Stock Market Update

[BRIEFING.COM] The stock market had some reason to be excited in the early going. It had been announced that the U.S. and China reached a framework agreement to implement the Geneva consensus, and the May Consumer Price Index (CPI) provided a pleasing snapshot of inflation being held in check thus far in the wake of the tariff actions.

The major indices started the session on a higher note, with small-cap stocks and semiconductor stocks continuing their outperformance. The upside bias, however, began to fade after Commerce Secretary Lutnick acknowledged in a CNBC interview that the tariff rate for China (55%) won't be changing.

That was not altogether surprising, but a bit of a disappointment nonetheless that provoked a sell-the-news response. The Philadelphia Semiconductor Index, up as much as 1.2% earlier, is down 0.2%.

There hasn't been a lot of conviction overall behind the selling efforts, yet the major indices have surrendered most, if not all, of their earlier gains and are little changed on the other side of the New York lunch hour.

Sector action has turned mixed, with six sectors up and five sectors down. The information technology sector (+0.1%) had been the strongest area but has relinquished that leadership post to the health care sector (+0.5%). The materials sector (-0.6%) is the weakest area, and it isn't all that weak.

One area that has stood out from the crowd is the quantum computing space. Stocks in that arena, like Quantum Computing (QUBT 19.04, +3.92, +25.88%) and Rigetti Computing (RGTI 12.29, +1.05, +9.32%), are enjoying outsized gains after NVIDIA (NVDA 143.37, -0.59, -0.41%) CEO Jensen Huang said quantum computing has reached an inflection point.

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 Mortgage Bankers Association Mortgage Applications Index increased 12.5% wk/wk, with refinance applications up 16% and purchase applications up 10%.