The S&P 500 Index ($SPX) (SPY) Wednesday closed up +0.43%, the Dow Jones Industrials Index ($DOWI) (DIA) closed up +0.70%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +0.39%.  June E-mini S&P futures (ESM25) are up +0.36%, and June E-mini Nasdaq futures (NQM25) are up +0.40%. 

Stock indexes settled moderately higher on Wednesday in volatile trade.  Stocks whipsawed lower and higher after the FOMC kept interest rates unchanged, as expected.  However, an afternoon rally in chip makers lifted the broader market into the close after Bloomberg reported that the Trump administration plans to rescind Biden-era AI chip curbs as part of a wider effort to revise semiconductor trade restrictions. 

Stocks found support Wednesday on easing US-China trade tensions as representatives from both countries will meet for their first trade talks since President Trump imposed tariffs on US trading partners.  US Treasury Secretary Bessent and US Trade Representative Greer will travel to Switzerland for trade talks on Saturday and Sunday with Chinese Vice Premier He Lifeng.  Bessent said the talks focus on de-escalating the tariff standoff between the two countries. He said the current tariff rates aren’t sustainable and are equivalent to a trade embargo. 

However, gains in stocks were limited Wednesday based on comments from President Trump, who said he was unwilling to preemptively lower tariffs on China to bolster more substantive negotiations. 

The FOMC, as expected, kept the fed funds target range unchanged at 4.25%-4.50% and said, “Uncertainty about the economic outlook has increased further.  The committee is attentive to the risks to both sides of its dual mandate and judges that the risks of higher unemployment and higher inflation have risen.” The FOMC added that economic activity continued to expand at a “solid pace” and inflation “remains somewhat elevated.”

Stocks extended their gains briefly Wednesday afternoon when Fed Chair Powell said the US economy remains on solid footing.  However, stock gains were muted when Mr. Powell said, “I don’t think we need to be in a hurry to adjust interest rates” and that, for the time being, the Fed is well positioned to wait for clarity on trade policy as higher tariffs could lead to higher inflation and unemployment. 

US Mar consumer credit rose by +$10.172 billion, stronger than expectations of +$9.387 billion.

US MBA mortgage applications rose +11.0% in the week ended May 2, with the purchase mortgage sub-index up +11.1% and the refinancing mortgage sub-index up +11.1%.  The average 30-year fixed rate mortgage fell -5 bp to 6.84% from 6.89% in the prior week.

The People’s Bank of China (PBOC) on Wednesday enacted several easing measures in an attempt to boost liquidity in financial markets and bolster economic growth.  The PBOC cut the seven-day reverse repurchase rate by -10 bp to 1.4% from 1.5% and cut the reserve requirement ratio for major banks by -50 bp to 9.0% from 9.5%.

This week, the market will focus on tariffs and any changes to US trade policy.  Thursday brings weekly initial unemployment claims, Q1 nonfarm productivity (expected 0.7%), and Q1 unit labor costs (expected +5.2%).

The markets are discounting the chances at 23% for a -25 bp rate cut after the June 17-18 FOMC meeting.

Q1 earnings reporting season remains in progress.  According to data compiled by Bloomberg Intelligence, the market consensus is for Q1 year-over-year earnings growth of +6.7% for the S&P 500 stocks, down from expectations of +11.1% in early November.  So far, of the 365 companies in the S&P 500 companies that have reported quarterly results, 78% have beaten estimates.  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 Wednesday settled mixed.  The Euro Stoxx 50 closed down -0.63%.  China’s Shanghai Composite rallied to a 1-month high and closed up +0.80%.  Japan’s Nikkei Stock 225 closed down -0.14%.

Interest Rates

June 10-year T-notes (ZNM25) closed up +7.5 ticks.  The 10-year T-note yield fell -2.2 bp to 4.273%.  June T-notes recovered from early losses and posted moderate gains. T-note prices found some support from strength in European government bond prices.  T-notes added to their gains Wednesday afternoon on curve-flattening trades that boosted demand for longer-tern Treasuries after Fed Chair Powell said the Fed was in no hurry to adjust interest rates. 

T-note prices on Wednesday initially moved lower on reduced safe-haven demand as stocks saw support from the US-China trade talks this weekend.  The FOMC’s post-meeting statement was also bearish for T-notes as it said economic activity continued to expand at a “solid pace” and inflation “remains somewhat elevated.”

European government bond yields on Wednesday finished lower.  The 10-year German bund yield fell -6.5 bp to 2.475%. The 10-year UK gilt yield fell -5.4 bp to 4.460%.

Eurozone Mar retail sales fell -0.1% m/m, right on expectations and the first decline in 5 months.

German Mar factory orders rose +3.6% m/m, stronger than expectations of +1.3% m/m.

Swaps are discounting the chances at 96% for a -25 bp rate cut by the ECB at the June 5 policy meeting.

US Stock Movers

Strength in chip stocks Wednesday supported gains in the broader market.  Nvidia (NVDA), Qualcomm (QCOM), and ASML Holding NV (ASML) closed up more than +3%.  Also, Micron Technology (MU), Lam Research (LRCX), NXP Semiconductors NV (NXPI), Broadcom (AVGO), KLA Corp (KLAC), Analog Devices (ADI), and Texas Instruments (TXN) closed up more than +2%.  In addition, Advanced Micro Devices (AMD), Intel (INTC), Microchip Technology (MCHP), and GlobalFoundries (GFS) closed up more than +1%.

Charles River Laboratories (CRL) closed up more than +18% to lead gainers in the S&P 500 after announcing a strategic review to enhance long-term stockholder value and that it is entering into a cooperation agreement with Elliot Investment Management.   

Oscar Health (OSCR) closed up more than +30% after reporting Q1 total revenue of $3.05 billion, well above the consensus of $2.86 billion.

Rockwell Automation (ROK) closed up more than +11% after reporting Q2 adjusted EPS of $2.45, stronger than the consensus of $2.08, and boosted its full-year adjusted EPS forecast to $9.20-$10.20 from a previous forecast of $8.60-$9.80, above the consensus of $9.18. 

Walt Disney (DIS) closed up more than +10% to lead gainers in the Dow Jones industrials after reporting Q2 adjusted EPS of $1.45, better than the consensus of $1.20, and forecast 2025 adjusted EPS of $5.75, above the consensus of $5.44.

Gen Digital (GEN) closed up more than +8% after reporting Q1 revenue of $1.01 billion, above the consensus of $998 million, and forecast Q1 adjusted revenue of $1.18 billion-$1.21 billion, stronger than the consensus of $1.02 billion.

CDW Corp (CDW) closed up more than +7% to lead gainers in the Nasdaq 100 after reporting Q1 net sales of $5.20 billion, stronger than the consensus of $4.94 billion.

Cencora (COR) closed up more than +4% after reporting Q2 adjusted EPS of $4.42, stronger than the consensus of $4.14, and raised its full-year adjusted EPS estimate to $15.70-%$15.95 from a previous estimate of $15.30-$15.60. 

Alphabet (GOOGL) closed down more than -7% to lead losers in the S&P 500 after Apple’s senior vice president of services said his company is “actively looking at” revamping its Safari web browser to focus on AI-powered search engines.

Marvell Technology (MRVL) is down more than -8% to lead losers in the Nasdaq 100 after narrowing its first quarter 2026 guidance range to be about $1.875 billion within a range of plus or minus 2%, versus the prior range of plus or minus 5%.

Sarepta Therapeutics (SRPT) closed down more than -21% after cutting its full-year total net product revenue forecast to $2.3 billion to $2.6 billion from a previous estimate of $2.9 billion to $3.1 billion. 

Entegris Inc (ENTG) closed down more than -5% after forecasting Q2 sales of $735 million-$775 million, well below the consensus of $827.1 million.

Arista Networks (ANET) closed down more than -4% after reporting Q1 adjusted gross margin of 64.1% versus 64.2% y/y. 

Crowdstrike Holdings (CRWD) closed down more than -4% after announcing plans to cut 5% of its workforce and expects about $36 million to $53 million in charges from the plan.

Uber Technologies (UBER) closed down more than -2% after reporting Q1 gross bookings of $42.82 billion, weaker than the consensus of $43.14 billion.

Earnings Reports (5/8/2025)

Akamai Technologies Inc (AKAM), Alliant Energy Corp (LNT), ConocoPhillips (COP), EPAM Systems Inc (EPAM), Evergy Inc (EVRG), Expedia Group Inc (EXPE), Federal Realty Investment Trust (FRT), Insulet Corp (PODD), Kenvue Inc (KVUE), Match Group Inc (MTCH), McKesson Corp (MCK), Microchip Technology Inc (MCHP), Molson Coors Beverage Co (TAP), Monster Beverage Corp (MNST), News Corp (NWSA), Paramount Global (PARA), Sempra (SRE), Solventum Corp (SOLV), Tapestry Inc (TPR), TKO Group Holdings Inc (TKO), Viatris Inc (VTRS), Warner Bros Discovery Inc (WBD).