On Monday, the S&P 500 Index closed with a minimal gain of 0.09%, while the Dow Jones remained steady, showing no change. The Nasdaq 100 experienced a modest uptick of 0.17%. Early futures trading revealed slight optimism, with E-mini S&P futures rising by 0.03% and E-mini Nasdaq futures increasing by 0.07%.
Investor sentiment was buoyed by encouraging developments in U.S.-China trade negotiations. Both countries agreed to continue their discussions, contributing to the positive trend in stock prices. Notably, Kevin Hassett, the head of the National Economic Council, indicated that the U.S. might consider easing restrictions on certain technology exports to China, provided that China reciprocates by lifting limitations on rare earth shipments.
Mergers and acquisitions also played a significant role in supporting the stock market. Qualcomm announced it would acquire Alphawave IP Group for approximately $2.4 billion, while IonQ's agreement to purchase Oxford Ionics for $1.075 billion further bolstered investor confidence. Additionally, lower bond yields contributed to the upbeat atmosphere, with the yield on 10-year Treasury notes dropping by 2 basis points to 4.48%.
While the market showed resilience, China's trade report raised concerns about global growth. Exports from China in May grew by only 4.8% year-over-year, falling short of the expected growth of 6.0%. Furthermore, imports declined by 3.4%, which was also below forecasts.
This week’s economic calendar is packed with critical data, particularly around trade tariffs and U.S.-China negotiations. Key highlights include the Consumer Price Index (CPI) report scheduled for Wednesday, which is expected to rise to 2.5% year-over-year from April's 2.3%. Core CPI, excluding food and energy, is anticipated to climb to 2.9% from 2.8%.
On Thursday, analysts predict a decrease in initial jobless claims by 6,000, bringing the total to approximately 241,000. Additionally, the Producer Price Index (PPI) is expected to show an increase, with the final demand PPI for May projected to grow to 2.6% from April's 2.4%.
Lastly, Friday will feature the preliminary June consumer sentiment index from the University of Michigan, which is forecasted to increase by 1.3 points to reach 53.5.
Market analysts currently assign a 0% probability to a 25 basis point rate cut in the upcoming Federal Open Market Committee meeting scheduled for June 17-18.
Internationally, stock markets showed mixed results on Monday. The Euro Stoxx 50 closed slightly lower by 0.16%, while China’s Shanghai Composite Index reached a three-week high, marking an increase of 0.43%. Japan’s Nikkei Stock 225 rose by 0.92%, reaching a one-week peak.
In the bond market, September 10-year Treasury notes experienced an uptick of 8 ticks, with yields slightly rising to 4.508%. This shift was aided by optimism surrounding U.S.-China trade talks, which could potentially lessen tariffs and alleviate inflation concerns. The weaker-than-expected Chinese trade figures lent additional support to Treasury prices.
Initially, T-notes faced pressure as WTI crude oil prices surged to a two-and-a-quarter month high, which raised inflation expectations. The Treasury’s plan to auction $58 billion in three-year notes added supply pressure as part of a larger auction schedule totaling $119 billion this week.
European bond markets experienced upward movements in yields. The 10-year German bund yield decreased by 0.9 basis points to 2.567%, while the 10-year UK gilt yield fell by 1.2 basis points to 4.632%. An ECB Governing Council member suggested that the central bank's interest rate cut cycle may soon be nearing its end.
On the U.S. stock front, notable gains in semiconductor stocks helped strengthen the broader market. Advanced Micro Devices (AMD), ARM Holdings, Qualcomm (QCOM), and ON Semiconductor saw increases exceeding 4%. Texas Instruments (TXN) followed suit with more than a 3% rise, while Intel and several other semiconductor companies, including KLA Corp and Micron Technology, posted gains of over 2%.
Goodyear Tire & Rubber experienced a remarkable rise of over 10% after BNP Paribas Exane upgraded the stock outlook from neutral to outperform with a price target of $15. Similarly, Etoro Group Ltd surged by more than 10% following a positive recommendation from Mizuho Securities.
In contrast, some companies faced declines. AppLovin (APP) led losses in the Nasdaq 100 with a drop of more than 8% after the S&P Dow Jones Indices confirmed the absence of changes in the S&P 500 Index, extinguishing suspicions that AppLovin might be added.
Other tech stocks also struggled, with Intuitive Surgical (ISRG) witnessing a decline of over 5% due to a downgrade from Deutsche Bank.
Insurance companies put downward pressure on the overall market, with Aon Plc, Allstate, and Marsh & McLennan all recording losses. Notably, EchoStar faced an over 8% decline amid speculation about a potential Chapter 11 bankruptcy filing.
Investors are also keeping an eye on upcoming earnings reports due on June 10, 2025, from key companies such as Core & Main Inc, GameStop Corp, GitLab Inc, and J.M. Smucker Co.
This snapshot of market activity and economic indicators highlights the dynamic interplay between international developments, corporate strategies, and investor sentiment that shape the financial landscape.
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