Markets Rise on Trade Deal News and Job Data Impact

The S&P 500 Index ($SPX) (SPY) is up +0.57%, the Dow Jones Industrials Index ($DOWI) (DIA) rises +0.53%, while the Nasdaq 100 Index ($IUXX) (QQQ) shows an increase of +0.79%. Correspondingly, June E-mini S&P futures (ESM25) are up +0.55%, and June E-mini Nasdaq futures (NQM25) are up +0.80%.

Trade Deal Announcement Sparks Market Optimism

U.S. stock indexes are climbing today following President Trump’s announcement of a “major” trade deal with the UK, enhancing optimism regarding progress in tariff negotiations. According to Mr. Trump’s post on Truth Social, a news conference is scheduled for 10 AM Washington time today to disclose the deal’s details. This announcement raises hopes that significant tariffs implemented by President Trump may be negotiated down, potentially preventing long-term damage to economic growth and corporate profits.

Economic Data Influences Market Activity

Today’s economic updates have pushed bond yields higher, creating a slight negative impact on stocks. Weekly initial unemployment claims fell more than expected, indicating strength in the labor market. In contrast, Q1 nonfarm productivity declined for the first time in nearly three years, while Q1 unit labor costs increased at the highest rate in a year.

Initial unemployment claims dropped by 13,000 to 228,000, indicating a stronger labor market compared to the anticipated 230,000. Nonfarm productivity fell by 0.8%, aligning with expectations as it marks the first decrease in 2 years and 9 months. Concurrently, Q1 unit labor costs rose by 5.7%, exceeding the expected increase of 5.1% and representing the largest jump in one year.

The markets are currently pricing in a 17% chance of a 25 basis point rate cut after the upcoming FOMC meeting on June 17-18. The Q1 earnings reporting season continues, with Bloomberg Intelligence noting a consensus for Q1 year-over-year earnings growth of 6.7% for S&P 500 stocks, down from earlier expectations of 11.1% in November. So far, 78% of the 386 companies that have reported results have surpassed estimates. Full-year corporate profits for the S&P 500 are projected to grow by 9.4%, revised down from 12.5% predicted in early January.

International Markets See Gains

Overseas stock markets are also trending upward. The Euro Stoxx 50 has risen to a 5-week high, climbing by 1.04%. The Shanghai Composite in China similarly reached a 5-week high, closing up 0.28%. Japan’s Nikkei 225 has increased to a 1.25-month high, finishing up 0.41%.

Interest Rates Update

June 10-year T-notes (ZNM25) are down by 5 ticks, with the 10-year T-note yield rising by 1.6 basis points to 4.285%. T-notes face downward pressure due to reduced safe-haven demand from a stock rally prompted by easing trade tensions. Additionally, T-notes are feeling some negative effects from comments made by Fed Chair Powell, stating that the Fed is not in a rush to adjust interest rates. Supply pressures are also impacting T-note prices, as the Treasury plans to auction $25 billion of 30-year T-bonds today, concluding this week’s quarterly refunding. The decline in jobless claims and rise in unit labor costs both serve as hawkish indicators for Fed policy.

European government bond yields are climbing as well. The German 10-year bund yield has increased by 1.2 basis points to 2.487%, while the 10-year UK gilt yield is up 1.1 basis points to 4.471%.

German Economic Performance

German industrial production rose by 3.0% month-over-month in March, significantly surpassing expectations of 1.0% and marking the largest increase in nearly 3.5 years. However, trade data was mixed: March exports increased by 1.1% month-over-month, above expectations of 1.0%, but imports fell unexpectedly by 1.4%, in contrast to anticipations of a 0.4% rise.

The Bank of England (BOE) has cut the official bank rate by 25 basis points to 4.25% from 4.50%, with BOE Governor Bailey citing easing inflationary pressures as the rationale behind this decision. Swaps markets are currently pricing in a 95% probability for a 25 basis point rate cut by the European Central Bank (ECB) at its policy meeting on June 5.

Market Movers in U.S. Stocks

The “Magnificent Seven” stocks are supporting the overall market, with notable gains in major companies. Tesla (TSLA) has risen over 2%, while Alphabet (GOOGL), Meta Platforms (META), and Microsoft (MSFT) are all up more than 1%. Additionally, Amazon.com (AMZN) has increased by 0.69%, and Apple (AAPL) by 0.14%.

Chip stocks are benefiting from recent gains after reports indicate the Trump administration plans to lift Biden-era AI chip restrictions. Advanced Micro Devices (AMD) is up more than 3%, while Intel (INTC) has risen over 2%. Other chip sector players, such as ASML Holding (ASML), Micron Technology (MU), and Marvell Technology (MRVL), are also posting gains exceeding 1%.

Stocks linked to cryptocurrency are surging today, driven by Bitcoin’s price increase of over 2% to a three-month high. Companies including Coinbase Global (COIN), MicroStrategy (MSTR), MARA Holdings (MARA), and Riot Platforms (RIOT) are all up more than 4%.

Specific companies are seeing significant gains. AppLovin (APP) is up more than 13%, reporting Q1 revenue of $1.48 billion, ahead of the $1.38 billion consensus. Axon Enterprises (AXON) jumps over 10% after raising its full-year revenue guidance to between $2.60 billion and $2.70 billion. EPAM Systems (EPAM) is also up more than 10%, reporting Q1 adjusted EPS of $2.41, exceeding consensus expectations.

MercadoLibre (MELI) has seen its stock increase by more than 8% after reporting Q1 adjusted EBITDA of $935.0 million, far above the $804.9 million consensus. Carvana (CVNA) is up more than 7%, with Q1 revenue reported at $4.23 billion, beating the $3.95 billion consensus. Tapestry (TPR) has seen an uptick of over 5%, with Q3 net sales coming in at $1.58 billion, above the $1.53 billion consensus.

Conversely, pharmaceutical stocks are under pressure following reports that President Trump aims to revive an initiative to reduce drug costs by linking government payments to lower international prices. Regeneron Pharmaceuticals (REGN) is down more than 4%, with Eli Lilly (LLY) and Gilead Sciences (GILD) seeing declines of more than 3%. Other prescription giants like AbbVie (ABBV), Merck & Co (MRK), and Amgen (AMGN) are also down.

Fortinet (FTNT) leads the S&P 500 and Nasdaq 100 decliners, down more than 12% after providing lower-than-expected full-year billing forecasts. Additionally, Arm Holdings (ARM) is down over 6% due to a Q1 adjusted EPS forecast below consensus. Molson Coors Beverage (TAP) has dropped more than 6% after reporting disappointing Q1 underlying EPS figures. Genpact Ltd (G) is down over 18% after cutting its full-year revenue estimate, while Match Group (MTCH) is down more than 3% due to workforce reductions and Q2 income forecasts that fall below consensus.

Upcoming Earnings Reports

Key earnings reports due on 5/8/2025 include Akamai Technologies Inc (AKAM), Alliant Energy Corp (LNT), ConocoPhillips (COP), EPAM Systems Inc (EPAM), among others.

On the date of publication, Rich Asplund did not hold positions in the securities mentioned in this article. All information is provided for informational purposes only. Please refer to the Barchart Disclosure Policy here.

The views expressed in this article are those of the author and do not necessarily reflect the opinions of Nasdaq, Inc.