After Hours Report

This week's action in the stock market was underscored by persistent resilience to selling efforts, but ultimately the market could not avoid a lower finish with the S&P 500 losing 0.4% for the week.

The modest loss masked a week that was jam-packed with news developments, starting with some optimism surrounding trade talks between officials from the U.S. and China, followed by an encouraging CPI report for May, indications of trade deals with India, Mexico, and Canada taking shape, and ending with concerns about the impact of an escalating conflict between Israel and Iran.

Like stocks, Treasuries finished the week on a lower note, but unlike stocks, they held onto a portion of their gains from this week.

Monday:

The stock market began the week on a slightly higher note with modest gains in the S&P 500 (+0.1%) and Nasdaq (+0.3%) while small caps outperformed throughout the day, sending the Russell 2000 higher by 0.7%.

The Monday session started with some guarded optimism surrounding trade talks between officials from U.S. and China. The market was eager to hear some news from the discussions in London, especially after NEC Director Hassett said that he does not expect a long meeting, but he expects a handshake agreement pertaining to rare earth elements. However, the day went by with no meaningful updates, other than a Fox Business report that talks will continue tomorrow after today's meeting lasted nearly seven hours. President Trump chimed in shortly before the close, saying he expects an update later this evening, which invited some profit taking that sent the major averages back toward their opening levels.

China was also in the spotlight overnight, when it reported more deflationary CPI and PPI readings for May, which are sending a poor signal about the country's pace of growth. Separately, China's Trade Balance report for May showed that exports to the U.S. dropped by more than 1/3.

Five sectors finished the day in positive territory after overcoming some early softness. The consumer discretionary sector (+1.1%) ended in the lead, seizing the top spot from the technology sector (+0.3%), which started in the lead, but finished just ahead of the broader market.

The discretionary sector received notable help from its two largest components, as Tesla (TSLA 308.55, +13.44, +4.6%) bounced back above its 50-day moving average (292.61) after last week's poor showing while Amazon (AMZN 216.98, +3.41, +1.6%) reached its best level since late February.

Technology was boosted by chipmakers with the PHLX Semiconductor Index (+2.0%) defending the bulk of its gain into the close even though chip giant NVIDIA (NVDA 142.63, +0.91, +0.6%) gave back a large chunk of its early advance that followed CEO Huang's opening keynote speech at London Tech Week. Qualcomm (QCOM 155.41, +6.17, +4.1%) was a notable outperformed among chip stocks, as it rallied to levels not seen since late March after announcing a $2.4 bln acquisition of Alphawave.

Elsewhere in technology, Apple (AAPL 201.45, -2.47, -1.2%) contributed to the intraday slip from highs after the company presented at its Worldwide Developers Conference, but only unveiled cosmetic software updates.

Economic data released today was limited to the Wholesale Inventories report for April (0.2%; Briefing.com consensus 0.0%; prior 0.4%), but things should get more exciting on that front in a couple days when the market receives the CPI report for May (Briefing.com consensus 0.2%; prior 0.2%).

Treasuries finished with gains across the curve that were paced by the short end. The 2-yr yield fell four basis points to 4.00% while the 30-yr yield dipped one basis point to 4.95% with help from an intraday release of the May Survey of Consumer Expectations from the New York Fed, which showed a drop in year-ahead inflation expectations to 3.2% from 3.6%. The three-year outlook decreased to 3.0% from 3.2% while the five-year outlook dipped to 2.6% from 2.7%.

Tomorrow's data will be limited to the 6:00 ET release of the NFIB Small Business Optimism Index for May (prior 95.8).

Tuesday:

The stock market climbed on Tuesday, buoyed by ongoing hope for a positive outcome of trade talks between officials from the U.S. and China. The S&P 500 (+0.6%) finished just behind the Nasdaq (+0.6%) while the Dow (+0.3%) continued this month's underperformance.

The trading day was largely uneventful, though it is worth noting that the market resisted selling efforts that knocked the major averages from highs on two occasions, only to be followed by a push to fresh highs for the day. President Trump's acknowledgement that Iran is becoming "much more aggressive" in nuclear talks with the U.S. was met with a brief mid-morning dip that was reversed quickly. Later in the day, Commerce Secretary Lutnick said that talks with China are going very well and could continue into tomorrow.

Ten sectors finished the day with gains, led by energy (+1.8%) even though crude oil could not sustain its morning gain, ending the pit session lower by 0.5% at $64.96/bbl. Energy was followed by the consumer discretionary sector (+1.2%), which received strong support from an extension of yesterday's bounce in Tesla (TSLA 326.09, +17.51, +5.7%).

Top-weighted technology (+0.5%) kept pace with the broader market, masking strength among chipmakers that helped the PHLX Semiconductor Index (+2.1%) extend this month's gain to 10.2% with Intel (INTC 22.11, +1.63, +8.0%) showing relative strength amid growing optimism surrounding its new fabrication technology.

The industrials sector (-0.4%) was the weakest performer throughout the day due to profit taking among defense stocks after their recent strength. Transport stocks, however, had a strong showing, sending the Dow Jones Transportation Average (+1.3%) back to its May high after Norfolk Southern (NSC 252.92, +2.35, +0.9%) said that its carload growth is up 5% quarter-to-date.

Treasuries finished the day with slim gains in longer tenors and modest losses up front ahead of tomorrow's release of May CPI (Briefing.com consensus 0.2%). The U.S. Treasury sold $58 bln in 3-yr notes to soft demand while tomorrow's session will feature a $39 bln 10-yr note reopening.

Today's economic data was limited to the NFIB Small Business Optimism Index for May, which rose to 98.8 from 95.8 in April.

Tomorrow, the market will receive the weekly MBA Mortgage Index (prior -3.9%) at 7:00 ET, followed by May CPI (Briefing.com consensus 0.2%; prior 0.2%) and Core CPI (Briefing.com consensus 0.3%; prior 0.2%) at 8:30 ET, and May Treasury Budget (prior $258.4 bln) at 14:00 ET.

Wednesday:

The stock market finished Wednesday on a lower note after an early push to levels not seen since late February gave way to midday profit taking. The S&P 500 (-0.3%) narrowed this week's gain to 0.4% while the Nasdaq (-0.5%) underperformed, trimming its week-to-date gain to 0.4%. The Dow (unch) outperformed today after lagging earlier this week, which leaves it up 0.2% since last Friday.

Equities climbed out of the gate, emboldened by the May CPI report, which was cooler than expected at the headline (0.1%; Briefing.com consensus 0.2%) and core (0.1%; Briefing.com consensus 0.3%) levels. However, even with the positive month-over-month surprise, year-over-year CPI accelerated to 2.4% from 2.3% in April while Core CPI remained at 2.8% for the third month in a row.

The post-CPI boost overshadowed an underwhelming update from U.S. China talks, which did not result in any groundbreaking agreements. Instead, the two sides agreed to implement what was already agreed upon during a mid-May meeting in Switzerland. In other trade-related news:

• Commerce Secretary Lutnick said that the 55% tariff rate on imports from China will not change.
• U.S. Court of Appeals upheld President Trump's tariffs ahead of a full hearing that will be held this summer.
• The U.S. and India might announce an interim trade deal by the end of the month, according to Reuters.A trade deal between the U.S. and the European Union could be made after the July 9 deadline, according to Bloomberg.
• The U.S. is nearing a deal with Mexico to reduce steel tariffs and cap imports, according to Bloomberg.
• The U.S. and Canada have begun exchanging terms on a deal pertaining to trade and security, according to The Globe and Mail.

Seven sectors finished the day in negative territory, but only two lost more than 0.6%. The consumer discretionary sector (-1.0%) ended at the bottom of the leaderboard, weighed down by the reduced likelihood of a change to the tariff rate on imports from China, while the materials sector (-1.0%) also lagged with Nucor (NUE 117.13, -7.55, -6.1%) and Steel Dynamics (STLD 130.03, -3.78, -2.8%) falling sharply amid reports of a likely reduction to tariffs on steel imports from Mexico.

Top-weighted technology (-0.3%) outperformed in early trade before catching down to the broader market during afternoon profit taking. Apple (AAPL 198.78, -3.89, -1.9%) lagged from the start while NVIDIA (NVDA 142.83, -1.12, -0.8%) reversed from early strength.

Quantum computing stocks like Rigetti Computing (RGTI 12.52, +1.28, +11.4%) and Quantum Computing (QUBT 18.97, +3.84, +25.4%) also met some late profit taking, though they held onto the bulk of their big gains that followed comments from NVIDIA CEO Huang, who said that the quantum industry is at an inflection point.

On the upside, the energy sector (+1.5%) continued its strong week (+3.5%), and an equally impressive start to June (+5.8%) amid signs of rising tensions in the Middle East, resulting from an AP report that nonessential personnel at the U.S. Embassy in Baghdad received clearance to leave voluntarily. Crude oil soared $3.25, or 5.0%, to $68.21/bbl on the news, with some assistance from a bullish inventory report.

Treasuries finished the day on their highs with the 10-yr yield falling six basis points to 4.41% thanks to the cool May CPI.

Reviewing today's economic data:

• Total CPI was up 0.1% month-over-month in May (Briefing.com consensus 0.2%) after increasing 0.2% in April. Core CPI, which excludes food and energy, was up 0.1% month-over-month (Briefing.com consensus 0.3%) after increasing 0.2% in April. On a year-over-year basis, total CPI was up 2.4%, versus 2.3% in April. Core CPI was up 2.8% year-over-year, versus 2.8% in April.
  • The key takeaway from the report is that both headline and core CPI were lower than expected on a month-over-month basis. While these readings may not give a big boost to near-term rate cut expectations, they should also not cause the market to think that the next cut will be delayed.
• The Treasury Budget for May showed a deficit of $316.0 billion compared to a deficit of $347.1 billion in the same period a year ago. The May deficit resulted from outlays ($687.2 billion) exceeding receipts ($371.2 billion). The Treasury Budget data are not seasonally adjusted so the May deficit cannot be compared to the April surplus of $258.4 billion.
  • The key takeaway from the report is that the year-to-date deficit is still up a sizable 13.6% year-over-year, though it is down from 22.0% in April, 23.0% in March, and 38.5% in February.

Thursday:

The S&P 500 (+0.4%) finished Thursday with a modest gain, slightly outpacing the Nasdaq (+0.2%) and the Dow (+0.2%) while small caps lagged, sending the Russell 2000 lower by 0.4%.

The modestly higher finish in the large cap indices was a reflection of continued resilience to selling efforts, as participants remained fearful of missing out on further gains after a big rally off the April low.

Equities saw some early pressure stemming from President Trump's toughening stance on trade and some renewed geopolitical concerns surrounding the Middle East, but that was offset by rate-cut friendly economic data.

President Trump said that letters with trade term offers will be sent to different countries. These offers will not leave much room for negotiation since he added that they will come with a "take it or leave it" caveat.

There was also some focus on the growing tensions in the Middle East after yesterday's report that U.S. Embassy staff in Baghdad received authorization to leave their post. President Trump confirmed the report last evening, and today, ABC News reported that Israel is considering military action against Iran with logistical support from the U.S.

Economic data released today included a cooler-than-expected PPI report for May (0.1%; Briefing.com consensus 0.2%) and a jobless claims report, which showed a big jump in Continuing Claims (+54,000 to 1.956 million) to levels not seen since late 2021.

Today's data strengthened the market's rate cut expectations for September, and it played a part in the market's opening rise off lows. Eight sectors finished the day in positive territory with top-weighted technology (+1.0%) finishing only behind the lightly-weighted utilities sector (+1.3%).

The technology sector received daylong support from fifth-largest component Oracle (ORCL 199.85, +23.47, +13.3%), which soared to a fresh record after the company beat Q3 expectations and issued in-line guidance for Q4. Chipmakers were among the outperformers in early trade, but the PHLX Semiconductor Index (+0.3%) gave back the bulk of its early gain, finishing behind the broader market.

On the downside, the communication services sector (-0.6%) was the worst performer, though it is still one this month's leaders, having climbed 3.2% since the end of May versus a 2.3% month-to-date gain in the S&P 500. Industrials (-0.2%) also lagged with Boeing (BA 203.75, -10.25, -4.8%) weighing the group down after an Air India 787 crashed shortly after take-off in Ahmedabad.

Treasuries ended with solid gains, as the 10-yr note and shorter tenors essentially finished where they started while the long bond outperformed with help from today's strong $22 bln 30-yr bond sale. The 10-yr yield fell six basis points to 4.36%, ending just below its 50-day moving average (4.369%).

Reviewing today's economic data:

• The Producer Price Index for final demand increased 0.1% month-over-month in May (Briefing.com consensus 0.2%) after decreasing a revised 0.2% (from -0.5%) in April. The Producer Price Index for final demand, less foods and energy, also increased 0.1% month-over-month (Briefing.com consensus 0.3%), while the April reading was revised up to -0.2% from -0.4%. On a year-over-year basis, the index for final demand was up 2.6%, versus an upwardly revised 2.5% in April (from 2.4%), while the index for final demand, less foods and energy, was up 3.0%, versus an upwardly revised 3.2% (from 3.1%) in April.
  • The key takeaway from the report is that the positive impact of a cooler-than-expected reading is largely being offset by upward revisions to readings from April. That said, the year-over-year Core PPI rate decelerated to 3.0% from 3.2%, which is a positive development.
• Initial jobless claims for the week ending June 7 hit 248,000 (Briefing.com consensus 250,000), unchanged from the prior week's upwardly revised level (from 247,000). Continuing jobless claims for the week ending May 31 increased by 54,000 to 1.956 million from last week's downwardly revised 1.902 million (from 1.904 million).
  • The key takeaway from the report is that continuing claims reached a level not seen since late 2021, which will invite some questions about the strength of the labor market since laid-off workers are having an increasingly difficult time finding new jobs quickly.

Friday:

The stock market finished the week on a poor note as concerns about further weekend escalation in tensions between Israel and Iran won over the fear of missing out on further upside in equities. The S&P 500 lost 1.1%, surrendering 0.4% for the week while the Russell 2000 (-1.9%; -1.5% for the week) and Dow (-1.8%; -1.5% for the week) underperformed.

Equities started Friday with losses after Israel struck Iranian nuclear facilities overnight. The attack prompted a spike in the price of oil while stocks started lower but spent the first half of the session in a steady rise, making for a continuation of this week's honey badger-like resilience.

The S&P 500 recovered more than half of its initial loss in morning trade but eventually fell prone to renewed selling pressure amid signs that the conflict in the Middle East is likely to escalate over the weekend. To that end, President Trump called on Iran to return to nuclear talks or face additional aggression from Israel, but CNBC reported in the early afternoon that Iranian officials no longer plan to attend nuclear talks that were scheduled for Sunday. A bit later, Iran fired a salvo of missiles toward Israel, giving the market little hope for de-escalation over the next couple days.

Ten sectors finished the day in negative territory with financials (-2.1%) and technology (-1.5%) finishing at the bottom of today's leaderboard. Payment processors like Visa (V 352.85, -18.55, -5.0%), PayPal (PYPL 70.83, -3.98, -5.3%), and Mastercard (MA 562.03, -27.25, -4.6%) paced the selling in financials on concerns that they could lose some business if retail giants Amazon (AMZN 212.10, -1.14, -0.5%) and Walmart (WMT 94.44, -0.39, -0.4%) issue stablecoins, which could happen in the near future, according to The Wall Street Journal.

The technology sector struggled with chipmakers leading the weakness as participants rushed to lock in profits after a strong week. The PHLX Semiconductor Index lost 2.6% today but still finished the week with a gain of 1.5%. Most other tech components also settled in the red, while solar names like Enphase Energy (ENPH 45.60, +0.91, +2.0%) and First Solar (FSLR 175.12, +7.29, +4.3%) bucked the weakness. The poor showing from the sector masked a continuation of yesterday's post-earnings rally in Oracle (ORCL 215.22, +15.36, +7.7%), which reached a fresh record high.

Select defense stocks like Northrop Grumman (NOC 516.72, +19.59, +3.9%) and Lockheed Martin (LMT 486.45, +17.18, +3.7%) also displayed relative strength, but the iShares U.S. Aerospace & Defense ETF (ITA 180.22, +0.75, +0.4%) finished the day with just a slim gain.

The energy sector (+1.7%) outperformed throughout the day, extending this week's advance to 5.7% as crude oil jumped $5.12, or 7.5%, to $73.16/bbl, ending the week with a gain of $8.57, or 13.3%.

Treasuries spent the session in a steady retreat from a slightly higher open as the rising price of oil led to concerns about accelerating inflation. The 10-yr yield rose seven basis points to 4.42% as today's developments took precedence over the preliminary reading of the University of Michigan's Consumer Sentiment Index for June (60.5; Briefing.com consensus 53.0), which showed a drop in year-ahead inflation expectations to 5.1% from 6.6%.

Monday's economic data will be limited to the 8:30 ET release of the Empire State Manufacturing survey for June (Briefing.com consensus -6.6; prior -9.2).