Stocks Settle Higher on Signs of Progress in US-China Trade Talks

The S&P 500 Index ($SPX) (SPY) Tuesday closed up +0.55%, the Dow Jones Industrials Index ($DOWI) (DIA) closed up +0.25%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +0.66%.  June E-mini S&P futures (ESM25) are up +0.54%, and June E-mini Nasdaq futures (NQM25) are up +0.64%. 

Stock indexes on Tuesday settled higher, with the S&P 500 and Nasdaq 100 climbing to 3 1/2-month highs and the Dow Jones Industrials posting a 3-month high.  Signs of progress in the US-China trade talks pushed stock prices higher on Tuesday.  Stocks raced to their highs Tuesday afternoon on comments from Commerce Secretary Lutnick, who said that the trade negotiations went "really, really well" and will continue on Wednesday if necessary. 

Gains in stocks were limited Tuesday after the World Bank cut its 2025 global GDP forecast to +2.3% from a +2.7% estimate in January due to trade tensions and policy uncertainty.  Also, bond yields moved up from their lows on Wednesday and finished little changed due to tepid demand for the Treasury's $58 billion auction of 3-year T-notes.

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 on Tuesday settled mixed.  The Euro Stoxx 50 closed down -0.11%.  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) Tuesday closed up +1.5 ticks.  The 10-year T-note yield fell -0.2 bp to 4.472%.  Sep T-notes on Tuesday posted modest gains 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. 

T-notes fell back from their best level after the S&P 500 climbed to a 3-1/2 month high, reducing safe-haven demand for T-notes.  Also, tepid demand for the Treasury's $58 billion auction of 3-year T-notes weighed on prices as the auction had a bid-to-cover ratio of 2.52, below the 10-auction average of 2.60. 

European government bond yields on Tuesday moved lower.  The 10-year German bund yield fell -4.4 bp to 2.523%. The 10-year UK gilt yield dropped to a 1-month low of 4.528% and finished down -9.0 bp to 4.542%.

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

Chip stocks rallied Tuesday, providing support to the broader market.  Intel (INTC) closed up more than +7% to lead gainers in the S&P 500 and Nasdaq 100.  Also, KLA Corp (KLAC) and Lam Research (LRCX) closed up more than +3%, and ON Semiconductor (ON), Micron Technology (MU), NXP Semiconductors NV (NXPI), Microchip Technology (MCHP), GlobalFoundries (GFS), Qualcomm (QCOM), and Analog Devices (ADI) closed up more than +2%.  In addition, ASML Holding NV (ASML) and Texas Instruments (TXN) are up by more than +1%. 

Tuesday's rally in WTI crude oil to a 2-1/4 month high lifted energy stocks.  Schlumberger (SLB) closed up more than +4%, and Haliburton (HAL), ConocoPhillips (COP), and APA Corp (APA) closed up more than +3%.  Also, Diamondback Energy (FANG), Devon Energy (DVN), Exxon Mobil (XOM), Phillips 66 (PSX), and Valero Energy (VLO) closed up more than +2%. 

Insmed Inc (INSM) closed 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) closed up more than +11% after reporting Q4 EPS of $2.63, well above the consensus of $1.93.

Eagle Bancorp (EGBN) closed up more than +6% after Janney Montogomery Scott LLC upgraded the stock to buy from neutral with a price target of $24. 

Atlantic Union Bankshares (AUB) closed up more than +3% after Raymond James upgraded the stock to strong buy from outperform with a price target of $41.

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

JM Smucker (SJM) closed down more than -15% 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) closed down more than -5% after announcing its intent to offer $1.0 billion convertible senior notes due 2030 in a private placement.

Gilead Sciences (GILD) closed down more than -2% after the FDA placed a clinical hold on trials of the company's experimental HIV treatment.

Domino's Pizza (DPZ) closed 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) closed down more than -1% after Redburn double-downgraded the stock to sell from buy with a price target of $260.

Moderna (MRNA) closed 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 (6/11/2025)

J Jill Inc (JILL), Lifezone Metals Ltd (LZM), Oracle Corp (ORCL), Oxford Industries Inc (OXM), PACS Group Inc (PACS), Smith-Midland Corp (SMID), Vera Bradley Inc (VRA), Victoria's Secret & Co (VSCO).