June 3rd, 2025
Market Performance:
• U.S. stocks were mixed in Tuesday early morning trading as investors learned that tariffs could cause economic damage.
• The S&P 500 was up about 0.1%, the NASDAQ jumped 0.4% and the Dow was trading near the flat line.
Economic Takeaways:
• The Organization for Economic Cooperation and Development (OECD) warned of economic damage from President Trump’s tariffs. The OECD has slashed its outlook for global economic growth, citing the impact of Trump’s trade policy on investment and confidence. According to the forecast, the US economy will slow particularly sharply, going from 2.8% growth last year to only 1.6% this year and 1.5% in 2026.
• Economic concerns accelerated overnight following a very sharp drop in China’s May manufacturing activity amid export weakness. China’s manufacturers suffered their worst slump since 2022 last month.
• A Job Openings and Labor Turnover Survey (JOLTS) update showed that job openings unexpectedly rose in April. With 7.39 million jobs open at the end of the month, the report sets the stage for the all-important May jobs report, which is set for release this Friday.
• The S&P 500 logged its best May in more than 30 years in large part due to the rebounding of the “Magnificent Seven” tech stocks.
• Deutsche Bank has raised its year-end target for the S&P 500 to 6,550 from 6,150, citing lower tariff-related earnings drag and a resilient economy. “We now see the tariff drag at only about one-third of what we previously penciled in,” Deutsche Bank strategists led by Binky Chadha wrote in a note on Monday.
• Millions of Americans have been hit with bad credit after missed student loan payments, The Washington Post reported. Credit scores dipped by more than 100 points for 2.2 million delinquent student loan borrowers and 150 points or more for more than one million in the first three months of 2025, according to the New York Federal Reserve.
• As of early Tuesday, futures trading indicated just a 5% chance of a Fed rate cut in June, and 25% in July, according to the CME FedWatch Tool.
• The 10-year Treasury yield was at 4.42% this morning.
• WTI crude oil was up this morning at $63.42.
• Bitcoin traded flat at just under $106,000.
Constellation Energy Pops Ahead of Open on Nuclear Deal with Meta
Constellation Energy (CEG) stock surged more than 12% in premarket trading following news that it struck a 20-year power purchase agreement (PPA) with Meta (META).
“We are proud to partner with Meta. … They figured out that supporting the relicensing and expansion of existing plants is just as impactful as finding new sources of energy,” said Joe Dominguez, Constellation’s president and CEO. “Sometimes the most important part of our journey forward is to stop taking steps backwards.”
Starting in June 2027, Meta will buy 1,121 megawatts of energy from Constellation’s Clinton nuclear facility in Illinois, powering its AI ambitions while supporting its clean energy goals, a release stated.
Terms of the deal were not disclosed.
Bond Market Struggles as Growth Stimulus Clashes with Inflation Risks
The bond market is facing conflicting forces, caught between growth-boosting policies and inflationary concerns—resulting in few clear signals for investors and rising long-term yields.
“We have policies that promote growth, like expansive fiscal stimulus, but others that may slow it, like tariffs,” said Kathy Jones, chief fixed income strategist at Charles Schwab, in an interview with Yahoo Finance. “The bond market is stuck in the middle.”
Long-term Treasury yields have been climbing in recent weeks amid mounting concerns over the U.S. fiscal outlook. President Trump’s sweeping tax package—estimated to add $4 trillion to the national debt over the next decade—has passed the House and is now headed to the Senate. Trump has pledged to sign the bill into law by July 4.
Clues About Interest Rates
After Federal Reserve Chair Jerome Powell offered no commentary on monetary policy in his brief remarks yesterday, investor attention now turns to upcoming speeches and reports for fresh insights. Today, Fed Governor Lisa Cook is set to discuss the economic outlook, potentially shedding more light on the central bank’s current thinking.
On Wednesday, the Fed will release its Beige Book, a summary of regional economic conditions that has gained added significance since the onset of the trade war. Market watchers will be especially interested in commentary on West Coast activity, where port traffic plays a major role in local economies.
Meanwhile, across the Atlantic, the European Central Bank (ECB) is expected to announce a 25-basis point rate cut on Thursday morning, despite German inflation slowing less than anticipated in May. If implemented, this would mark the ECB’s second consecutive quarter-point cut—following April’s move—and lower the benchmark rate to 2%, down from its 4% peak two years ago.
European equities have responded positively, with stocks gaining roughly 9% year-to-date through May, outperforming the U.S. market over the same period.
Notables
• Applied Digital (APLD) surged another 8% in premarket trading, building on Monday’s 48% rally after announcing two long-term lease agreements with Nvidia-backed CoreWeave (CRWV) for AI data centers. CoreWeave shares also rose 4% premarket.
• Constellation Energy (CEG) jumped 11% after securing a 20-year nuclear power deal with Meta (META). The news lifted other nuclear names as well, with Vistra (VST) up 5% and Oklo (OKLO) up 6%.
• Dollar General (DG) climbed 11% after reporting better-than-expected earnings and raising its full-year forecast, as the discount retailer is seen as well-positioned for a weaker economy.
• Pinterest (PINS) rose nearly 4% after JPMorgan upgraded the stock to Outperform from Neutral and boosted its price target to $40 (from $35), citing gains in user engagement and ad tech innovation.
• Crypto-linked stocks such as Coinbase (COIN) and MicroStrategy (MSTR) edged up 1% ahead of the opening bell.
• Signet Jewelers (SIG) popped 12.3% after topping earnings and revenue expectations and raising its fiscal 2026 guidance.
• Mining stocks came under pressure, with Freeport-McMoRan (FCX) down 1% and Southern Copper (SCCO) off 1.6% following a surprise contraction in China’s Caixin Manufacturing PMI, which dropped to 48.3 in May—its steepest decline since 2022, raising concerns over global commodity demand.
• Ferguson Enterprises (FERG) surged 14.3% after the plumbing and heating distributor beat earnings estimates and raised its guidance.
• Advertising giants Omnicom (OMC) and Interpublic Group (IPG) inched higher premarket, stabilizing after Monday’s dip. The pullback came in response to a Wall Street Journal report that Meta plans to launch fully AI-automated ad creation tools by 2026—potentially increasing competition for traditional agencies.
What’s Important Ahead
ADP private employment data for May will be out early tomorrow. May nonfarm payrolls will be out on Friday. Analysts see May jobs growth of 130,000, down from 177,000 in April. A miss may jump-start hopes for Federal Reserve rate cuts.
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