The S&P 500 Index ($SPX) (SPY) Wednesday closed unchanged, the Dow Jones Industrials Index ($DOWI) (DIA) closed down -0.25%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +0.21%. September E-mini S&P futures (ESU25) are down -0.01%, and September E-mini Nasdaq futures (NQU25) are up +0.22%.
Stock indexes on Wednesday settled mixed, with the Nasdaq 100 posting a new all-time high. Strength in semiconductor chip makers on Wednesday lifted the Nasdaq 100. Also, reduced geopolitical risks in the Middle East boosted market sentiment and prompted a risk-on for asset markets as the ceasefire between Israel and Iran appears to be holding. President Trump said Wednesday that the Mideast war is "over" and the US will hold a meeting with Iran next week.
Stocks lost some steam and fell back from their best levels Wednesday, with the S&P 500 retreating from a 4-month high on hawkish comments from Fed Chair Powell and a weak US home sales report.
US MBA mortgage applications rose +1.1% in the week ended June 20, with the purchase mortgage sub-index down -0.4% and the refinancing mortgage sub-index up +3.0%. The average 30-year fixed rate mortgage rose +4 bp to 6.88% from 6.84% in the prior week.
US May new home sales fell -13.7% m/m to a 7-month low of 623,000, weaker than expectations of -6.7% m/m to 693,000.
Fed Chair Powell stated that policymakers don't need to rush and lower interest rates, as recent economic data is backward-looking and many economists expect "a meaningful increase in inflation" over the course of this year due to tariffs.
Late Tuesday evening, Kansas City Fed President Schmid stated that the current "wait and see" monetary policy posture is appropriate, as the Fed should wait to see how tariffs and other policies impact the economy before adjusting interest rates.
The markets this week will watch to see if the ceasefire holds between Israel and Iran. Also, any new tariff news or trade deals will be scrutinized. On Thursday, Q1 GDP is expected to be unrevised at -0.2% (q/q annualized). Also, weekly initial unemployment claims are expected to fall by -2,000 to 243,000. Friday brings May personal spending (expected +0.1% m/m) and May personal income (expected +0.3% m/m). Also on Friday, the May core PCE price index, the Fed's preferred price gauge, is expected to rise by +0.1% m/m and +2.6% y/y. Finally, Friday's June University of Michigan US consumer sentiment index is expected to be revised lower by -0.2 points to 60.3.
The markets are discounting the chances at 25% for a -25 bp rate cut at the July 29-30 FOMC meeting.
Overseas stock markets on Wednesday settled mixed. The Euro Stoxx 50 closed down -0.85%. China's Shanghai Composite rallied to a 6-1/4 month high and closed up +1.04%. Japan's Nikkei Stock 225 closed up +0.39%.
Interest Rates
September 10-year T-notes (ZNU25) Wednesday closed up +1 tick. The 10-year T-note yield fell -0.6 bp to 4.289%. Sep T-notes rose to a 1-1/2 month high on Wednesday, and the 10-year T-note yield fell to a 1-1/2 month low of 4.275%. T-notes recovered from early losses Wednesday as short covering emerged on the weaker-than-expected US May new home sales report. T-notes also garnered support from the Federal Reserve's plan to lower capital requirements for banks to 3.5% to 4.5% from the current 5%, which would allow banks to hold more Treasuries.
T-notes were under pressure Wednesday on negative carryover from weakness in European government bonds. Also, hawkish Fed comments undercut T-notes when Fed Chair Powell said that policymakers don't need to rush and lower interest rates, and Kansas City Fed President Schmid said the Fed should wait to see how tariffs and other policies impact the economy before adjusting interest rates. Weak demand for the Treasury's $70 billion auction of 5-year T-notes also weighed on T-note prices as the auction had a bid-to-cover ratio of 2.36, below the 10-auction average of 2.40.
European government bond yields on Wednesday moved higher. The 10-year German bund yield rose to a 1-week high of 2.577% and finished up +2.1 bp to 2.565%. The 10-year UK gilt yield rebounded from a 1-1/2 month low of 4.440% and finished up +0.8 bp to 4.481%.
Eurozone May new car registrations rose +1.6% y/y to 927,000, the biggest increase in five months.
Swaps are discounting the chances at 8% for a -25 bp rate cut by the ECB at the July 24 policy meeting.
US Stock Movers
The strength in chip stocks on Wednesday helped push the Nasdaq 100 to a new all-time high, providing support for the overall market. Nvidia (NVDA) closed up more than +4% to lead gainers in the Nasdaq 100 and the Dow Jones Industrials. Also, Advanced Micro Devices (AMD) closed up more than +3%. In addition, Microchip Technology (MCHP) and Applied Materials (AMAT) closed up more than +1%, and Marvel Technology (MRVL) closed up +0.96%.
Super Micro Computer (SMCI) closed up more than +8% to lead gainers in the S&P 500 after GF Securities Ltd initiated coverage of the stock with a buy recommendation and a price target of $59.
Symbotic (SYM) closed up more than +8% after Arete initiated coverage on the stock with a buy recommendation and a price target of $50.
Stellantis NV (STLA) closed up more than +3% after Jefferies upgraded the stock to buy from hold with a price target of $13.20.
Yum! Brands (YUM) closed up more than +3% after JPMorgan Chase upgraded the stock to overweight from neutral with a price target of $162.
Coinbase Global (COIN) closed up more than +3% after Bernstein raised its price target on the stock to $510 from $310.
Alphabet (GOOGL) closed up more than +2% after launching Gemini CLI, an artificial intelligence coding assistant to ease the work of developers.
Paychex (PAYX) closed down more than -9% to lead losers in the S&P 500 and Nasdaq 100 after reporting Q4 adjusted EPS of $1.19 and matching estimates.
NuScale Power Corp (SMR) closed down more than -10% after BTIG LLC downgraded the stock to neutral from buy.
QXO Inc. (QXO) closed down more than -7% after announcing a public offering of 89.9 million shares of its common stock at a price to the public of $22.25 per share, below Tuesday's closing price of $23.51.
General Mills (GIS) closed down more than -5% after reporting Q4 net sales of $4.56 billion, below the consensus of $4.59 billion.
Tesla (TSLA) closed down more than -3% after reporting European May auto deliveries fell -28% y/y.
FedEx (FDX) closed down more than -3% after forecasting Q1 adjusted EPS of $3.40 to $4.000, weaker than the consensus of $4.03, and said it won't provide a profit outlook for the fiscal year due to uncertain global demand.
WEC Energy (WEC) closed down more than -2% after Goldman Sachs downgraded the stock to sell from neutral with a price target of $100.
Earnings Reports (6/26/2025)
Acuity Inc (AYI), Concentrix Corp (CNXC), McCormick & Co Inc/MD (MKC), NIKE Inc (NKE), Walgreens Boots Alliance Inc (WBA).
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.
