leading the gains at +4.03%. Additionally, June E-mini S&P futures (ESM25) are up +3.13%, and June E-mini Nasdaq futures (NQM25) have climbed +3.86%.

Today, U.S. stock indexes are soaring for a second consecutive session. The S&P 500 has reached a two-week high, and the Nasdaq 100 has achieved a one-week high. This rally stems from optimism surrounding U.S.-China trade talks, as President Trump expressed intentions to engage positively with China, suggesting that tariffs might decrease if a trade agreement is reached. Furthermore, stocks rose after Trump stated he would not dismiss Fed Chair Powell, bolstering confidence in the dollar and diminishing the likelihood of foreign investors liquidating their dollar assets, including stocks and Treasuries.

Investors continued to support market gains with positive data on U.S. new home sales and manufacturing PMI. However, the MBA mortgage applications report indicated a significant decline, falling -12.7% in the week ending April 18, driven by a -6.6% drop in the purchase mortgage sub-index and a -20.0% plunge in the refinancing sub-index. The average 30-year fixed mortgage rate increased by 9 basis points to 6.90% from 6.81% the previous week.

The April S&P manufacturing PMI surprisingly increased by +0.5 to 50.7, which exceeds expectations of a decline to 49.0. Meanwhile, March new home sales surged by +7.4% month-on-month to a six-month high of 724,000, surpassing expectations of 685,000.

However, comments from Fed Governor Kugler on Tuesday evening dampened sentiment when she indicated that tariffs might drive prices higher and amplify economic impacts more than expected. She also suggested maintaining steady interest rates until inflation risks stabilize.

Bitcoin (^BTCUSD) has seen a jump of more than +2%, reaching a seven-week high, as the dollar has plunged to a three-year low. This movement has increased demand for cryptocurrencies as a safe-haven asset amid ongoing global trade uncertainties. The market is currently pricing an 8% chance for a -25 basis point rate cut following the FOMC meeting scheduled for May 6-7.

This week’s market focus will hinge on Q1 corporate earnings and potential changes in U.S. trade policies. Later today, the Fed Beige Book will be released, followed by the March capital goods new orders report (expected to show a +0.1% increase) on Thursday, and existing home sales forecasted to decline by -2.8% month-on-month to 4.14 million. On Friday, the revised University of Michigan April consumer sentiment index is expected to remain unchanged at 50.8.

Q1 earnings reports are actively shaping the market landscape. According to Bloomberg Intelligence, the consensus anticipates a year-over-year earnings growth of +6.7% for S&P 500 stocks, a downgrade from a prior forecast of +11.1% made in November. For 2025, corporate profits for the S&P 500 are projected to rise by +9.4%, down from an earlier estimate of +12.5% in January.

Internationally, stock markets are trading mixed. The Euro Stoxx 50 has climbed to a two-and-a-half week high, gaining +3.03%. The Shanghai Composite in China is down -0.10%. In Japan, the Nikkei Stock 225 has rallied to a three-week high, closing up +1.89%.

Interest Rates

June 10-year Treasury notes (ZNM25) are up +5 ticks, while the yield on 10-year T-notes has declined by -6.4 basis points to 4.336%. Today’s upward movement in T-notes follows President Trump’s assurance that he would not remove Fed Chair Powell, which has alleviated concerns over Fed independence that could lead to foreign divestment from U.S. assets, including Treasuries.

Despite this, T-note prices retracted slightly following better-than-expected U.S. new home sales and manufacturing PMI results. An increase in inflation expectations is also bearish for T-notes, with the 10-year breakeven inflation rate rising to a one-and-a-half week high of 2.303%. Additionally, Treasury supply pressures loom, with an upcoming auction of $30 billion in 2-year floating-rate notes and $70 billion in 5-year T-notes as part of this week’s total auction package of $213 billion.

European government bond yields are climbing, with the 10-year German bund yield up +6.6 basis points to 2.509%. The 10-year UK gilt yield has increased by +0.4 basis points to 4.549%, rebounding from a two-week low of 4.469%.

In the Eurozone, the April S&P manufacturing PMI unexpectedly rose by +0.1 to a two-and-a-quarter year high of 48.7, contrary to expectations of a drop to 47.4. Meanwhile, the April composite PMI eased by -0.8 to 50.1, slightly below the anticipated 50.2.

Comments from ECB Governing Council member Nagel indicated that Europe is facing a stagnating economic situation, which carries a “risk of recession for Germany” due to the repercussions of U.S. tariffs.

Swaps are currently signaling an 86% probability for a -25 basis point rate cut by the ECB at the June 5 policy meeting.

U.S. Stock Movers

The so-called “Magnificent Seven” stocks are experiencing significant gains and bolstering the broader market performance. Tesla (TSLA) has surged by more than +7%, and Amazon.com (AMZN) has risen by over +6%. Additionally, Meta Platforms (META) and Nvidia (NVDA) are both up by over +5%, while Apple (AAPL), Alphabet (GOOGL), and Microsoft (MSFT) have increased by more than +3%.

Chip stocks are rallying following the easing of U.S.-China trade tensions, as President Trump signaled that tariffs could drop with an agreement. Notable gains include Marvell Technology (MRVL), ARM Holdings Plc (ARM), and GlobalFoundries (GFS), all up by more than +7%. Advanced Micro Devices (AMD), Broadcom (AVGO), Microchip Technology (MCHP), and Lam Research (LRCX) have risen by over +6%, while Applied Materials (AMAT), NXP Semiconductors NV (NXPI), and Texas Instruments (TXN) have gained more than +5%.

Coinciding with Bitcoin’s increase of over +2% to a seven-week high, stocks linked to cryptocurrencies have also ascended. Riot Platforms (RIOT) has gone up by more than +8%, while Coinbase Global (COIN) and MARA Holdings (MARA) are both up more than +3%. MicroStrategy (MSTR) has increased by more than +1%.

Amphenol Corp (APH) shares surged by over +11% following Q1 net sales of $4.80 billion, exceeding the consensus estimate of $4.25 billion. Boeing (BA) saw an increase of more than +7% after reporting Q1 revenue of $19.50 billion, better than the anticipated $19.37 billion. Boston Scientific (BSX) has risen by over +5% after raising its full-year net sales forecast to +15% to +17%, compared to a prior estimate of +12.5% to +14.5%. Vertiv Holdings (VRT) jumped over +12% after adjusting its full-year net sales predictions to $9.33 billion-$9.58 billion from a previous $9.13 billion-$9.28 billion, significantly above the consensus of $9.20 billion. Lastly, Intel (INTC) is also experiencing an upswing.