Major U.S. Indices Decline Amid Rising Bond Yields

The S&P 500 Index ($SPX) (SPY) is down -0.25%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.26%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.13%. June E-mini S&P futures (ESM25) fell -0.26%, and June E-mini Nasdaq futures (NQM25) are down -0.10%.

U.S. stock indexes reversed an earlier gain as increased bond yields negatively impacted equity support. The 10-year T-note yield increased +5 basis points to 4.49%. Early in the day, the S&P 500 and Dow Jones reached one-week highs, while the Nasdaq 100 hit a three-month high.

President Trump’s weekend decision to extend the 50% tariff deadline on U.S. imports from the EU until July 9 provided temporary market support. Investors are awaiting Nvidia’s earnings report today to assess the trade war’s impact and the artificial intelligence outlook.

U.S. MBA mortgage applications decreased -1.2% in the week ending May 23. The purchase mortgage sub-index rose +2.7%, while the refinancing sub-index dropped -7.1%. The average 30-year fixed mortgage rate increased +6 basis points to 6.98% from 6.92% the previous week.

The May Richmond Fed manufacturing survey rose by +4 to -9, aligning with expectations. The market assigns a 2% probability of a -25 basis point rate cut at the next FOMC meeting on June 17-18.

This week, market attention shifts to tariff news and potential trade agreements. The minutes from the May 6-7 FOMC meeting will be released today, alongside Nvidia’s quarterly earnings after market close. Initial unemployment claims are projected to rise by +3,000 to 230,000 this Thursday. Q1 GDP is expected to remain unchanged at -0.3% (quarter-over-quarter annualized), and April pending home sales are anticipated to decline -1.0% m/m. April personal spending is expected to rise +0.2% m/m, with personal income increasing +0.3% m/m. The April core PCE price index, the Federal Reserve’s preferred inflation measure, is expected to rise +0.1% m/m and +2.5% y/y. Additionally, Friday’s University of Michigan May consumer sentiment index may be revised up +0.2 points to 51.0 from 50.8.

As Q1 earnings season concludes, over 90% of S&P 500 companies have reported results, with 77% exceeding estimates—the highest rate since Q2 of 2024. Q1 earnings growth is at +13.1%, exceeding the +6.6% forecast before the season. Corporate profit projections for 2025 are now expected to rise +9.4%, down from January’s forecast of +12.5%.

International stock markets are mostly lower today. The Euro Stoxx 50 declined -0.50%, China’s Shanghai Composite fell -0.02%, and Japan’s Nikkei Stock 225 closed unchanged after hitting a two-week high.

Interest Rates

June 10-year T-notes (ZNM25) declined -11 ticks, with the yield up +5.4 basis points to 4.497%. T-notes face pressure due to weakness in European bonds and supply concerns from the Treasury’s auction of $28 billion in 2-year floating-rate notes and $70 billion in 5-year T-notes.

European government bond yields also rose today, with the 10-year German bund yield increasing +1.3 basis points to 2.545% and the 10-year UK gilt yield up +4.2 basis points to 4.707%.

The ECB’s April 1-year CPI expectations rose +3.1% y/y, surpassing estimates of +2.8% y/y and reaching a 14-month high. April’s 3-year CPI expectations remained stable at +2.5% y/y, aligning with forecasts. Germany reported a +34,000 increase in unemployment for May, exceeding expectations of +12,000, the highest in almost three years. The unemployment rate held steady at 6.3%. The April import price index saw a -1.7% m/m decline, greater than the -1.4% anticipated, marking the largest drop in over two years.

Swaps indicate a 98% chance of a -25 basis point rate cut by the ECB at the June 5 policy meeting.

U.S. Stock Movers

Okta (OKTA) is down more than -12% following a Q2 performance forecast of $2.20 billion to $2.21 billion, below the consensus of $2.23 billion. Galaxy Digital (GLXY) also dropped -12% after announcing an offering of 29 million shares of its Class A common stock.

PDD Holdings (PDD) declined by over -3% after UOB downgraded its ADRs to sell from buy, setting a price target of $90. Homebuilding stocks and their suppliers fell due to higher T-note yields, negatively impacting housing demand. Companies like DR Horton (DHI), Lennar (LEN), and Toll Brothers (TOL) are down more than -2%. Builders FirstSource (BLDR) decreased by over -1%. Booze Allen Hamilton Holding (BAH) is down more than -1% after Goldman Sachs downgraded its stock to sell, with a price target of $94.

Conversely, Elevance Health (ELV) rose over +1% after reaffirming its full-year adjusted profit forecast. Humana (HUM), CVS Health (CVS), and UnitedHealth Group (UNH) followed suit with gains over +1%.

Fair Isaac (FICO) surged over +7% after Baird upgraded its stock to outperform with a price target of $1,900. Abercrombie & Fitch (ANF) spiked by over +25% following Q1 net sales of $1.10 billion, exceeding expectations and raising its full-year sales forecast. Box Inc (BOX) climbed over +17% after increasing its revenue forecast to $1.17 billion, surpassing consensus estimates. Vail Resorts (MTN) rose over +12% after reaffirming fiscal guidance and reappointing CEO Rob Katz. Noble Corp (NE) increased over +1% following an upgrade from JPMorgan Chase with a price target of $30.

Earnings Reports (5/28/2025)

Upcoming earnings include: Agilent Technologies Inc (A), Capri Holdings Ltd (CPRI), Dick’s Sporting Goods Inc (DKS), elf Beauty Inc (ELF), HP Inc (HPQ), Macy’s Inc (M), nCino Inc (NCNO), Nordson Corp (NDSN), Nutanix Inc (NTNX), NVIDIA Corp (NVDA), Pure Storage Inc (PSTG), Salesforce Inc (CRM), SentinelOne Inc (S), Synopsys Inc (SNPS), U-Haul Holding Co (UHAL), Veeva Systems Inc (VEEV).

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

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