June S&P 500 E-Mini futures (ESM25) are down -0.05%, and June Nasdaq 100 E-Mini futures (NQM25) are down -0.09% this morning as concerns remain about the U.S. fiscal outlook after President Donald Trump’s signature tax bill narrowly passed the House of Representatives on Thursday.
Analysts are warning that the continued deterioration in the U.S. government’s fiscal position will keep putting pressure on riskier assets. President Trump’s sprawling tax and spending bill is expected to widen budget deficits by $2.7 trillion through 2034. The bill now heads to the Senate, with a vote on approval expected by August.
In yesterday’s trading session, Wall Street’s major indices closed mixed. Solar stocks plummeted after President Trump’s tax bill narrowly passed the House, as it could end numerous clean energy subsidies, with Sunrun (RUN) sinking over -37% and Enphase Energy (ENPH) plunging more than -19% to lead losers in the S&P 500. Also, managed healthcare stocks retreated after the Centers for Medicare & Medicaid Services said it would expand its auditing of Medicare Advantage plans, with Humana (HUM) slumping over -7% and Centene (CNC) falling more than -4%. In addition, Analog Devices (ADI) slid over -4% and was the top percentage loser on the Nasdaq 100 as commentary from management raised concerns about the company’s outlook for the current quarter. On the bullish side, Advance Auto Parts (AAP) jumped more than +57% after the aftermarket car-parts retailer reported better-than-feared Q1 results and maintained its full-year guidance.
“Market volatility has resurfaced amid renewed uncertainty surrounding trade policy and the fiscal outlook,” said Mark Haefele at UBS Global Wealth Management. “With bond yields elevated and tariff and budget risks in focus, this volatility may persist as investors monitor further developments in policy.”
Economic data released on Thursday showed that the U.S. S&P Global manufacturing PMI unexpectedly rose to 52.3 in May, stronger than expectations of 49.9. Also, the U.S. S&P Global services PMI rose to 52.3 in May, stronger than expectations of 51.0. In addition, the number of Americans filing for initial jobless claims in the past week fell -2K to a 1-month low of 227K, compared with the 230K expected. At the same time, U.S. April existing home sales unexpectedly fell -0.5% m/m to a 7-month low of 4.00M, weaker than expectations of 4.15M.
Fed Governor Christopher Waller said on Thursday that the central bank may lower interest rates in the second half of 2025 if tariffs imposed by the Trump administration on U.S. trading partners settle near 10%. “If we can get the tariffs down closer to 10% and then that’s all sealed, done, and delivered somewhere by July, then we’re in good shape for the second half of the year,” Waller said. At the same time, Boston Fed President Susan Collins said interest rate cuts might be delayed or potentially not occur at all this year.
Meanwhile, U.S. rate futures have priced in a 94.7% chance of no rate change and a 5.3% chance of a 25 basis point rate cut at June’s policy meeting.
Today, investors will focus on U.S. New Home Sales data, which is set to be released in a couple of hours. Economists foresee this figure coming in at 694K in April, compared to 724K in March.
Also, market participants will hear perspectives from St. Louis Fed President Alberto Musalem, Kansas City Fed President Jeff Schmid, and Fed Governor Lisa Cook throughout the day.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.515%, down -0.83%.
The Euro Stoxx 50 Index is up +0.13% this morning as falling bond yields provided some relief to investors, with better-than-expected economic data also supporting sentiment. Mining and energy stocks led the gains on Friday. At the same time, insurance stocks underperformed. The benchmark index is on track to end the week largely unchanged. The Office for National Statistics reported on Friday that Britain’s monthly retail sales rose much more than expected in April, driven by warmer weather that boosted food store performance. Separately, data showed that Germany’s economy grew faster than previously reported in the first quarter, fueled by a surge in exports and manufacturing as U.S. firms stockpiled goods in anticipation of President Trump’s tariffs. Meanwhile, EU and U.S. officials are scheduled to hold a call on trade later today. The Financial Times reported on Friday that President Trump’s trade negotiators are urging the EU to unilaterally cut tariffs on U.S. goods, warning that without such concessions, the bloc will make no headway in talks to avert additional 20% “reciprocal” duties. In corporate news, AJ Bell Plc (AJB.LN) climbed over +6% after the British investment platform reported a 12% year-over-year increase in half-yearly pre-tax profit.
U.K. Retail Sales, U.K. Core Retail Sales, Germany’s GDP, and France’s Consumer Confidence data were released today.
U.K. April Retail Sales came in at +1.2% m/m and +5.0% y/y, stronger than expectations of +0.3% m/m and +4.5% y/y.
U.K. April Core Retail Sales stood at +1.3% m/m and +5.3% y/y, stronger than expectations of +0.3% m/m and +4.4% y/y.
The German GDP has been reported at +0.4% q/q and 0.0% y/y in the first quarter, stronger than expectations of +0.2% q/q and -0.2% y/y.
The French May Consumer Confidence arrived at 88, weaker than expectations of 93.
Asian stock markets today settled mixed. China’s Shanghai Composite Index (SHCOMP) closed down -0.94%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.47%.
China’s Shanghai Composite Index gave up earlier gains and closed lower today despite positive news on the Sino-U.S. trade front. Bank stocks lost ground on Friday. Reuters reported that China has reduced the ceilings on deposit rates as authorities aim to preserve banks’ profit margins and discourage savings. At the same time, healthcare stocks outperformed, supported by Jiangsu Hengrui Pharmaceuticals’ strong debut in Hong Kong on Friday. The benchmark index notched a weekly loss. Meanwhile, Beijing and Washington maintained high-level engagement with a Thursday call between senior officials, signaling that both sides are keeping communication channels open following their trade truce earlier this month. U.S. Deputy Secretary of State Christopher Landau and China’s Executive Vice Foreign Minister Ma Zhaoxu held talks covering a broad range of mutually important issues, according to a statement from the U.S. State Department. In other news, the People’s Bank of China also injected 500 billion yuan into the country’s financial system on Friday through its one-year medium-term lending facility to maintain ample liquidity. In corporate news, BYD rose over +1% following a report that its April electric vehicle sales in Europe topped Tesla’s for the first time.
Japan’s Nikkei 225 Stock Index ended higher today, bolstered by falling U.S. Treasury yields and a weaker yen. Shares of Japanese trading houses climbed on Friday after Greg Abel, Berkshire Hathaway’s next chief executive, met with the country’s largest trading firms this week in Tokyo. Still, the benchmark index ended the week lower. Government data released on Friday showed that Japan’s core inflation accelerated at its quickest annual rate in more than two years in April, increasing the likelihood of another Bank of Japan interest rate hike by year-end. ING’s Min Joo Kang said in a research note that Japan’s hotter-than-expected core inflation raises the likelihood of a rate hike in July. Still, some other economists said the bank might hold off on any action this year if trade frictions escalate. Meanwhile, Japanese government bonds stabilized on Friday, capping a volatile week during which super-long yields reached record highs amid inflation and fiscal concerns that dampened demand for debt. BOJ Governor Kazuo Ueda said on Thursday that the central bank will keep a close watch on market developments. Investor focus remains on the outcome of U.S. trade negotiations with Japan. Japanese Prime Minister Shigeru Ishiba said on Friday that he had a 45-minute phone conversation with U.S. President Donald Trump to discuss tariffs, diplomatic relations, and security matters. Japan’s top trade negotiator, Ryosei Akazawa, departed for the U.S. on Friday for a third round of trade talks, with Tokyo intent on avoiding any deal that fails to address tariffs on its vital auto industry. Reuters reported that Akazawa plans to return to the U.S. on May 30th for a fourth round of trade talks to meet with U.S. Treasury Secretary Scott Bessent, who will be unable to attend today’s talks. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed down -3.62% to 24.48.
The Japanese April National Core CPI came in at +3.5% y/y, stronger than expectations of +3.4% y/y.
Pre-Market U.S. Stock Movers
Shares of nuclear power companies surged in pre-market trading after a Reuters report said President Trump is set to sign executive orders as early as Friday to boost the nuclear energy industry. Oklo (OKLO) is up over +11%, Uranium Energy (UEC) is up more than +17%, and Vistra (VST) is up over +2%.
Intuit (INTU) climbed over +8% in pre-market trading after the financial software company posted upbeat FQ3 results and raised its full-year guidance.
Deckers Outdoor (DECK) tumbled more than -16% in pre-market trading after the maker of Hoka running shoes and UGG boots issued below-consensus FQ1 guidance.
Ross Stores (ROST) plunged over -11% in pre-market trading after the discount department store chain withdrew its full-year guidance amid tariff uncertainty.
Workday (WDAY) slid over -6% in pre-market trading after the software company gave Q2 subscription revenue guidance that slightly missed forecasts.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Friday - May 23rd
Booz Allen Hamilton (BAH), Miniso (MNSO), Frontline (FRO), Buckle (BKE).
On the date of publication, Oleksandr Pylypenko 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.
