Stocks Slip as Trade Uncertainty Sparks Risk-Off in Asset Markets

The S&P 500 Index ($SPX) (SPY) today is down -0.17%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.50%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.06%.  June E-mini S&P futures (ESM25) are down -0.14%, and June E-mini Nasdaq futures (NQM25) are down -0.05%. 

Stock indexes and the dollar are under pressure today as comments from President Trump sparked trade uncertainty and risk-off sentiment in asset markets.  Late Wednesday, Mr. Trump said he intends to send letters to dozens of US trading partners in the next one to two weeks setting unilateral tariffs, ahead of the July 9 deadline that came with his 90-day pause. 

Also, rising geopolitical risks in the Middle East are negative for stocks.  US authorities ordered some staff to depart the US embassy in Baghdad after Iran threatened to strike US bases in the region if attacked.  Tensions in the region have increased this week as talks between the US and Iran over its advancing nuclear program appear to have hit an impasse.  President Trump said Wednesday that he’s “less confident” about convincing Iran to shut down its nuclear program.  The US and Iran are set to meet in Oman on Sunday for their sixth round of nuclear negotiations.  If the US and Iran are at an impasse, it is possible that Israel might decide to proceed with a military attack on Iran’s nuclear facilities.

Losses in stock indexes are limited today, as the US reports on weekly initial unemployment claims and May producer prices were Fed-friendly, which knocked bond yields lower and boosted the prospects for Fed rate cuts. The 10-year T-note yield is down -6 bp to 4.36%. 

US weekly initial unemployment claims were unchanged at an 8-month high of 248,000, showing a weaker labor market than expectations of a decline to 242,000.  Weekly continuing claims rose +54,000 to a 3-1/2 year high of 1.956 million, showing a weaker labor market than expectations of 1.910 million.

The US May final-demand PPI report moved up to +2.6% y/y from +2.5% y/y in April, right on expectations.  The May PPI ex-food and energy report eased to +3.0% y/y from +3.2% y/y in April, better than expectations of +3.1% y/y.

The markets this week will focus on any fresh tariff news.  On Friday, the preliminary June University of Michigan US consumer sentiment index is expected to climb +1.4 to 53.6. 

The markets are discounting the chances at 3% 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 fell to a 1-week low and is down -0.74%.  China’s Shanghai Composite closed up +0.012%.  Japan’s Nikkei Stock 225 closed down -0.65%.

Interest Rates

September 10-year T-notes (ZNU25) today are up +11 ticks.  The 10-year T-note yield is down -5.7 bp to 4.363%.  Sep T-notes are moving higher today on carryover support from a rally in European government bonds.  Also, falling inflation expectations are supportive of T-notes as the 10-year breakeven inflation expectations rate dropped to a 5-week low today of 2.262%.  T-notes added to their gains on today’s Fed-friendly jobless claim and PPI reports. Supply pressures may limit further upside in T-notes as the Treasury will auction $22 billion of 30-year T-bonds later today to conclude this week’s $119 billion auction package of T-notes and T-bonds. 

European government bond yields today are moving higher.  The 10-year German bund yield fell to a 5-week low of 2.468% and is down -5.7 bp to 2.477%.  The 10-year UK gilt yield dropped to a 5-week low of 4.478% and is down -6.0 bp to 4.493%.

ECB Executive Board member Schnabel said the ECB’s interest rate-cutting campaign may soon be over, with inflation and the economy both on track. 

ECB Governing Council member Simkus said he favors a pause in interest rate moves by the ECB due to “very big uncertainty” over US tariff policy. 

UK Apr manufacturing production fell -0.9% m/m, weaker than expectations of -0.7% m/m.  Also, Apr industrial production fell -06% m/m, weaker than expectations of -0.5% m/m.

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

Energy producers and service providers are sliding today, with the price of WTI crude oil down more than -1%.  APA Corp (APA) is down more than -2%.  Also, Devon Energy (DVN), Haliburton (HAL), Schlumberger (SLB), Diamondback Energy (FANG), ConocoPhillips (COP), Occidental Petroleum (OXY), and Valero Energy (VLO) are down more than -1%. 

GameStop (GME) is down more than -18% after announcing plans to offer $1.75 billion of convertible senior notes due 2032. 

Oxford Industries (OXM) is down more than -7% after cutting its full-year adjusted EPS forecast to $2.80-$3.20 from a previous forecast of $4.60-$5.00, well below the consensus of $4.50. 

Boeing (BA) is down more than -4% to lead losers in the S&P 500 and Dow Jones Industrials after a 787 Boeing Dreamliner aircraft operated by Air India crashed shortly after takeoff in Ahmedabad, India.

GE Aerospace (GE) is down more than -2% after a Boeing 787 Dreamliner aircraft crashed shortly after takeoff in Ahmedabad, India.  GE makes the GEnx-1B engines that power the 787 Dreamliner.

Cloudflare (NET) is down more than -1% after announcing plans to offer $1.75 billion of convertible senior notes due 2030.

Oracle (ORCL) is up more than +11% to lead gainers in the S&P 500 after reporting Q4 adjusted revenue of $15.90 billion, better than the consensus of $15.59 billion. 

Calavo Growers (CVGW) is up more than +10% after announcing it has received a non-binding, indicative proposal to acquire all of its outstanding shares for $32 a share. 

Anglogold Ashanti Plc (AU) is up more than +5% after Roth Capital Partners initiated coverage on the stock with a recommendation of buy and a price target of $52. 

Datadog (DDOG) is up more than +3% to lead gainers in the Nasdaq 100 after Wolfe Research upgraded the stock to outperform from peer perform with a price target of $150.

Monster Beverage (MNST) is up more than +1% after Stifel resumed coverage on the stock with a recommendation of buy and a price target of $72.

Earnings Reports (6/12/2025)

Adobe Inc (ADBE), America’s Car-Mart Inc/TX (CRMT), Immersion Corp (IMMR), Lovesac Co/The (LOVE), RH (RH).