Stocks Edge Higher as Markets Eye US-China Trade Talks

The S&P 500 Index ($SPX) (SPY) today is up +0.21%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.01%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.15%.  June E-mini S&P futures (ESM25) are up +0.29%, and June E-mini Nasdaq futures (NQM25) are up +0.25%. 

Stock indexes today are posting modest gains on signs of progress in the US-China trade talks.  On Monday evening, President Trump stated that the US was “doing well with China” and that he was “only getting good reports” on the talks.  Trade negotiators for both countries are meeting again today in London.  Lower bond yields are also boosting stocks today, with the 10-year T-note yield down -3 bp to 4.44%.  In addition, today’s rally in the price of WTI crude oil to a 2-1/4 month high is lifting energy-producing stocks.

The markets this week will focus on any fresh tariff news and the US-China trade negotiations.  On Wednesday, the May CPI report 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 today are mixed.  The Euro Stoxx 50 is down -0.03%.  China’s Shanghai Composite fell from a 3-1/2 week high and closed down -0.44%.  Japan’s Nikkei Stock 225 climbed to a 3-1/2 month high and closed up +0.32%.

Interest Rates

September 10-year T-notes (ZNU25) today are up +7 ticks.  The 10-year T-note yield is down -3.0 bp to 4.444%.  Sep T-notes today are moving higher on carryover support from a rally in 10-year UK gilts to a 1-month high.  T-notes also have support from optimism that progress is being made in US-China trade talks, which could lead to lower tariffs and reduced inflation concerns.  Supply pressures are limiting gains in T-notes as the Treasury will auction $58 billion of 3-year T-notes later today as part of this week’s $119 billion auction schedule of T-notes and T-bonds. 

European government bond yields today are moving lower.  The 10-year German bund yield is down -4.4 bp to 2.523%. The 10-year UK gilt yield dropped to a 1-month low of 4.531% and is down -9.5 bp to 4.537%.

The Eurozone Jun Sentix investor confidence index rose +8.3 to a 1-year high of 0.2, stronger than expectations of -5.5.

ECB Governing Council member Holzmann said, “The inflation goal is already in reach, so for me it makes sense for the ECB to not cut rates until autumn, to be sure that the uncertainty we have everywhere about the economy, we don’t experience another bout of inflation.”

UK May payrolled employees fell -109,000, weaker than expectations of -20,000 and the biggest decline in 5 years.

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

Today’s rally in WTI crude oil to a 2-1/4 month high is lifting oil stocks.  APA Corp (APA) is up more than +2%.  Baker Hughes (BKR), ConocoPhillips (COP), Chevron (CVX), Haliburton (HAL), Phillips 66 (PSX), Devon Energy (DVN), Marathon Petroleum (MPC), Schlumberger (SLB), and Valero Energy (VLO) are up more than +1%.

Insmed Inc (INSM) is up more than +28% after announcing positive results from a Phase 2b study of its Treprostinil palmitil inhalation powder as a once-daily therapy in patients with pulmonary arterial hypertension. 

Casey’s General Stores (CASY) is up more than +14% after reporting Q4 EPS of $2.63, well above the consensus of $1.93.

Eagle Bancorp (EGBN) is up more than +5% after Janney Montogomery Scott LLC upgraded the stock to buy from neutral with a price target of $24. 

Atlantic Union Bankshares (AUB) is up more than +2% after Raymond James upgraded the stock to strong buy from outperform with a price target of $41.

Yum!  Brands (YUM) is up nearly +1% after Redburn upgraded the stock to buy from neutral with a price target of $177. 

Macerich Co (MAC) is up more than +1% after Mizuho Securities upgraded the stock to outperform from neutral with a price target of $18. 

JM Smucker (SJM) is down more than -9% to lead losers in the S&P 500 after reporting Q4 net sales of $2.14 billion, weaker than the consensus of $2.18 billion, and forecasting 2026 adjusted EPS of $8.50-$9.50, well below the consensus of $10.25.

Rubrik Inc (RBRK) is down more than -4% after announcing its intent to offer $1.0 billion convertible senior notes due 2030 in a private placement.

Domino’s Pizza (DPZ) is down more than -2% after Redburn initiated coverage of the stock with a recommendation of sell and a price target of $340.

McDonald’s (MCD) is down more than -1% to lead losers in the Dow Joens industrials after Redburn double-downgraded the stock to sell from buy with a price target of $260.

Moderna (MRNA) is down more than -1% to lead vaccine makers lower after the US Department of Health and Human Services dismissed all 17 members advising the US government on vaccine safety and policy. 

Earnings Reports (6/10/2025)

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