Stocks Post Modest Gains on Signs of Progress in US-China Trade Talks

The S&P 500 Index ($SPX) (SPY) Monday closed up +0.09%, the Dow Jones Industrials Index ($DOWI) (DIA) closed unchanged, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +0.17%.  June E-mini S&P futures (ESM25) are up +0.03%, and June E-mini Nasdaq futures (NQM25) are up +0.07%. 

Stock indexes on Monday settled slightly higher, with the S&P 500 posting a 3-1/2 month high.  Signs of progress in the US-China trade talks pushed stock prices higher on Monday after trade negotiators for both countries agreed to meet again on Tuesday.  Gains in stocks accelerated on Monday when Kevin Hassett, head of the National Economic Council, said the US is willing to remove restrictions on some tech exports to China for assurances that China will ease limits on rare earth shipments. 

M&A activity is supportive of stocks after Qualcomm on Monday agreed to buy Alphawave IP Group Plc for about $2.4 billion.  Also, IonQ agreed to buy Oxford Ionics in a deal valued at $1.075 billion.  Lower bond yields also boosted stocks as the 10-year T-note yield on Monday fell -2 bp to 4.48%.

China’s trade report was weaker than expectations and was bearish for global growth prospects.  China’s May exports rose +4.8% y/y, weaker than expectations of +6.0% y/y.  Also, May imports fell -3.4% y/y, weaker than expectations of -0.8% y/y.

The markets this week will focus on any fresh tariff news and the US-China trade negotiations.  On Wednesday, May CPI is expected to tick up to +2.5% y/y from +2.3% y/y in April, and May CPI ex-food and energy is expected to increase to +2.9% y/y from +2.8% y/y in April.  On Thursday, weekly initial unemployment claims are expected to fall -6,000 to 241,000. Also, the May final-demand PPI is expected to increase to +2.6% y/y from +2.4% y/y in April, while May PPI ex-food and energy is expected to remain unchanged from April at +3.1% y/y.  On Friday, the preliminary June University of Michigan US consumer sentiment index is expected to climb +1.3 to 53.5. 

The markets are discounting the chances at 0% for a -25 bp rate cut at the next FOMC meeting on June 17-18.

Overseas stock markets on Monday settled mixed.  The Euro Stoxx 50 closed down -0.16%.  China’s Shanghai Composite rose to a 3-week high and closed up +0.43%.  Japan’s Nikkei Stock 225 climbed to a 1-week high and closed up +0.92%.

Interest Rates

September 10-year T-notes (ZNU25) Monday closed up +8 ticks.  The 10-year T-note yield rose +0.2 bp to 4.508%.  Sep T-notes Monday recovered early losses and settled higher on optimism that progress was being made in US-China trade talks, which could lead to lower tariffs and reduced inflation concerns.  T-note prices also saw some support from the weaker-than-expected Chinese trade report, which was negative for global economic growth. 

T-notes on Monday initially moved lower, and the 10-year T-note yield rose to a 1-week high of 4.516%.  T-notes were under early pressure on Monday after the price of WTI crude oil rallied to a 2-1/4 month high, boosting inflation expectations.  Also, supply pressures weighed on T-notes as the Treasury will auction $58 billion of 3-year T-notes on Tuesday as part of this week’s $119 billion auction schedule of T-notes and T-bonds. 

European government bond yields today are moving higher.  The 10-year German bund yield fell -0.9 bp to 2.567%. The 10-year UK gilt yield fell -1.2 bp to 4.632%.

ECB Governing Council member Kazimir said the ECB is nearly, if not already, at the end of its interest rate cut cycle.

Swaps are discounting the chances at 13% for a -25 bp rate cut by the ECB at the July 24 policy meeting.

US Stock Movers

Strength in chip stocks on Monday supported the broader market.  Advanced Micro Devices (AMD), ARM Holdings Plc (ARM), Qualcomm (QCOM), and ON Semiconductor (ON) closed up more than +4%.  Also, Texas Instruments (TXN) closed up more than +3%.  In addition,  Intel (INTC), KLA Corp (KLAC), ASML Holding NV (ASML), Micron Technology (MU), and NXP Semiconductors NV (NXPI) closed up more than +2%. 

Goodyear Tire & Rubber (GT) closed up more than +10% after BNP Paribas Exane upgraded the stock to outperform from neutral with a price target of $15.

Etoro Group Ltd (ETOR) closed up more than +10% after Mizuho Securities initiated coverage on the stock with a recommendation of outperform and a price target of $80. 

Steven Madden Ltd (SHOO) closed up more than +4% after Williams Trading LLC upgraded the stock to buy from hold with a price target of $31. 

ABM Industries (ABM) closed up more than +3% after Baird upgraded the stock to outperform from neutral with a price target of $56. 

IonQ (IONQ) closed up more than +2% after agreeing to buy Oxford Ionics in a deal valued at $1.075 billion.

Synopsys (SNPS) and Cadence Design Systems (CDNS) closed up more than +1% after DigiTimes reported that access to technical support platforms from the companies had been restored in China in the wake of a phone call last week between US President Trump and Chinese President Xi Jinping. 

AppLovin (APP) closed down by more than -8% to lead losers in the Nasdaq 100 after S&P Dow Jones Indices announced there are no changes to the S&P 500 Index, erasing speculation that the stock might be added to the index.

Intuitive Surgical (ISRG) closed down more than -5% after Deutsche Bank Downgraded the stock to sell from hold with a price target of $440.

Insurance stocks declined on Monday, putting pressure on the overall market.  Aon Plc (AON) closed down more than -4%, and Allstate (ALL), Arthur J Gallagher (AJG), Marsh & McLennan (MMC) closed down more than -3%.  Also, American International Group (AIG), Progressive Corp (PGR), Willis Towers Watson Plc (WTW), and Erie Indemnity (ERIE) closed down more than -2%.  In addition, Travelers Cos (TRV) closed down more than -3% to lead losers in the Dow Jones Industrials.

EchoStar (SATS) closed down more than -8% after the Wall Street Journal reported the company is weighing a potential Chapter 11 bankruptcy filing amid an FCC review of certain of its wireless and satellite spectrum rights. 

Cheniere Energy (LNG) closed down more than -6% on signs of insider selling after an SEC filing showed Director Shear sold $1.06 million of shares last Thursday.

Robinhood Markets (HOOD) closed down more than -2% after Reburn downgraded the stock to sell from neutral with a price target of $48. 

Earnings Reports (6/10/2025)

Core & Main Inc (CNM), GameStop Corp (GME), Gitlab Inc (GTLB), J M Smucker Co/The (SJM).