Page One
It has been quite the turn of events for the stock market since the S&P 500 fell below 5,000 on April 7. In effect, it has been a U-turn. With yesterday's move, the S&P 500 cleared key technical resistance at its 200-day moving average (5,750) and is now eyeing the 6,000 level again.
The expedited recovery effort has been fueled by an easing of the reciprocal tariff tension and an easing of recession concerns, with yesterday's response to the U.S.-China de-escalation a case in point.
Things have cooled down a bit relative to yesterday, but they still look pretty good, all things considered.
Currently, the S&P 500 futures are up three points and are trading 0.1% above fair value, the Nasdaq 100 futures are up 59 points and are trading 0.3% above fair value, and the Dow Jones Industrial Average futures are down 178 points and are trading 0.4% below fair value.
It doesn't show up in the line above, but the equity futures are much improved from their morning lows. The S&P 500 futures, for instance, had been down as many as 26 points, while the Nasdaq 100 futures had been down as many as 116 points.
The rebound says a lot about the state of the market, which has pivoted again to being inclined to buy on weakness rather than to sell into strength. That pivot has coincided with the more positive-sounding trade discussions. Those discussions are now being joined by more active negotiations surrounding the reconciliation bill, which are geared toward lowering taxes.
Hence, the stock market finds itself in a hopeful state that is allowing for a better-than-feared economic and earnings outlook.
UnitedHealthGroup (UNH) investors, though, are feeling a little less hopeful at the moment. The Dow component is down 10% in pre-market action following the news that CEO Andrew Witty is stepping down for personal reasons and that the company is suspending its 2025 outlook as it grapples with higher-than-expected medical costs.
The weakness in UNH is the basis for the underperformance of the Dow Jones Industrial Average futures. The broader market, though, has fought back, supported by some relative strength in the mega-cap stocks, buying momentum, news of Coinbase (COIN) being added to the S&P 500 prior to the open on Monday, May 19, and a placating Consumer Price Index (CPI) for April.
Briefly, total CPI was up 0.2% month-over-month (Briefing.com consensus 0.3%) following a 0.1% decline in March. Core CPI, which excludes food and energy, was also up 0.2% month-over-month (Briefing.com consensus 0.3%) following a 0.1% increase in March.
On a year-over-year basis, total CPI was up 2.3%, versus 2.4% in March. That is the smallest 12-month increase since February 2021. Core CPI was up 2.8% year-over-year, unchanged from March.
The key takeaway from the report is the absence of any tariff shock in the headlines. Consumer prices, overall, were held in check, for the most part, including food and gasoline.
The 2-yr note yield is down three basis points to 3.97%, and the 10-yr note yield is down one basis point to 4.45%, little changed from where they were shortly before the CPI release at 8:30 a.m. ET.
