The S&P 500 Index ($SPX) (SPY) Friday closed down -0.67%, the Dow Jones Industrials Index ($DOWI) (DIA) closed down -0.61%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed down -0.93%.  June E-mini S&P futures (ESM25) are down -0.77%, and June E-mini Nasdaq futures (NQM25) are down -1.09%. 

Stock indexes retreated on Friday, with the S&P 500 and Dow Jones Industrials posting 2-week lows and the Nasdaq 100 posting a 1-1/2 week low.  Trade tensions and concerns about the fiscal outlook undercut stocks.  President Trump's comments knocked Apple's shares down more than -3% and weighed on technology stocks when he threatened 25% tariffs on Apple if the company's iPhones were not made in the US.  Mr. Trump also threatened to increase tariffs on other device makers, such as Samsung Electronics, if they didn't move the manufacturing of their products to the US. 

Stock index losses accelerated Friday when President Trump threatened a 50% tariff on goods from the European Union (EU) starting on June 1, saying, "Our discussions with them on trade are going nowhere," and he's "not looking for a deal" with the EU. 

Stocks recovered from their worst level Friday after US Apr new home sales unexpectedly rose to a 3-year high, a supportive factor for the economy.  Also, Chicago Fed President Goolsbee said President Trump's new tariff threat is "really scary" for firms, and Fed rate cuts are still possible over a 10-month to 16-month time horizon.  Stocks also saw support from Friday's -3 bp decline in the 10-year T-note yield to 4.50%.

Stocks and the dollar were under pressure this week due to the reduced attractiveness of US assets to foreign investors with the ongoing trade war, last Friday's Moody downgrade of the US credit rating, and the negative US budget deficit outlook in the Republican reconciliation bill. 

US Apr new home sales unexpectedly rose +10.9% m/m to a 3-year high of 743,000, stronger than expectations of a -4.0% m/m decline to 695,000.

The markets are discounting the chances at 2% for a -25 bp rate cut at the next FOMC meeting on June 17-18.

Q1 earnings reporting season is winding down.  So far, almost 90% of companies in the S&P 500 have reported quarterly results, and 77% have beaten estimates, the highest since Q2 of 2024.  Earnings growth in Q1 is running at +13.1%, compared with just +6.6% expected before the start of the season.  Full-year 2025 corporate profits for the S&P 500 are seen rising +9.4%, down from the forecast of +12.5% in early January.  

Overseas stock markets on Friday settled mixed.  The Euro Stoxx 50 tumbled to a 2-week low and closed down sharply by -1.81%.  China's Shanghai Composite fell to a 1-1/2 week low and closed down -0.94%.  Japan's Nikkei Stock 225 closed up +0.47%.

Interest Rates

June 10-year T-notes (ZNM25) Friday closed up by +8 ticks.  The 10-year T-note yield fell -3.0 bp to 4.499%.  June T-notes moved higher Friday on an increase in safe-haven demand as stocks faltered when President Trump threatened a 50% tariff on EU goods.  Easing inflation expectations are also supportive of T-notes after the 10-year breakeven inflation rate fell to a 1-1/2 week low Friday of 2.321%. 

T-notes fell back from their best levels Friday after US Apr new home sales unexpectedly rose to a 3-year high.  Gains in T-notes are also limited by concern the unfunded tax cuts in President Trump's budget would force the Treasury to increase the sales of Treasury debt securities to finance the burgeoning deficit.

T-note yields remained lower Friday on comments from Treasury Secretary Bessent, who said US regulators may ease the supplementary leverage ratio (SLR) rule this summer, which could encourage banks to boost their Treasury holdings and thus reduce Treasury yields. 

European government bond yields on Friday moved lower.  The 10-year German bund yield fell to a 2-week low of 2.539% and finished down -7.6 bp at 2.567%.  The 10-year UK gilt yield fell -7.0 bp to 4.681%.

The ECB reported that Q1 negotiated wages in the Eurozone rose +2.4%, down from +4.1% in Q4, a sign of easing wage pressures and a dovish factor for ECB policy.

German Q1 GDP was revised upward to +0.4% q/q and -0.2% y/y from the previously reported +0.2% q/q and -0.4% y/y.

UK Apr retail sales ex-auto fuel rose +1.3% m/m, stronger than expectations of +0.1% m/m.

ECB Governing Council member Rehn said, "If the incoming data and macroeconomic analysis confirm the current outlook for stabilization of inflation and somewhat subdued growth, the appropriate response in June would be to continue monetary easing and cut interest rates."

ECB Governing Council member Stournaras said, "I believe the ECB will cut interest rates one more time in June and then I see a pause."

Swaps are discounting the chances at 99% for a -25 bp rate cut by the ECB at the June 5 policy meeting.

US Stock Movers

Chip stocks retreated Friday and weighed on the overall market. Microchip Technology (MCHP) closed down more than -3%.  Also, ON Semiconductor (ON), GlobalFoundries (GFS), NXP Semiconductors NV (NXPI), Intel (INTC), and Texas Instruments (TXN) closed down more than -2%.  In addition, Qualcomm (QCOM), Applied Materials (AMAT), KLA Corp (KLAC), Lam Research (LRCX), Nvidia (NVDA), Micron Technology (MU), and Marvel Technology (MRVL) closed down more than -1%. 

Apple (AAPL) closed down more than -3% after President Trump threatened 25% tariffs on the company if iPhones weren't made in the US.

Deckers Outdoor (DECK) closed down more than -19% to lead losers in the S&P 500 after forecasting Q1 net sales of $890 million to $910.0 million, weaker than the consensus of $923.5 million.

Workday (WDAY) closed down more than -12% to lead losers in the Nasdaq 100 despite forecasting as-expected Q2 subscription revenue, which disappointed analysts looking for the company to get a boost from new artificial intelligence features for its products. 

Booz Allen Hamilton Holding (BAH) closed down more than -16% after forecasting 2026 adjusted Ebitda of $1.32 billion-$1.37 billion, well below the consensus of $1.42 billion.

Copart (CPRT) closed down more than -11% after reporting Q3 revenue of $1.21 billion, below the consensus of $1.22 billion.

Ross Stores (ROST) closed down more than -9% after forecasting Q2 EPS of $1.40 to $1.55, weaker than the consensus of $1.66, and withdrawing its annual guidance "given the highly volatile environment."

Nuclear power stocks are climbing today after Reuters reported that President Trump will sign executive orders to ease the regulatory process on approvals for new reactors.  Centrus Energy (LEU) closed up more than +19%, NuScale Power (SMR) closed up more than +18%, and Constellation Energy (CEG) and Vistra (VST) closed up more than +1%. 

Gold mining stocks moved higher on Friday after the price of gold rose more than +1% to a 2-week high.  Gold Fields Ltd (GFI) closed up more than +4%, Anglogold Ashanti Plc (AU) closed up more than +2%, and Newmont (NEM) closed up more than +1%.

United States Steel (X) closed up more than +21% after President Trump said he backed the acquisition of US Steel by Japan's Nippon Steel after Nippon Steel said US Steel would remain in the US and keep its headquarters in Pittsburgh. 

Intuit (INTU) closed up more than +8% to lead gainers in the S&P 500 and Nasdaq 100 after reporting Q3 net revenue of $7.75 billion, above the consensus of $7.56 billion and raised its full-year revenue forecast to $18.72 billion-$18.76 billion from a previous forecast of $18.16 billion-$18.35 billion, stronger than the consensus of $18.35 billion.

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Seagate Technology Holdings Plc (STX) closed up more than +3% after Morgan Stanley raised its price target on the stock to $140 from $99. 

Earnings Reports (5/27/2025)

American Vanguard Corp (AVD), AutoZone Inc (AZO), Box Inc (BOX), Champion Homes Inc (SKY), Critical Metals Corp (CRML), Golar LNG Ltd (GLNG), Golden Matrix Group Inc (GMGI), HEICO Corp (HEI), Okta Inc (OKTA), Semtech Corp (SMTC).