The Day's Stock Market Performance Unveiled
Stocks Buoyed by Dropping Bond Yields and Strong Chip Stock Performance
In today's market, the S&P 500 ($SPX) (SPY), the Dow Jones Industrials Index ($DOWI) (DIA), and the Nasdaq 100 Index ($IUXX) (QQQ) have recorded modest gains, with increases of +0.19%, +0.11%, and +0.20%, respectively. June E-mini S&P futures (ESM25) and June E-mini Nasdaq futures (NQM25) also registered gains of +0.20% and +0.25%.
The indexes are slightly up thanks to lower bond yields, which have offered a bit of support. The 10-year T-note yield has dipped -7 bp to a 3-1/2 week low of 4.38%. The strength in chip stocks is also adding to the market's momentum.
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The market's gains are somewhat tempered by signs of economic weakness in the US. The May ADP employment change showed its smallest increase in more than two years, and the May ISM services index contracted for the first time in eleven months. US-China trade tensions also linger, as President Trump indicated that Chinese President Xi Jinping is "very tough and extremely hard to make a deal with," casting a shadow over optimism for a near-future agreement.
US MBA mortgage applications took a -3.9% dip in the week ended May 30. Purchase mortgage applications fell -4.4%, and refinancing applications decreased -3.5%. The average 30-year fixed rate mortgage dropped -6 bp to 6.92%.
The US May ADP employment change ticked up +37,000, weaker than predicted and marking the smallest increase in over two years. The May ISM services index unexpectedly declined -1.7 to 49.9, the first time the index has fallen below 50 and contracted in 11 months. However, the May ISM prices paid sub-index rose +3.6 to a 2-1/2 year high of 68.7.
The markets are currently giving a 4% chance for a -25 bp rate cut at the next FOMC meeting on June 17-18. The focus for this week will be on new trade or tariff news, with the Fed Beige Book releasing today and weekly initial unemployment claims expected to fall by -5,000 to 235,000 on Thursday. On Friday, the anticipated May nonfarm payrolls are expected to climb +125,000, while the unemployment rate is expected to remain steady at 4.2%. Finally, May average hourly earnings are projected to rise +0.3% m/m and +3.7% y/y.
Overseas stock markets are up today, with the Euro Stoxx 50 up +0.53%, China's Shanghai Composite climbing to a 1-1/2 week high and ending up +0.42%, and Japan's Nikkei Stock 225 closing up +0.80%.
Remodeling the Bonds Market Scene
September 10-year T-notes (ZNU25) have climbed +15 ticks. The 10-year T-note yield has dropped -7.3 bp to 4.381%. T-notes have rallied to a 3-1/2 week high today, as the yield fell to a 3-1/2 week low of 4.373%. This advance is partially attributed to signs of weakness in the US labor market, as the May ADP employment change posted its smallest increase in over two years. T-note gains were somewhat cushioned by an unexpected contraction in the May ISM services index and rising price pressures indicated by the May ISM prices paid sub-index.
European government bond yields are mixed, with the 10-year German bund yield at +0.2 bp to 2.527%, and the 10-year UK gilt yield down -2.5 bp to 4.613%.
The Eurozone May S&P composite PMI saw an upward revision of +0.7 to 50.2 from the initially reported 49.5. The UK May S&P services PMI underwent an upgrade of +0.7 to 50.9 from the previously reported 50.2. Swaps are estimating a nearly 97% chance for a -25 bp rate cut by the ECB at Thursday's policy meeting.
The Movers and Shakers of US Stocks
ON Semiconductor Corp (ON) is surging more than +5%, leading gains in the S&P 500 and Nasdaq 100, after it announced optimistic signs of a recovery in demand. Other chipmakers, such as NXP Semiconductors NV (NXPI), GlobalFoundries (GFS), Marvell Technology (MRVL), Broadcom (AVGO), Micron Technology (MU), and Texas Instruments (TXN), have also seen gains of more than +1%.
Homebuilders are gaining ground today as the 10-year T-note yield has hit a 3-1/2 week low, a beneficial factor for housing demand. DR Horton (DHI) is up more than +2%, while Lennar (LEN), Toll Brothers (TOL), and PulteGroup (PHM) have also seen increases of more than +1%.
Guidewire Software (GWRE) is up more than +18%, following an upgrade in revenue guidance for the full year to $1.18 billion to $1.19 billion, exceeding the consensus of $1.17 billion.
Lumentum Holdings (LITE) is up more than +7%, after raising its Q4 adjusted EPS forecast to 78 cents-85 cents from a prior estimate of 70 cents-80 cents, surpassing the consensus of 74 cents.
Thor Industries (THO) is up more than +2% after announcing Q3 net sales of $2.89 billion, well above the consensus of $2.56 billion, and forecasting full-year consolidated net sales of $9.0 billion-$9.5 billion, the midpoint superior to the consensus of $9.23 billion.
XP Inc (XP) is up more than +1% following an upgrade to "buy" from "neutral" by Goldman Sachs, coupled with a price target of $23.
Dollar Tree (DLTR) is down more than -9%, leading declines in the S&P 500, after forecasting 2026 net sales of $18.5 billion-$19.1 billion, the midpoint below the consensus of $18.93 billion.
CrowdStrike Holdings (CRWD) is down more than -4%, leading declines in the Nasdaq 100, after reporting Q1 subscription revenue of $1.05 billion, somewhat lower than the consensus of $1.06 billion, and cutting its 2026 adjusted operating income forecast to $878.7 million-$909.7 million from a previous forecast of $944.2 million-$985.1 million, weaker than the consensus of $975.7 million.
Tesla (TSLA) is down more than -3% after reporting a -15% decline in May vehicle shipments from China.
Flowserve (FLS) is down more than -2% following an agreement to merge in an all-stock deal with Chart Industries, where Chart shareholders will receive 3.165 shares of Flowserve common stock for each share of Chart common stock owned.
Aptiv Plc (APTV) is down more than -1% after Guggenheim Securities downgraded the stock from "buy" to "neutral."
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Dollar Tree Inc (DLTR), Five Below Inc (FIVE), MongoDB Inc (MDB), PVH Corp (PVH), Thor Industries Inc (THO).
The surge in chipmakers like ON Semiconductor Corp, NXP Semiconductors NV, GlobalFoundries, Marvell Technology, Broadcom, Micron Technology, and Texas Instruments can be attributed to optimistic signs of recovery in demand within the sports electronics industry. Homebuilders such as DR Horton, Lennar, Toll Brothers, and PulteGroup are gaining ground due to the 10-year T-note yield hitting a 3-1/2 week low, favoring housing demand within the sports industry.
