The S&P 500 Index ($SPX) (SPY) today is up +0.19%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.11%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.20%.  June E-mini S&P futures (ESM25) are up +0.20%, and June E-mini Nasdaq futures (NQM25) are up +0.25%. 

Stock indexes today are mildly higher, with the S&P 500 posting a 3-1/4 month high, the Dow Jones Industrials posting a 2-week high, and the Nasdaq 100 posting a 3-1/2 month high.  Lower bond yields today are supporting gains in stocks, with the 10-year T-note yield falling -7 bp to a 3-1/2 week low of 4.38%.  Also, the strength in chip stocks today is lifting the broader market. 

Stock gains are muted today by signs of weakness in the US economy after the May ADP employment change posted its smallest increase in more than two years, and the May ISM services index contracted for the first time in eleven months.  Lingering US-China trade tensions are also limiting gains in stocks after President Trump said today that Chinese President Xi Jinping is “very tough and extremely hard to make a deal with.”  Mr. Trump’s comments dampened optimism for a US-China trade deal in the near future. 

US MBA mortgage applications fell -3.9% in the week ended May 30, with the purchase mortgage sub-index down -4.4% and the refinancing mortgage sub-index down -3.5%.  The average 30-year fixed rate mortgage fell -6 bp to 6.92% from 6.98% in the prior week. 

The US May ADP employment change rose +37,000, weaker than expectations of +114,000 and the smallest increase in more than two years.

The US May ISM services index unexpectedly fell -1.7 to 49.9, weaker than expectations of an increase to 52.0 and the first time the index fell below 50 and contracted in 11 months.  The May ISM prices paid sub-index rose +3.6 to a 2-1/2 year high of 68.7, stronger than expectations of no change at 65.1.

The markets are discounting the chances at 4% for a -25 bp rate cut at the next FOMC meeting on June 17-18.

The markets this week will focus on any new trade or tariff news. Later today, the Fed Beige Book will be released.  On Thursday, weekly initial unemployment claims are expected to fall by -5,000 to 235,000.  On Friday, May nonfarm payrolls are expected to climb +125,000, and the May unemployment rate is expected to remain unchanged at 4.2%.  Finally, May average hourly earnings are expected to rise +0.3% m/m and +3.7% y/y. 

Overseas stock markets today are higher.  The Euro Stoxx 50 is up +0.53%.  China’s Shanghai Composite climbed to a 1-1/2 week high and closed up +0.42%.  Japan’s Nikkei Stock 225 closed up +0.80%.

Interest Rates

September 10-year T-notes (ZNU25) today are up +15 ticks.  The 10-year T-note yield is down -7.3 bp to 4.381%.  Sep T-notes today rallied to a 3-1/2 week high, and the 10-year T-note yield fell to a 3-1/2 week low of 4.373%.  T-notes are climbing today on signs of weakness in the US labor market after the May ADP employment change posted its smallest increase in more than two years.  T-notes added to their gains after the May ISM services index unexpectedly contacted for the first time in eleven months.  Gains in T-notes were limited on signs of price pressures after the May ISM prices paid sub-index rose more than expected to a 2-1/2 year high.

European government bond yields today are mixed.  The 10-year German bund yield is up +0.2 bp to 2.527%. The 10-year UK gilt yield is down -2.5 bp to 4.613%.

The Eurozone May S&P composite PMI was revised upward by +0.7 to 50.2 from the previously reported 49.5.

The UK May S&P services PMI was revised upward by +0.7 to 50.9 from the previously reported 50.2.

Swaps are discounting the chances at 97% for a -25 bp rate cut by the ECB at Thursday’s policy meeting.

US Stock Movers

ON Semiconductor Corp (ON) is up more than +5% to lead gainers in the S&P 500 and Nasdaq 100 after it said it is starting to see signs of a broad-based recovery in demand.  Other chip makers rallied on the news, with NXP Semiconductors NV (NXPI) up more than +3% and GlobalFoundries (GFS), Marvell Technology (MRVL), Broadcom (AVGO), Micron Technology (MU), and Texas Instruments (TXN) up more than +1%.

Homebuilders are climbing today after the 10-year T-note yield fell to a 3-1/2 week low, a supportive factor for housing demand.  DR Horton (DHI) is up more than +2%.  Also, Lennar (LEN), Toll Brothers (TOL), and PulteGroup (PHM) are up more than +1%. 

Guidewire Software (GWRE) is up more than +18% after boosting its revenue guidance for the full year to $1.18 billion to $1.19 billion from a previous forecast of $1.16 billion to $1.17 billion, above the consensus of $1.17 billion. 

Lumentum Holdings (LITE) is up more than +7% after boosting its Q4 adjusted EPS forecast to 78 cents-85 cents from a prior forecast of 70 cents-80 cents, stronger than the consensus of 74 cents. 

Thor Industries (THO) is up more than +2% after reporting 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 better than the consensus of $9.23 billion. 

XP Inc (XP) is up more than +1% after Goldman Sachs upgraded the stock to buy from neutral with a price target of $23. 

Dollar Tree (DLTR) is down more than -9% to lead losers 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% to lead losers in the Nasdaq 100 after reporting Q1 subscription revenue of $1.05 billion, below 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 its May vehicle shipments from China fell -15% y/y to 61,662 units, the eighth straight monthly decline.

Flowserve (FLS) is down more than -2% after agreeing to combine an all-stock merger 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 to neutral from buy.

Earnings Reports (6/4/2025)

Dollar Tree Inc (DLTR), Five Below Inc (FIVE), MongoDB Inc (MDB), PVH Corp (PVH), Thor Industries Inc (THO).