Stocks See Support as Bond Yields Slide

The S&P 500 Index ($SPX) (SPY) today is up +0.03%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.06%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.10%.  June E-mini S&P futures (ESM25) are up +0.07%, and June E-mini Nasdaq futures (NQM25) are up +0.14%. 

Stock indexes are slightly higher due to lower bond yields, with the 10-year T-note yield down -2 bp to 4.42%.  Gains in stocks are muted after the OECD cut its 2025 global GDP forecast for the second time this year, citing trade barriers and uncertainty that are weighing on economic confidence.  Also, the heightened trade tensions between the US and China continue to weigh on stock prices after China’s Ministry of Commerce on Monday accused the US of unilaterally introducing new discriminatory restrictions. 

The Organization for Economic Cooperation and Development (OECD) cut its global 2025 GDP forecast to +2.9% from a March forecast of +3.1%, citing the impact of tariffs and uncertainty on confidence and investment.

Weakness in Chinese manufacturing activity is negative for global growth prospects.  The China May Caixin manufacturing PMI unexpectedly fell -2.1 to 48.3, weaker than expectations of an increase to 50.7 and the lowest level in more than 2-1/2 years.

The markets are discounting the chances at 1% for a -25 bp rate cut at the next FOMC meeting on June 17-18.

The markets this week will focus on any new trade or tariff news. Later today, Apr factory orders are expected to fall -3.2% m/m, and the Apr JOLTS job openings report is expected to fall by -92,000 to 7.100 million.  On Wednesday, the May ADP employment change is expected to climb by +110,000, and the May ISM services index is expected to rise +0.5 to 52.1. On Thursday, weekly initial unemployment claims are expected to fall by -5,000 to 235,000.  On Friday, May nonfarm payrolls are expected to climb +125,000, and the May unemployment rate is expected to remain unchanged at 4.2%. Finally, May average hourly earnings are expected to rise +0.3% m/m and +3.7% y/y. 

Overseas stock markets today are mixed.  The Euro Stoxx 50 is down -0.13%.  China’s Shanghai Composite closed up +0.43%.  Japan’s Nikkei Stock 225 closed down -0.06%.

Interest Rates

September 10-year T-notes (ZNU25) today are up +8 ticks.  The 10-year T-note yield is down -1.4 bp to 4.426%.  Sep T-notes are climbing today on positive carryover from a rally in European government bonds due to an ECB-friendly Eurozone May CPI report. Also, today’s action by the OECD to cut its global 2025 GDP forecast for the second time this year was supportive of T-notes. 

European government bond yields today are moving lower.  The 10-year German bund yield fell to a 3-1/2 week low of 2.485% and is down -2.2 bp to 2.503%.  The 10-year UK gilt yield dropped to a 3-week low of 4.601% and is down -5.4 bp to 4.613%.

Eurozone May CPI eased to +1.9% y/y from +2.2% y/y in Apr, better than expectations of +2.0% y/y and the smallest increase in 8 months.  May core CPI eased to +2.3% y/y from +2.7% y/y in Apr, better than expectations of +2.4% y/y and the smallest increase in 3-1/3 years.

The Eurozone Apr unemployment rate fell -0.1 and matched the record low of 6.2%, right on expectations.

Swaps are discounting the chances at 97% for a -25 bp rate cut by the ECB at Thursday’s policy meeting.

US Stock Movers

Mining stocks are under pressure today on demand concerns for industrial metals after a gauge of Chinese manufacturing activity in May contracted by the most in more than 2-1/2 years.  As a result, Freeport McMoRan (FCX), Newmont (NEM), and Southern Copper (SCCO) are down more than -1%. 

Real Estate Investment Trust companies (REITs) are sliding today and weighing on the broader market.  Mid-America Apartment Communities (MAA), Equity Residential (EQR), and Healthpeak Properties (DOC) are down more than -2%.  Also, AvalonBay Communities (AVB), Camden Property Trust (CPT), and Essex Property Trust (ESS) are down more than -1%.

EchoStar (SATS) is down more than -4% after deciding not to make a $183 million cash interest payment due June 2 in light of uncertainty raised by an FCC review.

Cooper Cos (COO) is down more than -2% as analysts have cut their price targets on teg stock by an average of 15% since the company reported earnings last Thursday.

ASML Holding NV (ASML) is down more than -1% after Barclays downgraded the stock to equal weight from overweight. 

Dollar General (DG) is up more than +11% to lead gainers in the S&P 500 after reporting Q1 net sales of $10.44 billion, stronger than the consensus of $10.28 billion, and raising its 2026 net sales forecast to +3.7% to +4.7% from a previous view of +3.4% to +4.4%.

Signet Jewelers (SIG) is up more than +9% after reporting Q1 sales of $1.54 billion, above the consensus of $1.52 billion, and raising its 2026 adjusted EPS forecast to $7.70-$9.38 from a previous forecast of $7.31-$9.10, the midpoint above the consensus of $8.39. 

MoonLake Immunotherapeutics (MLTX) is up more than +16% after the Financial Times reported that Merck held talks to acquire the company. 

Ferguson Enterprises (FERG) is up more than +12% after reporting Q3 revenue of $7.62 billion, above the consensus of $7.41 billion. 

Pinterest (PINS) is up more than +1% after JPMorgan Chase upgraded the stock to overweight from neutral with a price target of $40.

Lululemon Athletica (LULU) is up more than +2% after Evercore ISI raised its price target on the stock to $400 from $320. 

Earnings Reports (6/3/2025)

Crowdstrike Holdings Inc (CRWD), Dollar General Corp (DG), Donaldson Co Inc (DCI), Ferguson Enterprises Inc (FERG), Guidewire Software Inc (GWRE), Hewlett Packard Enterprise Co (HPE), Ollie’s Bargain Outlet Holding (OLLI).