Stocks Rally on Hopes of Trade Deals

The S&P 500 Index ($SPX) (SPY) today is up +0.58%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.89%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.52%.  September E-mini S&P futures (ESU25) are up +0.53%, and September E-mini Nasdaq futures (NQU25) are up +0.50%. 

Stock indexes today are extending this week's rally, with the S&P 500 and Nasdaq 100 posting new all-time highs, and the Dow Jones Industrials posting a 3-3/4 month high.  Positive trade news is buoying stocks today as the US moves closer to trade deals with China and other trading partners.  Stocks added to their gains today after the University of Michigan's US June consumer sentiment index improved, as inflation expectations unexpectedly declined. Stocks remained higher despite the weaker-than-expected US May personal spending and income reports, as well as the stronger-than-expected May core PCE price index.

US Commerce Secretary Lutnick said that the US and China had finalized a trade understanding reached last month in Geneva, including a commitment from China to deliver rare earth materials.  China's Commerce Ministry also confirmed the agreement and stated that it will review and approve eligible applications for the export of controlled items, and the US will cancel the restrictive measures taken against China.  In addition, Commerce Secretary Lutnick said the White House has imminent plans to reach agreements with a set of 10 major trading partners ahead of a July 9 deadline for reciprocal tariffs.  Meanwhile, the Treasury Department announced a deal with G-7 countries that will exclude US companies from some taxes imposed by other countries in exchange for removing the "revenge tax" proposal from President Trump's tax bill.

US May personal spending unexpectedly fell -0.1% m/m, weaker than expectations of a +0.1% m/m increase.  May personal income unexpectedly fell -0.5% m/m, weaker than expectations of +0.3% m/m and the biggest decline in more than 3-1/2 years.

The US May core PCE price index, the Fed's preferred gauge of underlying inflation, rose +0.2% m/m and +2.7% y/y, stronger than expectations of +0.1% m/m and +2.6% y/y.

The University of Michigan US Jun consumer sentiment index was revised upward by +0.2 to 60.7, stronger than expectations of no change at 60.5.

The University of Michigan US Jun 1-year inflation expectations were unexpectedly revised lower to 5.0%, weaker than expectations of an upward revision to 5.2%. The 5-10 year inflation expectations were revised downward to 4.0%, weaker than expectations of no change at 4.1%.

Minneapolis Fed President Kashkari said he sees two 25-bp Fed rate cuts this year, with the first potentially in September, but warned that tariffs could have a delayed impact on inflation, and policymakers should remain flexible.

On the negative side for stocks is the upcoming earnings season in two weeks.  Bloomberg Intelligence data show the consensus for Q2 earnings of S&P 500 companies to rise by 2.8% year-over-year, the smallest increase in two years.  Also, only six of the 11 S&P 500 sectors are projected to post an increase in earnings, the fewest since Q1 of 2023, according to Yardeni Research.

Federal funds futures prices are discounting the chances at 21% for a -25 bp rate cut at the July 29-30 FOMC meeting.

Overseas stock markets today are mixed.  The Euro Stoxx 50 is up +1.10%.  China's Shanghai Composite closed down -0.70%.  Japan's Nikkei Stock 225 climbed to a 5-month high and closed up +1.43%.

Interest Rates

September 10-year T-notes (ZNU25) today are down by -5 ticks.  The 10-year T-note yield is up +3.5 bp to 4.277%. 

T-note prices are slightly lower today on some negative carryover from weakness in European government bonds.  Also, positive trade news today has pushed the S&P 500 to a new record high and reduced safe-haven demand for T-notes.  In addition, the stronger-than-expected May core PCE price index, the Fed's preferred gauge of underlying inflation, is negative for T-notes. 

Losses in T-notes are limited due to the unexpected declines in the US May personal spending and income reports, dovish factors for Fed policy.  Also, the unexpected downward revision to the University of Michigan US inflation expectations is bullish for T-notes.  In addition, dovish comments today from Minneapolis Fed President Kashkari were supportive of T-notes, as he stated that he sees two 25-bp Fed rate cuts this year.

European government bond yields today are moving higher.  The 10-year German bund yield rose to a 1-month high of 2.606% and is up +2.8 bp to 2.597%.  The 10-year UK gilt yield is up +3.4 bp to 4.506%.

The Eurozone Jun economic confidence survey unexpectedly fell -0.8 to 94.0, weaker than expectations of unchanged at 94.8.

Swaps are discounting the chances at 6% for a -25 bp rate cut by the ECB at the July 24 policy meeting.

US Stock Movers

Strength in chip makers is lifting the broader market.  ARM Holdings Plc (ARM) is up more than +3% and Intel (INTC) is up more than +2%.  Also, Nvidia (NVDA), Qualcomm (QCOM), and Lam Research (LRCX) are up more than +1%.

Nike (NKE) is up more than +15% to lead gainers in the S&P 500 and Dow Jones Industrials after reporting Q4 revenue of $11.10 billion, better than the consensus of $10.72 billion, and saying it is taking steps to mitigate tariffs, including "surgical" price increases and reducing production in China. 

Apogee Enterprises (APOG) is up more than +6% after raising guidance on its 2026 adjusted EPS forecast to $3.80-$4.20 from a previous forecast of $3.55-$4.10. 

Trade Desk (TTD) is up more than +3% after Evercore ISI upgraded the stock to outperform from in line with a price target of $90.   

Boeing (BA) is up more than +3% after Redburn upgraded the stock to buy from neutral with a price target of $275.

Estee Lauder (EL) is up more than +2% after HSBC upgraded the stock to buy from hold with a price target of $99. 

Amazon.com (AMZN) is up more than +1% after BNP Paribas Exane upgraded the stock to outperform from neutral with a price target of $254.

Coinbase Global (COIN) is down more than -6% to lead losers in the S&P 500 and Nasdaq 100 after a -1% decline in the price of Bitcoin sparked profit-taking and long liquidation in the stock after it had posted a record high Thursday.

Gold mining stocks are under pressure today, with the price of COMEX gold falling to a 4-week low.  As a result, Anglogold Ashanti Plc (AU) is down more than -5%, Gold Fields Ltd (GFI) is down more than -4%, and Newmont (NEM) is down more than -3%.   

CorMedix (CRMD) is down more than -15% after announcing it intends to offer and sell $85 million of shares of its common stock in an underwritten public offering.

Uber Technologies (UBER) is down more than -3% after Canaccord Genuity downgraded the stock to hold from buy.

Earnings Reports (6/27/2025)

Apogee Enterprises Inc. (APOG) and Immersion Corp (IMMR).