The S&P 500 Index ($SPX) (SPY) on Tuesday closed up +0.27%, the Dow Jones Industrials Index ($DOWI) (DIA) closed up +0.43%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +0.33%. September E-mini S&P futures (ESU25) rose +0.28%, and September E-mini Nasdaq futures (NQU25) rose +0.36%.
Stock indexes on Tuesday settled higher after the preliminary revision to US payrolls in the year through March showed the number of jobs was fewer than previously stated, bolstering the outlook for accelerated interest rate cuts by the Fed. Stocks remain underpinned by the prospect of a more accommodative Fed, as the markets have fully priced in a 25 bp rate cut by the Fed at next week’s FOMC meeting and priced in a 10% chance for a 50 bp rate cut.
M&A activity also supported stocks on Tuesday after Anglo American agreed to acquire Teck Resources, creating a more than $50 billion company. Also, Novartis AG is buying Tourmaline Bio for about $1.4 billion.
The preliminary benchmark payroll revisions to US payrolls in the year through March 2025 showed -911,000 fewer jobs than previously stated, a wider loss than expectations of -700,000 and the largest markdown in job growth since at least 2000, a sign of a weaker US labor market.
Market focus this week will be on any trade or tariff news. On Wednesday, Aug PPI final demand is expected to climb +3.3% y/y, unchanged from July, and Aug PPI ex-food and energy is expected to ease to +3.5% y/y from +3.7% y/y in July. On Thursday, Aug CPI is expected to climb to +2.9% y/y from +2.7% y/y in July, and Aug CPI ex-food and energy is expected to increase +3.1% y/y, unchanged from July. Also, weekly initial unemployment claims are expected to fall by -3,000 to 234,000. On Friday, the University of Michigan Sep consumer sentiment index is expected to slip -0.2 to 58.0.
The markets are now pricing in a 10% chance of a 50 bp rate cut at the upcoming FOMC meeting on Sep 16-17, versus the previous expectations of a zero chance of that 50 bp rate cut. After the fully expected -25 bp rate cut at the Sep 16-17 meeting, the markets are now discounting a 75% chance of a second -25 bp rate cut at the Oct 28-29 meeting, up from a 54% chance as of late Thursday. The markets are now pricing in an overall -72 bp rate cut in the federal funds rate by year-end to 3.66% from the current 4.38% rate.
Regarding tariffs, a federal appeals court ruled late last month that President Trump exceeded his authority by imposing global tariffs without Congressional approval, but the court let the tariffs remain in place while appeals continue. The US Court of Appeals for the Federal Circuit Court said, “The statute bestows significant authority on the President to undertake a number of actions in response to a declared national emergency, but none of these actions explicitly include the power to impose tariffs, duties, or the like, or the power to tax.” The case now appears to be headed to the Supreme Court for a final decision. According to Bloomberg Economics, the average US tariff will rise to 15.2% if rates are implemented as announced, up from 13.3% earlier, and significantly higher than the 2.3% in 2024 before the tariffs were announced.
Overseas stock markets settled mixed on Tuesday. The Euro Stoxx 50 rose to a 1-week high and closed up +0.11%. China’s Shanghai Composite closed down -0.51%. Japan’s Nikkei Stock 225 dropped from a record high and closed down -0.42%.
Interest Rates
December 10-year T-notes (ZNZ5) on Tuesday closed down by -6.5 ticks. The 10-year T-note yield rose by +3.0 bp to 4.070%. Strength in stocks on Tuesday curbed safe-haven demand for T-notes. Also, supply pressures are weighing on T-notes as the Treasury will auction $119 billion of T-notes and T-bonds this week.
T-notes recovered some of their losses on solid demand for the Treasury’s $58 billion auction of 3-year T-notes that had a bid-to-cover ratio of 2.73, above the 10-auction average of 2.59. T-notes also have support after Tuesday’s larger-than-expected downward revision to annual US payroll growth and last Friday’s weak US unemployment report boosted the chances to 100% for a 25 bp Fed rate cut at next week’s FOMC meeting.
Concerns about Fed independence are negatively impacting T-note prices due to President Trump’s attempt to fire Fed Governor Cook and Stephen Miran’s intention to hold a Fed Governor position while remaining technically in his White House role on the Council of Economic Advisors.
European government bond yields on Tuesday moved higher. The 10-year German bund yield rose +1.7 bp to 2.659%. The 10-year UK gilt yield rose +1.8 bp to 4.623%.
French Jul manufacturing production fell -1.7% m/m, weaker than expectations of -1.2% m/m and the largest decline in 14 months.
Swaps are discounting no chance for a -25 bp rate cut by the ECB at Thursday’s policy meeting.
US Stock Movers
UnitedHealth Group (UNH) closed up more than +8% to lead gainers in the S&P 500 and Dow Jones Industrials and underpin health insurance stocks after saying it expects 78% of its Medicare Advantage members to be in highly rated 4-star or higher plans that earn bonus payments next year. Also, Centene (CNC) closed up more than +7% and Molina Healthcare (MOH) closed up more than +3%. In addition, Elevance Health (ELV) closed up more than +2% and CVS Health (CVS) closed up more than +1%
Strength in chip makers also supported gains in the broader market. Advanced Micro Devices (AMD) and Micron Technology (MU) closed up more than +2%. Also, Nvidia (NVDA), Marvell Technology (MRVL), ARM Holdings Plc (ARM), and ASML Holding NV (ASML) closed up more than +1%. In addition, KLA Corp (KLAC) closed up +0.96% and Applied Materials (AMAT) closed up +0.89%.
Tourmaline Bio (TRML) closed up more than +57% after Novartis AG agreed to buy the company for $1.4 billion or about $48 a share.
Nebius Group NV (NBIS) closed up more than +49% after announcing it will provide Microsoft access to GPU infrastructure capacity at its new data center in Vineland, New Jersey, over the next five years.
Brighthouse Financial (BHF) closed up more than +12% after the Financial Times reported that Aquarian Holdings is in late-stage talks with two Middle Eastern investors to finance a takeover of the company.
Atlassian Corp (TEAM) closed up more than +5% to lead gainers in the Nasdaq 100 after announcing it is ending its data center product over the coming three years and will move customers to its cloud platform.
CoreWeave (CRWV) closed up more than +7% after launching CoreWeave Ventures, a new initiative committed to backing founders and companies developing platforms and technologies shaping the AI ecosystem.
Humana (HUM) closed down more than -12% to lead losers in the S&P 500 after a post on LinkedIn, cited by analysts at Leerink Partners, stated that changes in the thresholds for Medicare quality ratings that pay bonuses to health plans are harder to get, and Humana receives most of its revenue from selling private Medicare Advantage plans.
Albemarle (ALB) closed down more than -11% as lithium stocks retreated on a report from Chinese state media Securities Times that said CATL’s lithium mine, which had suspended production last month, will resume production soon.
SailPoint (SAIL) closed down more than -7% after forecasting Q3 adjusted income from operations of $42.5 million-$43.5 million, weaker than the consensus of $50.4 million.
Fox Corp (FOXA) closed down more than -6% after trusts established for three of Rupert Murdoch’s children are selling 16.9 million shares of Class B stock.
Home builders and home building suppliers are falling today on long liquidation and profit taking following the sharp rally in the stocks over the past three months. Builders FirstSource (BLDR) closed down more than -5%. Also, PulteGroup (PHM), DR Horton (DHI), and Lennar (LEN) closed down more than -3%, and Toll Brothers (TOL) closed down more than -2%.
Freeport-McMoRan (FCX) closed down more than -5% after announcing that mining operations at the Central Papua, Indonesia Grasberg minerals district had been suspended to evacuate workers from an underground mine.
News Corp (NWS) closed down more than -4% after announcing it will offer 14.1 million shares of Class B common stock.
Earnings Reports(9/10/2025)
Barnes & Noble Education Inc (BNED), Chewy Inc (CHWY), Daktronics Inc (DAKT), Frequency Electronics Inc (FEIM), Oxford Industries Inc (OXM), PACS Group Inc (PACS).
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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