Stocks See Support as T-note Yields Ease

The S&P 500 Index ($SPX) (SPY) today is up +0.04%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.11%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.02%.  June E-mini S&P futures (ESM25) are up +0.03%, and June E-mini Nasdaq futures (NQM25) are up +0.04%. 

Stock indexes today are slightly higher, with the S&P 500 posting a 2-1/4 month high.  Stocks today are extending this week's rally as easing trade tensions between the US and China fuel risk-on sentiment in asset markets.  Also, lower T-note yields today are supporting stocks on speculation the Fed will step in to lower interest rates to avoid a recession. 

Today's US housing news was weaker than expected and was negative for stocks but was supportive for bond prices after Apr housing starts and building permits fell more than expected.  The US Apr import price index ex-petroleum posted its biggest increase in a year, a hawkish factor for Fed policy.

US Apr housing starts rose +1.6% m/m to 1.361 million, weaker than expectations of 1.364 million.  Also, Apr building permits, a proxy for future construction, fell -4.7% m/m to 1.412 million, weaker than the consensus of 1.450 million.

The US Apr import price index ex-petroleum rose +0.4% m/m, stronger than expectations of +0.1% m/m and the biggest increase in a year. 

Today's comments from Atlanta Fed President Bostic were mildly supportive for stocks when he said he expects the US economy to slow this year but not fall into recession and sees "one rate cut this year" amid economic uncertainty and as tariffs put upward pressure on inflation.

For the rest of this week, the markets will focus on tariff news and the prospects for additional trade deals.  Later today, the preliminary May University of Michigan US consumer sentiment index is expected to rise +1.2 points to 53.4. 

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

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 rose to a 7-week high and is up +0.03%.  China's Shanghai Composite closed down -0.40%.  Japan's Nikkei Stock 225 closed unchanged.

Interest Rates

June 10-year T-notes (ZNM25) today are up +12 ticks.  The 10-year T-note yield is down -4.1 bp to 4.390%.  June T-notes are climbing today on positive carryover from a rally in European government bonds.  T-notes also found support on today's weaker-than-expected US Apr housing starts and building permits reports.  Gains in T-notes were limited after the US Apr import price index ex-petroleum rose by the most in a year, a hawkish factor for Fed policy.

European government bond yields today are moving lower.  The 10-year German bund yield is down -4.8 bp at 2.574%. The 10-year UK gilt yield is down -4.1 bp to 4.619%.

ECB Governing Council member Kazaks said ECB interest rate cuts are nearing their end-point as "we are relatively close to the terminal rate already" if the base case for inflation returning to 2% this year materializes."

Swaps are discounting the chances at 91% for a -25 bp rate cut by the ECB at the June 5 policy meeting.

US Stock Movers

Applied Materials (AMAT) is down more than -5% to weigh on chip stocks and lead losers in the S&P 500 and Nasdaq 100 after reporting Q2 net sales of $7.10 billion, below the consensus of $7.13 billion.  Also, ON Semiconductor Corp (ON), KLA Corp (KLAC), ASML Holding NV (ASML), Marvell Technology (MRVL), Lam Research (LRCX), and GlobalFoundries (GFS) closed down more than -1%.

Gold-mining stocks are under pressure today, with the price of COMEX gold down nearly -2%.  As a result, Gold Fields (GFI) and Anglogold Ashanti Plc (AU) are down more than -2%, and Newmont (NEM) is down more than -1%.

Archer Aviation (ACHR) is up more than +10% after it was selected as the "Official Air Taxi Provider" for the 2028 LA Olympic and Paralympic Games. 

CoreWeave (CRWV) is up more than +9% after a 13G regulatory filing showed Nvidia raised its stake in the company to 7% from 5.2%.

Rocket Cos (RKT) is up more than +5% after ValueAct Capital Management LLC reported a 9.9% holding in the company. 

Charter Communications (CHTR) is up more than +3% to lead gainers in the Nasdaq 100 after agreeing to merge with Cox Communications.

Vistra Corp (VST) is up more than +2% after acquiring seven natural gas generation facilities from Lotus Infrastructure Partners for $1.9 billion.

Constellation Brands (STZ) is up more than +1% after Warren Buffet's Berkshire Hathaway added to its stake in the company, which now stands at 6.6% or $2.2 billion.

Globant SA (GLOB) is down more than -28% after reporting Q1 revenue of $611.1 million, weaker than the consensus of $621.1 million, and cut its full-year revenue forecast to $2.46 billion from a previous forecast of $2.64 billion-$2.71 billion, well below the consensus of $2.63 billion. 

Doximity (DOCS) is down more than -16% after forecasting 2026 revenue of $619 million to $631 million, below the consensus of $634.6 million. 

Earnings Reports (5/16/2025)

Despegar.com Corp (DESP), Flowers Foods Inc (FLO), PrimeEnergy Resources Corp (PNRG), RBC Bearings Inc (RBC), Replimune Group Inc (REPL), Septerna Inc (SEPN).