The S&P 500 Index ($SPX) (SPY) today is up +0.25%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.40%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.51%.  June E-mini S&P futures (ESM25) are up +0.30%, and June E-mini Nasdaq futures (NQM25) are up +0.73%. 

Stock indexes today recovered from early losses and are adding to Monday’s sharp rally, with the S&P 500 and Nasdaq 100 posting new 2-1/4 month highs. Easing inflation pressures are boosting stocks after today’s US Apr consumer price report rose less than expected.  Stocks surged Monday after China and the US agreed to cut tariffs and de-escalate their trade war. 

US Apr CPI rose +2.3% y/y, slightly weaker than expectations of +2.4% y/y and the smallest year-on-year increase in 4 years.  Apr CPI ex-food and energy rose +2.8% y/y, unchanged from March and right on expectations. 

The easing of US-China trade tensions has dampened speculation the trade turmoil would push the US economy into recession.  Today, JPMorgan Chase boosted its US 2025 GDP forecast to +0.6% from a previous estimate of +0.2%, saying that the trade truce between China and the US reduces the risk of recession to below 50%. 

Weakness in health insurance stocks is weighing on the Dow Jones Industrials today, with UnitedHealth Group down more than -14% after CEO Witty stepped down for personal reasons, effective immediately, and the company suspended its 2025 outlook as medical expenditures are expected to be higher than anticipated. 

Some negative trade comments today from Treasury Secretary Bessent were bearish for stocks when he said the European Union suffers from a “collective action problem” that’s hampering trade negotiations and trade talks between the US and Europe “may be a bit slower.”

This week, the markets will focus on tariff news and the prospects for additional trade deals.  On Thursday, Apr retail sales are expected at +0.1% m/m, and Apr retail sales ex-autos are expected at +0.3% m/m.  Also, on Thursday, Apr PPI final demand is expected at +0.2% m/m and +2.5% y/y, with Apr PPI ex-food and energy expected at +0.3% m/m and +3.1% y/y.  Finally, on Thursday, Apr manufacturing production is expected to fall by -0.4% m/m.  On Friday, Apr housing starts are expected to be up +3.1% m/m to 1.365 million, while Apr building permits are expected to be down -1.2% m/m to 1.450 million.  Also, on Friday, the preliminary May University of Michigan US consumer sentiment index is expected to rise +1.1 points to 53.3. 

The markets are discounting the chances at 8% for a -25 bp rate cut after the June 17-18 FOMC meeting.

Q1 earnings reporting season is winding down.  So far, over 75% of companies in the S&P 500 have reported quarterly results, and 77% have beaten estimates, the highest since Q2 of 2024.  Earnings growth in Q1 is running at +13.1%, compared with just +6.6% expected before the start of the season.  Full-year 2025 corporate profits for the S&P 500 are seen rising +9.4%, down from the forecast of +12.5% in early January.  

Overseas stock markets today are higher.  The Euro Stoxx 50 is up +0.20%.  China’s Shanghai Composite climbed to a 1-1/2 month high and closed up +0.17%.  Japan’s Nikkei Stock 225 rallied to a 2-1/2 month high and closed up +1.43%.

Interest Rates

June 10-year T-notes (ZNM25) today are up +5 ticks.  The 10-year T-note yield is down -1.8 bp to 4.453%.  June T-notes today are climbing on some Fed-friendly inflation news after US Apr CPI rose less than expected.  However, higher European government bond yields today are limiting the upside in T-note prices.   Also, strength in stocks today has limited the safe-haven demand for T-notes. 

European government bond yields today are moving higher.  The 10-year German bund yield rose to a 1-month high of 2.680% and is up +1.1 bp to 2.659%.  The 10-year UK gilt yield rose to a 4-week high of 4.671% and is up +1.6 bp to 4.659%.

The German May ZEW survey expectations of economic growth rose +39.2 to 25.2, stronger than expectations of 11.3. 

Swaps are discounting the chances at 88% for a -25 bp rate cut by the ECB at the June 5 policy meeting.

US Stock Movers

Chip stocks today are climbing for a second day as US-China trade tensions eased.  Micron Technology (MU) and Intel (INTC) are up more than +2%.  Also, Advanced Micro Devices (AMD), Marvell Technology (MRVL), Lam Research (LRCX), ON Semiconductor (ON), KLA Corp (KLAC), Broadcom (AVGO), and Applied Materials (AMAT) are up more than +1%.  

Coinbase Global (COIN) is up more than +14% after S&P Dow Jones Indices said the company would join the S&P 500 Index before the start of trading on May 19.

Super Micro Computer (SMCI) is up more than +4% after Raymond James initiated coverage on the stock with a recommendation of outperform and a price target of $41.

Palantir Technologies (PLTR) is up more than +4% to lead gainers in the Nasdaq 100 after CTBC Securities Investment Service initiated coverage on the stock with a buy recommendation and a price target of $142.30

ON Holding (ONON) is up more than +9% after reporting Q1 net sales of CHF726.6 million ($862.8 million), stronger than the consensus of CHF684.2 million ($812.4 million).

Caterpillar (CAT) is up more than +2% to lead gainers in the Dow Jones Industrials after Baird upgraded the stock to outperform from neutral with a price target of $395. 

XP Inc (XP) is up more than +2% after Morgan Stanley upgraded the stock to overweight from equal weight with a price target of $24.

UnitedHealth Group (UNH) is down more than -14% to lead health insurance stocks lower after CEO Witty stepped down for personal reasons, effective immediately, and the company suspended its 2025 outlook as medical expenditures are expected to be higher than anticipated.  Also, Elevance Health (ELV) is down more than -7%, and Humana (HUM) is down more than -5%.  In addition, CVS Health (CVS) and Centene (CNC) are down more than -4%, and Molina Healthcare (MOH) is down more than -3%.

Defensive food and beverage stocks are under pressure today as the overall market climbs.  Mondelez International (MDLZ) is down more than -2% to lead losers in the Nasdaq 100.  Also, Kraft Heinz (KHC), PepsiCo (PEP), Monster Beverage (MNST), Conagra Brands (CAG), Campell’s Company (CPB), Hormel Foods (HRL) and General Mills (GIS) are down more than -1%. 

Rapid7 Inc (RPD) is down more than -6% after D.A. Davidson downgraded the stock to underperform from neutral with a price target of $21. 

Earnings Reports (5/13/2025)

Everus Construction Group Inc (ECG), Exelixis Inc (EXEL), GRAIL Inc (GRAL), Landstar System Inc (LSTR), Loar Holdings Inc (LOAR), NU Holdings Ltd/Cayman Islands (NU), Under Armour Inc (UAA).