May 30th, 2025
Market Performance:
- US stocks slid on Friday as investors digested more tariff uncertainty and comments from President Trump.
- US stocks are still on track to close the month of May out on Friday with gains. The S&P 500 may see a jump of over 6%, the Dow could see a rise of about 4% and the Nasdaq Composite is headed for a surge of almost 10%.
- US Treasuries are on track to deliver their first monthly loss this year. A Bloomberg index that tracks the bonds is down more than 1.2% in May after all maturities came under pressure.
- Markets across the Asia-Pacific retraced on Friday following the temporary reinstatement of Trump’s “unlawful” tariffs.
Economic Takeaways:
- The US trade deficit in goods narrowed sharply in April. The goods trade gap contracted 46.0% to $87.6 billion last month, the Commerce Department’s Census Bureau said on Friday. Goods imports decreased $68.4 billion to $276.1 billion. Exports of goods increased by $6.3 billion to $188.5 billion.
- Inflation continued cooling in April, according to the latest readingof the Personal Consumption Expenditures (PCE) index. The “core” PCE index increased in line with expectations on a monthly and annual basis. “Personal income was the big surprise, rising 0.8% versus an expectation of 0.3%,” said Cooper Howard, director, fixed income strategy at the Schwab Center for Financial Research “It could be due to the Social Security catch-up payments, though. Savings rose 0.5%, which could mean that individuals are preparing for a slowdown in the economy. This doesn’t change the outlook for the Fed. We’re still looking for one to two cuts this year depending on how the economy develops.”
- First quarter S&P 500 earnings growth was nearly 13%, according to FactSet, in data released before Nvidia (NVDA) and Salesforce (CRM) reported.
- Bitcoin (/BTC) was steady and other cryptocurrencies slipped this morning, but it was a strong May for cryptocurrencies however as Bitcoin hit all-time highs above $112,000 at one point. The coin is on pace for about 11% gains this month.
- As of early Friday, futures trading indicated just a 2% chance of a Fed rate cut in June, and 24% in July, according to the CME FedWatch Tool.
President Trump Says China Violated Trade Agreement
This is the second week in a row for Friday trading to get influenced by President Trump’s remark on tariffs.
This time the President has said that China ‘violated’ trade agreement with the U.S.
Trump lashed out at China on Friday morning on Truth Social, saying, “China was in big trouble two weeks ago” due to the high tariffs set by the US, he said. Trump said he made a quick deal with China — which he accused them of breaking.
“The bad news is that China, perhaps not surprisingly to some, HAS TOTALLY VIOLATED ITS AGREEMENT WITH US. So much for being Mr. NICE GUY!” Trump wrote.
US Treasury Secretary Scott Bessent told Fox News on Thursday that trade talks between the US and China are “a bit stalled,” saying a call between President Trump and China’s Xi Jinping may be needed.
“I think that given the magnitude of the talks, given the complexity, that this is going to require both leaders to weigh in with each other,” Bessent said.
It was on Wednesday that a trade court voted to block many of Trump’s tariffs, including key China-focused duties. A top official said that Taiwan will continue to seek a trade deal with the US despite the trade court’s ruling.
The US Court of Appeals for the Federal Circuit, which oversees the International Trade Court, granted the Trump administration’s request for a temporary administrative stay yesterday. This gives the court time to review legal arguments and filings. The administration must submit its briefings by June 9, after which the court will determine the next steps.
The White House is vowing to take its appeal to the Supreme Court if necessary.
What is One Analyst Saying About Nvidia and Tariffs?
In a grand earnings showing, Nvidia delivered a quarterly beat this week. But the company will miss out on $8 billion worth of H20 chip sales in its second quarter, due to tightened export controls.
“The ongoing US/China negotiations could yield positive results for Nvidia over the coming months that could get Nvidia back in the China H20 game (with a new restricted chip) and ultimately the $8 billion run rate could easily come back to the Nvidia story,” said Wedbush analyst Dan Ives in a note on Thursday. After all, China still wants chips.
Could Rate Cuts Be on the Way?
Tariff uncertainty may be the primary thing standing in the way of lower interest rates, the Federal Reserve’s Austan Goolsbee indicated this week.
Bloomberg reports:
Federal Reserve Bank of Chicago President Austan Goolsbee said a resolution in trade policy could push the US economy back toward its pre-tariff trajectory, allowing officials to lower interest rates.
“If on the back end of this thing, either we don’t put the tariffs in, or they reach some deals that allow us to avoid doing that, we could go back to what we were prior to April 2,” Goolsbee said Thursday, referring to the day President Donald Trump announced widespread tariffs on US trading partners. “If you have stable full employment and inflation going to target, rates can come down to where they would eventually settle.”
After weeks of walking back, delaying and then ratcheting up some tariffs, Trump was dealt a major blow on Wednesday when the bulk of the levies were deemed illegal and blocked by the US trade court. The Trump administration immediately said it would appeal, meaning the tariffs could later be decided by an appellate court or potentially the Supreme Court.
“If we can get the dust out of the air, I do still think that underneath there is a strong dual-mandate economy,” Goolsbee said during the moderated discussion in Mackinac Island, Michigan. “The longer we go contemplating really big changes, like some of the ones that have been discussed, the more that fades into the background.”
On Thursday President Trump pressed Fed Chairman Jerome Powell to lower rates. Powell had made a visit to the White House.
Notables
- American Eagle (AEO) shares sank on a larger than expected first quarter loss.
- Gap (GAP) shares headed lower after warning of up to $300M tariff costs. The company expects about $250 million to $300 million in tariff-related costs but aims to mitigate more than half of that amount.
- Two independent market research companies have slashed their forecasts on Apple’s (AAPL) 2025 growth by more than half. IDC now expects just 0.6% growth while Counterpoint Research sees a 1.9% increase.
- Dell (DELL) rose 0.5% in pre-market trading after first quarter earnings per share missed analysts’ expectations. The tech company raised its guidance and cited strong AI demand.
- Ulta Beauty (ULTA) jumped 9.3% this morning after the cosmetic company surpassed Wall Street’s expectations for quarterly earnings.
- Marvell Technology (MRVL) dropped 4% ahead of the open despite meeting analysts’ earnings expectations. Guidance also met expectations.
- UiPath (PATH) moved higher 12.7% after quarterly results from the software firm exceeded Wall Street’s expectations and the firm raised its guidance.
- Regeneron Pharmaceuticals (REGN) was down almost 11% ahead of the open as investors reacted to mixed clinical trial data for a drug designed to treat a lung condition.
What’s Important Next Week
June 2: May ISM Manufacturing PMI®, April construction spending, and expected earnings from The Campbell’s Company (CPB).
June 3: April factory orders, April Job Openings and Labor Turnover Survey (JOLTS), and expected earnings from Dollar General (DG), CrowdStrike (CRWD), and Hewlett Packard Enterprise (HPE).
June 4: May ISM Services PMI® and expected earnings from Dollar Tree (DLTR).
June 5: ECB rate decision and expected earnings from Broadcom (AVGO), Ciena (CIEN), lululemon (LULU), and Petco (WOOF).
June 6: May Nonfarm payrolls.Also tomorrow will be the University of Michigan final consumer sentiment reading for May. The average analyst estimate of 50.8 is unchanged from the preliminary May reading. This was one of the lowest in history.
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