Stocks Decline as Tariff Concerns Weigh on Market Sentiment

The S&P 500 Index ($SPX) (SPY) today is down -0.40%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.23%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.48%.  June E-mini S&P futures (ESM25) are down -0.42%, and June E-mini Nasdaq futures (NQM25) are down -0.48%. 

Stock indexes today are seeing downward pressure as concern about US trade policy weighs on market sentiment.  Late Thursday, US Treasury Secretary Bessent said that trade talks with China were “a bit stalled” and that a call between President Trump and Chinese President Xi Jinping may be needed to reach a deal.  Stocks added to their losses today when President Trump accused China of violating an agreement with the US to ease tariffs but did not specify how China had violated the agreement.

US economic news today was mostly supportive for stocks as Apr personal spending rose as expected and Apr personal income rose more than expected. Also, the Apr core PCE price index, the Fed’s preferred inflation gauge, eased to its lowest level in more than 4 years, a dovish factor for Fed policy.

US Apr personal spending rose +0.2% m/m, right on expectations. Apr personal income rose +0.8% m/m, stronger than expectations of +0.3% m/m and the biggest increase in 15 months. 

The US Apr core PCE price index, the Fed’s preferred inflation gauge, rose +0.1% m/m and +2.5% y/y, right on expectations.  The +2.5% y/y report was the smallest year-on-year advance in more than 4 years.

The US May Chicago PMI unexpectedly fell -4.1 to 40.5, weaker than expectations of an increase to 45.0.

Comments Thursday evening from Dallas Fed President Logan signaled the Fed could keep interest rates unchanged in the medium term when she said it might be “quite some time” before Fed officials know how the economy will respond to tariffs and other policy changes and the Fed adjusts interest rates.

The markets are discounting the chances at 2% for a -25 bp rate cut at the next FOMC meeting on June 17-18.

Later today, the University of Michigan May US consumer sentiment index is expected to be revised upward by +0.7 points to 51.5 from the previously reported 50.8.

Q1 earnings reporting season is winding down.  So far, more than 90% of companies in the S&P 500 have reported quarterly results, and 77% have beaten estimates, the highest percentage 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 up +0.34%.  China’s Shanghai Composite closed down -0.47%.  Japan’s Nikkei Stock 225 closed down -1.22%.

Interest Rates

June 10-year T-notes (ZNM25) today are down -1 tick.  The 10-year T-note yield is up +0.8 bp to 4.426%.  June T-notes today fell from a 3-week high and are slightly lower, and the 10-year T-note yield rebounded from a 2-week low of 4.40% and is slightly higher.  Today’s weakness in European government bonds is weighing on T-notes.  Also, hawkish comments from Dallas Fed President Logan undercut T-note prices when she said it may be “quite some time” before the Fed adjusts interest rates.  In addition, concerns about rising wage pressures are weighing on T-notes after today’s news showed US Apr personal income posted its largest increase in 15 months.   

T-notes recovered most of their losses today on an increase in safe-haven demand for government debt when stocks fell after President Trump accused China of violating the tariff agreement with the US.  T-notes also have support after the US Apr core PCE price index, the Fed’s preferred inflation gauge, posted its smallest year-on-year advance in more than four years, a dovish factor for Fed policy. 

European government bond yields today are moving higher.  The 10-year German bund yield rebounded from a 3-week low of 2.497% and is up +2.1 bp at 2.529%.  The 10-year UK gilt yield is up +1.7 bp to 4.665%.

Eurozone Apr M3 money supply rose +3.9% y/y, stronger than expectations of +3.7% y/y.

German Apr retail sales unexpectedly fell -1.1% m/m, weaker than expectations of a +0.2% m/m increase and the biggest decline in more than 1-1/2 years.

German May CPI (EU harmonized) rose +0.2% n/n and +2.1% y/y, stronger than expectations of +0.1% m/m and +2.0% y/y.

Swaps are discounting the chances at 98% for a -25 bp rate cut by the ECB at the June 5 policy meeting.

US Stock Movers

Marvell Technology (MRVL) is down more than -6% to lead chip stocks lower after forecasting Q2 adjusted gross margin of 59% to 60%, with the midpoint slightly below the consensus of 59.6%.  Also, GlobalFoundries (GFS), Applied Materials (AMAT), and Lam Research (LRCX) are down more than -2%.  In addition, Advanced Micro Devices (AMD), Micron Technology (MU), Intel (INTC), NXP Semiconductors NV (NXPI), ON Semiconductor (ON), and Qualcomm (QCOM) are down more than -1%.

Regeneron Pharmaceuticals (REGN) is down more than -17% to lead losers in the S&P 500 after its itepekimab, an experimental drug jointly developed with Sanofi for chronic obstructive pulmonary disease, showed disappointing results in late-stage trial.

Cooper Cos (COO) is down more than -12% after cutting its full-year organic growth forecast to 5%-6% from a previous forecast of 6%-8%.

The Gap (GAP) is down more than -19% after forecasting Q2 net sales about flat y/y and warned of a $250 million to $300 million hit to earnings should tariffs remain at current levels of 30% for most goods from China and 10% for other countries. 

Elastic NV (ESTC) is down more than -14% after forecasting 2026 revenue of $1.66 billion to $1.67 billion, below the consensus of $1.68 billion.

Ulta Beauty (ULTA) is up more than +14% to lead gainers in the S&P 500 after reporting Q1 EPS of $6.70, well above the consensus of $5.80 and raised its 2026 EPS forecast to $22.65-$23.20 from a previous estimate of $22.50-$22.90, stronger than the consensus of $22.95. 

Zscaler (ZS) is up more than +7% to lead gainers in the Nasdaq 100 after reporting Q3 revenue of $678.0 million, better than the consensus of $666.3 million and raising its full-year revenue forecast to $2.66 billion from a previous forecast of $2.64 billion-$2.65 billion, above the consensus of $2.65 billion.

UiPath (PATH) is up more than +4% after reporting Q2 total revenue of $356.6 million, above the consensus of $332.4 million, and forecasting 2026 revenue of $1.549 billion to $1.554 billion, stronger than the consensus of $1.52 billion. 

Costco Wholesale (COST) is up more than +2% after reporting Q3 EPS of $4.28, better than the consensus of $4.24.

Dexcom (DXCM) is up more than +1% after Goldman Sachs initiated coverage on the stock with a buy recommendation and a price target of $104. 

Earnings Reports (5/30/2025)

B Riley Financial Inc (RILY), Compass Diversified Holdings (CODI), Roadzen Inc (RDZN), Shoe Carnival Inc (SCVL), Sunnova Energy International Inc (NOVA).