Stocks Turn Mixed as Bond Yields Rise

The S&P 500 Index ($SPX) (SPY) today is down -0.06%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.13%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.25%.  June E-mini S&P futures (ESM25) are down -0.11%, and June E-mini Nasdaq futures (NQM25) are up +0.24%. 

Stock indexes today are mixed, with the Nasdaq 100 posting a 2-1/2 month high.  The strength in chip makers today is supporting gains in the broader market.  The Trump administration is expected to sign agreements to give Saudi Arabia and the United Arab Emirates wider access to advanced AI chips, with companies like Nvidia, Advanced Micro Devices, and Amazon.com investing in projects, including data centers and AI infrastructure.  On Tuesday, the Commerce Department said it is rescinding the AI diffusion rule launched by President Biden, and the Trump administration plans to overhaul regulations on the export of semiconductors used in artificial intelligence that could shift toward negotiating individual deals with countries.

However, stocks fell back from their best levels today and are trading mixed after the 10-year T-note yield rose to a 1-month high on hawkish comments from Fed Vice Chair Jefferson, who said he's lowered his 2025 US growth forecast but still sees expansion and, "If the increase in tariffs announced so far are sustained, they are likely to interrupt progress on disinflation and generate at least a temporary rise in inflation."

US MBA mortgage applications rose +1.1% in the week ended May 9, with the purchase mortgage sub-index up +2.3% and the refinancing mortgage sub-index down -0.4%.  The average 30-year fixed rate mortgage rose +2 bp to 6.86% from 6.84% in the prior week.

This week, the markets will focus on tariff news and the prospects for additional trade deals.  On Thursday, Apr retail sales are expected at +0.1% m/m, and Apr retail sales ex-autos are expected at +0.3% m/m.  Also, on Thursday, Apr PPI final demand is expected at +0.2% m/m and +2.5% y/y, with Apr PPI ex-food and energy expected at +0.3% m/m and +3.1% y/y.  Finally, on Thursday, Apr manufacturing production is expected to fall by -0.4% m/m.  On Friday, Apr housing starts are expected to be up +3.1% m/m to 1.365 million, while Apr building permits are expected to be down -1.2% m/m to 1.450 million.  Also, on Friday, the preliminary May University of Michigan US consumer sentiment index is expected to rise +1.1 points to 53.3. 

The markets are discounting the chances at 8% for a -25 bp rate cut after the June 17-18 FOMC meeting.

Q1 earnings reporting season is winding down.  So far, over 80% of companies in the S&P 500 have reported quarterly results, and 77% have beaten estimates, the highest since Q2 of 2024.  Earnings growth in Q1 is running at +13.1%, compared with just +6.6% expected before the start of the season.  Full-year 2025 corporate profits for the S&P 500 are seen rising +9.4%, down from the forecast of +12.5% in early January.  

Overseas stock markets today are mixed.  The Euro Stoxx 50 is down -0.28%.  China's Shanghai Composite rose to a 1-3/4 month high and closed up +0.86%.  Japan's Nikkei Stock 225 closed down -0.14%.

Interest Rates

June 10-year T-notes (ZNM25) today are down -3 ticks.  The 10-year T-note yield is up +3.6 bp to 4.501%.  June T-notes today dropped to a 1-month low, and the 10-year T-note yield climbed to a 1-month high of 4.507%.  T-notes today gave up an early advance and turned lower on negative carryover from weakness in European government bonds.  Also, rising inflation expectations are bearish for T-notes after the US 10-year breakeven inflation rate rose to a 6-week high today of 2.366%. Losses in T-notes accelerated on hawkish comments from Fed Vice Chair Jefferson, who said inflation could rise from US tariff policies. 

European government bond yields today are moving higher.  The 10-year German bund yield rose to a 1-month high of 2.694% and is up +0.5 bp at 2.684%.  The 10-year UK gilt yield rose to a 1-month high of 4.714% and is up +4.2 bp to 4.712%.

Swaps are discounting the chances at 87% for a -25 bp rate cut by the ECB at the June 5 policy meeting.

US Stock Movers

Chip stocks are extending this week's rally today to lift the overall market.  Advanced Micro Devices (AMD) is up more than +5% to lead gainers in the Nasdaq 100, and ARM Holdings Plc (ARM) is up more than +4%.  Also, Nvidia (NVDA) is up more than +2% to lead gainers in the Dow Joens Industrials, and Marvell Technology (MRVL) is up +0.63%. 

Recently beaten-down health insurance companies are recovering today.  UnitedHealth Group (UNH) is up more than +3% to lead gainers in the Dow Jones Industrials, and Molina Healthcare (MOH) is up more than +2%.  Also, Cigna Group (CI), Elevance Health (ELV), and Humana (HUM) are up more than +1%. 

Super Micro Computer (SMCI) is up more than +16% to lead gainers in the S&P 500, extending Tuesday's +15% rally after Saudi Arabia-based data center company DataVolt signed a multi-year partnership agreement with the company.

Exelixis (EXEL) is up more than +19% after reporting Q1 total revenue of $555.4 million, well above the consensus of $495.6 million, and raised its full-year revenue forecast to $2.25 billion-$2.35 billion from a previous forecast of $2.15 billion-$2.25 billion, better than the consensus of $2.25 billion.

Dynatrace (DT) is up more than +5% after reporting Q4 revenue of $445.2 million, better than the consensus of $435.2 million, and forecast 2026 revenue of $1.95 billion-$1.97 billion, stronger than the consensus of $1.93 billion. 

Boeing (BA) is up more than +1% after Qatar agreed to buy 160 aircraft from the company that is worth more than $200 billion.

Tesla (TSLA) is up more than +1% after Reuters reported that the company plans to start shipping components from China to the US to produce Cybercab and Semi trucks from the end of this month.

Gold mining stocks are sliding today, with the price of COMEX gold down more than -1% to a 1-month low.  AngloGold Ashanti Plc (AU) is down more than -5%, Newmont (NEM) is down more than -3%, and Gold Fields Ltd (GFI) is down more than -1%.

Loar Holdings (LOAR) is down more than -7% after shareholders plan to sell nine million shares via a one-day marketed offering that may price after the close on Wednesday.  D.A. Davidson downgraded the stock to underperform from neutral with a price target of $21.

American Eagle Outfitters (AEO) is down more than -5% after withdrawing its fiscal year 2025 guidance due to macroeconomic uncertainty.

Cboe Global Markets (CBOE) is down more than -2% after Morgan Stanley double-downgraded the stock to underweight from overweight with a price target of $215. 

Target (TGT) is down more than -2% after Oppenheimer cut its price target on the stock to $130 from $150.

Consolidated Edison (ED) is down more than -2% after KeyBanc Capital Markets downgraded the stock to underweight from sector weight with a price target of $90.

Earnings Reports (5/14/2025)

Cisco Systems Inc (CSCO), DXC Technology Co (DXC), Dynatrace Inc (DT), Millrose Properties Inc (MRP), New Fortress Energy Inc (NFE), STERIS PLC (STE).