The S&P 500 Index ($SPX) (SPY) Friday closed down -0.07%, the Dow Jones Industrials Index ($DOWI) (DIA) closed down -0.29%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed down -0.01%. June E-mini S&P futures (ESM25) are down -0.07%, and June E-mini Nasdaq futures (NQM25) are down -0.01%.
Stock indexes on Friday settled slightly lower as the market traded cautiously ahead of weekend trade talks between the US and China. Comments on social media from President Trump weighed on stocks Friday when he said an 80% tariff on China “seems right” and that the right level of tariff on China would be up to Treasury Secretary Bessent. According to Bloomberg Intelligence, the average company in the S&P 500 made 6.1% of its revenue from selling goods in China or to Chinese companies in 2024.
Also, comments from New York Fed President Williams undercut stocks on Friday when he said he expects economic growth in the US this year to be “considerably slower” than in 2024, and he anticipates higher inflation and unemployment.
Stocks on Friday initially extended Thursday’s gains after President Trump announced a framework trade deal with the UK, although there are still details to work out. The announcement raised hopes that President Trump’s tariffs will be negotiated down, averting lasting damage to economic growth and corporate profits.
Earnings results Friday were mixed for stocks. On the positive side, Microchip Technology rose more than +12% to lead chip stocks higher after reporting better-than-expected Q4 net sales and forecasting Q1 net sales above consensus. Also, Lyft soared more than +28% after forecasting Q2 gross bookings above consensus. In addition, Insulet surged more than +20% after reporting stronger-than-expected Q1 revenue and raised its full-year revenue forecast. On the negative side, Akamai Technologies closed down more than -10% after forecasting full-year adjusted EPS below consensus. Also, Expedia Group fell more than -7% after reporting weaker-than-expected Q1 revenue and cutting its 2025 revenue forecast.
T-note prices found support Friday on comments from Japanese Finance Minister Kato, who said the Japanese government is not considering the sale of US Treasury securities as part of its trade negotiation with the US. According to US Treasury data, Japan held $1.13 trillion in Treasury securities at the end of February, making it the biggest foreign holder of US debt. If Japan were to start aggressively selling Treasury securities, there could be an upward spike in Treasury yields that would damage the US economy and perhaps cause a systemic crisis for the US financial system.
Comments Friday from Fed Governor Kugler were bearish for stocks and bonds when she said the Fed should hold interest rates steady for now, citing a stable US economy and uncertainty around President Trump’s tariffs policy.
The markets are discounting the chances at 17% for a -25 bp rate cut after the June 17-18 FOMC meeting.
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 412 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 Friday settled mixed. The Euro Stoxx 50 rose to a 5-week high and closed up +0.39%. China’s Shanghai Composite closed down -0.30%. Japan’s Nikkei Stock 225 rose to a 6-week high and closed up +1.56%.
Interest Rates
June 10-year T-notes (ZNM25) Friday closed up +0.5 tick. The 10-year T-note yield fell -0.2 bp to 4.377%. June T-notes Friday settled slightly higher, and the 10-year T-note yield fell from a 2-1/2 week high of 4.396%. Comments from Japanese Finance Minister Kato boosted T-notes Friday when he said the Japanese government is not considering the sale of US Treasuries as part of its trade negotiation with the US. Also, comments from New York Fed President Williams supported T-notes when he said he expects economic growth in the US this year to be “considerably slower” than in 2024. In addition, short covering supported T-notes as bond dealers lifted short hedges they put on against this week’s $125 billion quarterly refunding.
T-note prices were undercut by negative carryover from weakness in European government bond prices. T-note prices are also being undercut by easing global trade tensions. In addition, hawkish comments from Fed Governor Kugler were negative for T-note prices when she said the Fed should hold interest rates steady for now. Finally, an increase in inflation expectations was bearish for T-notes as the 10-year breakeven inflation rate rose to a 5-week high Friday of 2.323%.
European government bond yields Friday moved higher. The 10-year German bund yield rose to a 4-week high of 2.588% and finished up +2.7 bp to 2.562%. The 10-year UK gilt yield climbed to a 2-1/2 week high of 4.603% and finished up +2.1 bp to 4.567%.
ECB Governing Council member Simkus said, “Another interest rate cut by the ECB in June is needed” as the Eurozone is yet to feel the full force of US tariffs, and inflation is expected to continue to slow.
ECB Governing Council member Rehn said the ECB should cut interest rates next month if its new financial forecasts confirm an outlook of disinflation and waning growth momentum.
Swaps are discounting the chances at 93% for a -25 bp rate cut by the ECB at the June 5 policy meeting.
US Stock Movers
Insulet (PODD) closed up more than +20% to lead gainers in the S&P 500 after reporting Q1 revenue of $569.0 million, better than the consensus of $543.5 million, and raising its forecast for full-year revenue to a range of +19% to +22% from a previous range of +16% to +20%.
Microchip Technology (MCHP) closed up more than +12% to lead chip stocks higher after reporting Q4 net sales of $970.5 million, stronger than the consensus of $962.7 million, and forecasting Q1 net sales of $1.02 billion-$1.07 billion, well above the consensus of $983.5 million. Also, Marvell Technology (MRVL) and Texas Instruments (TXN) closed up more than +3%, and ON Semiconductor (ON) and Analog Devices (ADI) closed up more than +2%. In addition, Intel (INTC), NXP Semiconductors NV (NXPI), and GlobalFoundries (GFS) closed up more than +1%.
Energy stocks rallied on Friday as WTI crude rose more than +1% to a 1-1/2 week high. As a result, APA Corp (APA) closed up more than +3%, and Devon Energy (DVN) closed up more than +2%. Also, Exxon Mobil (XOM), Occidental Petroleum (OXY), Phillips 66 (PSX), Diamondback Energy (FANG), and Hess Corp (HES) closed up more than 1%.
Trade Desk (TTD) closed up more than +18% to lead gainers in the Nasdaq 100 after reporting a Q1 adjusted Ebitda margin of 34%, above the consensus of 33%, and forecast Q2 adjusted Ebitda of $259 million, stronger than the consensus of $254.6 million.
Lyft (LYFT) closed up more than +28% after forecasting Q2 gross bookings of $4.41 billion to $4.57 billion, the midpoint above the consensus of $4.48 billion.
Pinterest (PINS) closed up more than +5% after reporting Q1 revenue of $855.0 million, stronger than the consensus of $846.3 million, and forecasting Q2 revenue of $960 million-$980 million, the midpoint above the consensus of $963.7 million.
Cloudflare (NET) closed up more than +5% after reporting Q1 revenue of $479.1 million, above the consensus of $470 million.
Globus Medical (GMED) closed down more than -22% after reporting Q1 net sales of $598.1 million, well below the consensus of $627.2 million, and forecast full-year adjusted EPS of $3.00-$3.30, weaker than the consensus of $3.40.
Akamai Technologies (AKAM) closed down more than -10% to lead losers in the S&P 500 after forecasting full-year adjusted EPS of $6.10-$6.40, the midpoint below the consensus of $6.27.
Expedia Group (EXPE) closed down more than -7% after reporting Q1 revenue of $2.99 billion, below the consensus of $3.02 billion, and cut its 2025 revenue forecast to up +2% to +4% from a previous estimate of up +4% to +6%.
Affirm Holdings (AFRM) closed down more than -14% after forecasting full-year revenue of $3.16 billion-$3.19 billion, the midpoint below the consensus of $3.18 billion.
HubSpot (HUBS) closed down more than -8% after forecasting Q2 adjusted EPS of $2.10 to $2.12, weaker than the consensus of $2.13.
Crowdstrike Holdings (CRWD) closed down more than -4% to lead losers in the Nasdaq 100 after US prosecutors and regulators said they are investigating the $32 million deal between Crowdstrike and Carahsoft Technology on what senior company executives may have known about the deal and other transactions made by the firm.
Earnings Reports (5/12/2025)
Acadia Healthcare Co Inc (ACHC), DaVita Inc (DVA), Essential Utilities Inc (WTRG), Fortrea Holdings Inc (FTRE), Fox Corp (FOXA), New Fortress Energy Inc (NFE), NRG Energy Inc (NRG), Seaport Entertainment Group In (SEG), Simon Property Group Inc (SPG), Standardaero Inc (SARO), ZoomInfo Technologies Inc (ZI).
