May 22nd, 2025
Market Performance:
- Shares moved higher on Thursday morning as investors absorbed the House approving the Trump tax bill overnight. The Dow Jones Industrial Average rose 0.2%, coming off a nearly 2% drop on Wednesday. The S&P 500 gained 0.2%, while the tech-heavy Nasdaq Composite moved 0.7%.
- The benchmark 10-year yield topped 4.6% this morning.
- Bitcoin exploded to a new record high of $111,878. Ether also made gains.
Economic Takeaways:
- President Trump’s tariff rollbacks this back had some positive influence this month as U.S. economic output rebounded. The S&P Global’s flash US composite PMI, which captures activity in both the services and manufacturing sectors, climbed to 52.1 in May. This is compared to 50.6 in April.
- The weekly report on initial jobless claims releasedon Thursday showed the number of Americans filing for unemployment insurance on a continuing basis totaled 1.9 million. This brought the four-week moving average of continuing claims to its highest level since November 2021.
Concerns Over the Big Beautiful Tax Bill:
The House of Representatives passed Trump’s tax-and-spending package by a single vote after some last minute revisions. Changes included a more generous deduction for state and local taxes. The bill is now moving closer to becoming law.
So, what are the concerns? The legislation could add trillions to the U.S.’ already existing $36 trillion deficit.
Recently Moody’s downgrade of the U.S. credit was alarming.
“Market participants should consider the possibility that the historical treatment of the federal government in municipal ratings/credit assessments may be shifting,” wrote Municipal Market Analytics partners in a May 19 research note. “Moody’s recent downgrade of the state of Maryland’s Aaa rating is (in our opinion) early evidence that the federal government’s weakening credit position is becoming a more pressing factor in municipal rating outcomes.”
The bill “looks like a budget buster in the near term when it comes to spending,” said Christopher Rupkey, chief economist for FWDBONDS, a markets research company. “Bond yields are rising anticipating there will be more Treasury auctions to fund the budget deficit red ink.”
The tax bill is just one of many Washington policies that are expected to increase inflation, said Steve Blitz, chief U.S. economist at GlobalData.
“The budget discussion is fueling a lot of concern about deficits and debt levels rising over the long run,” said Kathy Jones, chief fixed income strategist at Schwab. “The current proposal is expected to add anywhere from $3 trillion to $5 trillion to the accumulated debt over the next 10 years. The market appears to be voting against this bill and would like to see more fiscal restraint.”
Top Gainers:
Advance Auto Parts, Inc. (AAP)
IonQ, Inc. (IONQ)
Rigetti Computing, Inc. (RGTI)
D-Wave Quantum, Inc. (QBTS)
Urban Outfitters, Inc. (URBN)
LiveRamp Holdings, Inc. (RAMP)
Pony AI, Inc. (PONY)
Snowflake, Inc. (SNOW)
Symbotic, Inc. (SYM)
Peloton Interactive, Inc. (PTON)
Hertz Global Holdings, Inc. (HTZ)
Top Losers:
Enphase Energy, Inc. (ENPH)
EnerSys (ENS)
Newegg Commerce, Inc. (NEGG)
NextEra Energy, Inc. (NEE)
XPeng, Inc. (XPEV)
Manchester United plc (MANU)
Tonix Pharmaceuticals (TNXP)
Warrior Met Coal, Inc. (HCC)
Humana, Inc. (HUM)
Notables:
- Urban Outfitters (URBN) and Ralph Lauren (RL) released impressive quarterly results. Urban Outfitters were up almost 18% after first-quarter results and Ralph Lauren popped 2.8% this morning.
- Amazon’s (AMZN) CEO Andy Jassy said tariffs haven’t hurt demand or raised prices for the company.
- Ryan Reynolds’ linked MNTN went public at $16 a share and rose 60%. MNTN is an advertising platform for internet-connected TVs which has actor Ryan Reynolds as its chief creative officer.
- Toll Brothers (TOL) reported earnings on Wednesday and expects full year’s completed sales to meet prior guidance.
- Alphabet (GOOGL) continued rising in morning trading after rising nearly 2.8% yesterday as the company introduced several new AI features designed to help users, including what it said would be an improved Google search engine.
- CoreWeave (CRWV) went even higher by 1% in pre-market trading after popping 19% yesterday following its announcement of a $2 billion debt offering.
- MicroStrategy (MSTR) and Coinbase Global (COIN), both rose after Bitcoin hit a new record high.
- UnitedHealth Group (UNH) continued to fall after media reports this week revealed grim details about payments to nursing homes—which the company denied.
- Lumen Technologies (LUMN) soared over 10% on news that AT&T (T) will acquire Lumen’s mass markets fiber connectivity business for $5.75 billion.
- Snowflake (SNOW) jumped 9.7% ahead of the open after the cloud-based storage company reported first quarter earnings that topped Wall Street’s expectations.
- Advance Auto Parts (AAP) climbed nearly 31% ahead of the open after a solid Q1 earnings report.
Tech Earnings Will Take the Spotlight Next Week
Chipmaker NVIDIA (NVDA) is scheduled to report on May 28.
Nvidia is likely to gain or lose as much as 7.4% the day after the AI chipmaker reports quarterly earnings results on May 28, options traders tracked by Bloomberg predict.
The stock had plummeted 8.5% in February after the company’s fourth quarter earnings topped Wall Street’s expectations, but its outlook for first quarter gross margin came in lower than estimates.
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