Stock Market Update

[BRIEFING.COM] The stock market trades firmly higher at midday after yesterday's closure with the Dow (+1.6%), S&P 500 (+1.9%), and Nasdaq (+2.3%) sitting at their best levels after a steady extension of their starting gains.

The market raced out of the gate after President Trump said that the implementation of an extra 50% tariff on imports from Europe will be pushed back to July 9 from June 1 to give additional negotiating time. NEC Director Hassett also chimed in this morning, sharing his expectations for some trade deals being announced as early as this week.

The tariff delay fueled a sharply higher start with all eleven sectors taking part in the advance with the consumer discretionary sector (+2.9%), technology (+2.4%), and communication services (+2.0%) leading the market higher. High-beta chipmakers are also among the outperformers with the PHLX Semiconductor Index rising 3.6% as anticipation builds ahead of tomorrow's release of quarterly results from NVIDIA (NVDA 135.40, +4.11, +3.1%).

The earnings flow was limited today, and it has had no impact on the action. AutoZone (AZO 3676.00, -150.46, -3.9%) has fallen back below its 50-day moving average (3693) after missing Q3 EPS expectations on above-consensus revenue, but that has not stopped the consumer discretionary sector from being among the leaders.

Consumers appeared to be out in force during Memorial Day weekend, giving AMC (AMC 4.01, +0.77, +23.8%) its best weekend of the year in terms of revenue.

The advance in stocks has received added support from a rise in Treasuries, which is following an overnight advance in Japanese ultra-long bonds after it was reported that the country's Ministry of Finance will reduce issuance of ultra-long debt. The U.S. Treasury 10-yr yield is down seven basis points at 4.44% while the 2-yr yield is down two basis points at 3.98% going into today's $69 bln 2-yr note sale.

Reviewing today's economic data:

• Total durable goods orders decreased 6.3% month-over-month in April (Briefing.com consensus -8.1%) following a downwardly revised 7.6% increase (from 9.2%) in March, with a 17.1% decline in transportation equipment orders acting as the key drag. Excluding transportation, durable goods orders rose 0.2% month-over-month (Briefing.com consensus 0.0%) following a downwardly revised 0.2% decline (from 0.0%) in March.
  • The key takeaway from the report is that there was a big dropoff in business spending, evidenced by the 1.3% decline in new orders for nondefense capital goods excluding aircraft.
• The Conference Board's Consumer Confidence Index jumped to 98.0 in May (Briefing.com consensus 87.0) from a downwardly revised 85.7 (from 86.0) in June, breaking a string of five consecutive months of decline.
  • The key takeaway from the report is that there was a clear connection between the increase in consumer confidence and the pause in the reciprocal tariff rates, which triggered a material rally in stock prices and improved forecasts for the economic outlook. Note: roughly half of the responses came after the May 12 news that the U.S. and China were pausing their respective reciprocal tariff rates.
• The FHFA Housing Price Index was down 0.1% in March (Briefing.com consensus 0.2% after a revised flat reading (from 0.1%) in February.
• The S&P Case-Shiller Home Price Index was up 4.1% in March (Briefing.com consensus 4.4%), decelerating from being up 4.5% in February.