The S&P 500 Index ($SPX) (SPY) Monday closed down -0.64%, the Dow Jones Industrials Index ($DOWI) (DIA) closed down -0.24%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed down -0.67%. June E-mini S&P futures (ESM25) are down -0.66%, and June E-mini Nasdaq futures (NQM25) are down -0.71%.
Stock indexes closed lower Monday due to US trade uncertainty. President Trump said on Sunday that he had no plans to speak to Chinese President Xi Jinping, although Mr. Trump said there could be trade deals with some US trading partners as soon as this week. Stock indexes recovered from their worst levels on Monday after the US Apr ISM services index unexpectedly increased, which dampened concern that the economy might be sliding into recession.
Energy producers sold off Monday, with the price of WTI crude down -2% at a 3-1/2 week low after OPEC+ on Saturday agreed to raise its crude production level by 411,000 bpd in June, threatening to add to a global crude oil glut. Saudi Arabia also signaled that further similar-sized increases in crude output could follow, which is viewed as a strategy to reduce oil prices and punish overproducing OPEC+ members, such as Kazakhstan and Iraq.
The US Apr ISM services index unexpectedly rose +0.8 to 51.6, stronger than expectations of a decline to 50.2. Also, the Apr ISM services prices paid sub-index rose +4.2 to a 2-1/4 year high of 65.1, higher than expectations of 61.4.
This week, the market will focus on tariffs and any changes to US trade policy. On Tuesday, the March trade deficit is expected to widen to -$136.7 billion. On Wednesday, the FOMC is expected to keep its federal funds target range unchanged at 4.25%-4.50%. Post-FOMC comments on Wednesday from Fed Chair Powell will also be studied for any clues as to the future of Fed policy. Thursday brings weekly initial unemployment claims, Q1 nonfarm productivity (expected 0.7%), and Q1 unit labor costs (expected +5.2%).
The markets are discounting the chances at 2% for a -25 bp rate cut after the 2-day FOMC meeting that ends on Wednesday.
Q1 earnings reporting season remains in progress. According to data compiled by Bloomberg Intelligence, the market consensus is for Q1 year-over-year earnings growth of +6.7% for the S&P 500 stocks, down from expectations of +11.1% in early November. So far, of the 365 companies in the S&P 500 companies that have reported quarterly results, 78% have beaten estimates. 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 on Monday settled lower. The Euro Stoxx 50 closed down -0.04%. China’s Shanghai Composite was closed for the Labor Day holiday. Japan’s Nikkei Stock 225 was closed for the Children’s Day holiday.
Interest Rates
June 10-year T-notes (ZNM25) Monday closed down -3 ticks. The 10-year T-note yield rose +3.0 bp to 4.338%. June T-notes fell to a 1-week low Monday, and the 10-year T-note yield rose to a 1-week high of 4.369%. T-note prices retreated Monday after the Apr ISM services index rose more than expected, and the Apr ISM service prices-paid sub-index jumped to a 2-1/4 year high, bolstering inflation concerns. T-notes were also pressured by caution ahead of Wednesday’s FOMC decision, where the FOMC appears unlikely to lay out a dovish tone. In addition, tepid demand for the Treasury’s $58 billion 3-year T-notes auction was bearish for T-notes price as the auction had a bid-to-cover ratio of 2.56, below the 10-auction average of 2.61.
T-notes had some support from safe-haven demand with Monday’s slump in stocks. T-notes also had carryover support from strength in 10-year German bunds.
European government bond yields on Monday moved lower. The 10-year German bund yield fell -1.6 bp to 2.517%. The 10-year UK gilt yield did not trade on Monday, with markets in the UK closed for the May Day holiday.
The Eurozone May Sentix investor confidence index rose +11.4 to -8.1, stronger than expectations of -11.5.
Swaps are discounting the chances at 97% for a -25 bp rate cut by the ECB at the June 5 policy meeting.
US Stock Movers
Energy stocks and energy service providers were under pressure Monday, with the price of WTI crude down more than -2% at a 3-1/2 week low. As a result, Apa Corp (APA) closed down more than -5%, and Occidental Petroleum (OXY) closed down more than -4%. Also, ConocoPhillips (COP) and Haliburton (HAL) closed down more than -3%. In addition, Diamondback Energy (FANG), Exxon Mobil (XOM), Chevron (CVX), Schlumberger (SLB), and Devon Energy (DVN) closed down more than -2%.
Media stocks fell Monday after President Trump said he plans to impose a 100% tariff on films produced overseas. As a result, Netflix (NFLX), Paramount Global (PARA), and Warner Bros Discovery (WBD) closed down more than -1%.
Zimmer Biomet Holdings (ZBH) closed down more than -11% to lead losers in the S&P 500 after cutting its full-year adjusted diluted EPS estimate to $7.90-$8.10 from a previous estimate of $8.15-$8.35.
ON Semiconductor (ON) closed down more than -8% to lead losers in the Nasdaq 100 despite reporting better-than-expected Q1 revenue after forecasting Q2 adjusted gross margins of 36.5% to 38.5%, below the consensus of 39%.
Tyson Foods (TSN) closed down more than -7% after reporting Q2 sales of $13.07 billion, below the consensus of $13.12 billion.
Apple (AAPL) closed down more than -3% to lead losers in the Dow Jones Industrials as the company prices a 4-part debt offering today.
Berkshire Hathaway (BRK.B) closed down more than -5% after CEO Buffet announced that he would step down at the end of the year.
Gold Fields (GFI) closed up more than +7% to lead gold-mining stocks higher after gold prices jumped more than +2% on Monday. Also, AngloGold Ashanti Plc (AU) closed up more than +4%, and Newmont (NEM) closed up more than +2%.
Howard Hughes Holdings (HHH) closed up more than +3% after entering into an agreement where Pershing Square Capital will invest $900 million to acquire 9 million shares of the company.
Freshpet (FRPT) closed up more than +3% after reporting Q1 net sales of $263.2 million, above the consensus of $259.9 million.
Axsome Therapeutics (AXSM) closed up more than +3% after reporting Q1 cash and cash equivalents of $300.9 million, above the consensus of $255.5 million.
EQT Corp (EQT) closed up more than +2% after UBS upgraded the stock to buy from neutral with a price target of $64.
Henry Schein (HSIC) closed up more than +1% after reporting Q1 adjusted EPS of $1.15, better than the consensus of $1.11, and forecast full-year adjusted EPS of $4.80-$4.94, the midpoint above the consensus of $4.86.
Earnings Reports (5/6/2025)
Advanced Micro Devices Inc (AMD), American Electric Power Co Inc (AEP), Archer-Daniels-Midland Co (ADM), Arista Networks Inc (ANET), Assurant Inc (AIZ), Ball Corp (BALL), Constellation Energy Corp (CEG), Corpay Inc (CPAY), Devon Energy Corp (DVN), DoorDash Inc (DASH), Duke Energy Corp (DUK), Electronic Arts Inc (EA), Expeditors International of Washington (EXPD), Fidelity National Information (FIS), Gartner Inc (IT), Gen Digital Inc (GEN), Global Payments Inc (GPN), International Flavors & Fragrances (IFF), IQVIA Holdings Inc (IQV), Jack Henry & Associates Inc (JKHY), Jacobs Solutions Inc (J), Leidos Holdings Inc (LDOS), Marathon Petroleum Corp (MPC), Marriott International Inc/MD (MAR), Mosaic Co/The (MOS), Super Micro Computer Inc (SMCI), TransDigm Group Inc (TDG), Waters Corp (WAT), WEC Energy Group Inc (WEC), Wynn Resorts Ltd (WYNN), Zoetis Inc (ZTS).
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.
