June 11th, 2025
Market Performance:
U.S. equity markets opened mostly higher on Wednesday after May’s inflation data came in softer than expected. Growth-oriented sectors like technology and consumer discretionary are leading early gains, though most sectors are starting the day either flat or slightly higher. Overseas, Asian markets closed higher overnight, supported by progress in U.S.-China trade negotiations, while European markets are also trading in positive territory.
Markets saw a modest early uptick, driven by a smaller-than-expected 0.1% rise in the Consumer Price Index and reports that a tentative agreement between the U.S. and China may be close.
Economic Takeaways:
- Headline inflation edged up just 0.1% month over month, coming in below the expected 0.2% increase. On an annual basis, the consumer price index rose 2.4%, putting it close to the Federal Reserve’s long-term target of 2% year-over-year inflation.
- U.S. ocean imports fell in May on 145% tariffs on China.
- The monthly budget deficit slipped to $316B amid tariffs boosting customs receipts.
- Scott Bessent said he would like to stay as Treasury secretary until 2029 but did not dismiss the possibility of becoming the next Fed chair.
- Bond yields are moving lower after the softer-than-expected inflation report, with the decline more pronounced on the short end of the curve. The 10-year Treasury yield started the day near 4.44%, while the 2-year yield slipped to around 3.95%.
- Second quarter S&P 500 earnings growth is now seen at 4.9%, according to FactSet.
Elon Musk Feels Bad About his Feud with President Trump
Elon Musk offered his most conciliatory remarks yet over his recent fallout with Donald Trump, just days after a phone call with two of the president’s closest allies. According to sources familiar with the matter, Vice President JD Vance and White House Chief of Staff Susie Wiles reached out to Musk last Friday, urging him to put an end to the escalating conflict. The call was first reported by The Wall Street Journal.
Musk had previously been a trusted adviser and confidant to Trump before a highly publicized split last week sparked controversy involving both the former president and the Tesla CEO.
“I regret some of my posts about President @realDonaldTrump last week,” Musk wrote Wednesday on his social media platform, X. “They went too far.” According to The New York Times, Musk also called Trump directly prior to posting the public apology.
The dispute reportedly stemmed from Musk’s opposition to a tax-cut bill championed by Trump in Congress. The tension escalated when Trump threatened to retaliate by severing Musk’s access to federal contracts—an action that could seriously impact SpaceX, Musk’s aerospace company.
“I thought it was very nice that he did that,” Trump said in a brief interview with The New York Post, though he did not indicate whether he would fully move past the disagreement.
CPI Data is In
U.S. inflation rose just 0.1% in May from the previous month, coming in below expectations. The consumer price index increased 0.1% for the month, bringing the annual inflation rate to 2.4%.
Excluding food and energy, core CPI also came in at 0.1% month over month and 2.8% year over year, falling short of forecasts for 0.3% and 2.9%, respectively.
Weakness in energy prices helped counterbalance some of the increases, and several key categories that were anticipated to reflect tariff-related price hikes—such as vehicles and apparel—actually saw declines.
“Consumer prices rose less than expected in May as President Donald Trump’s tariffs had yet to show significant impact on inflation,” the Bureau of Labor Statistics reported Wednesday.
The consumer price index, a comprehensive gauge of goods and services throughout the U.S. economy, rose 0.1% in May, putting the year-over-year inflation rate at 2.4%. Economists polled by Dow Jones had expected increases of 0.2% monthly and 2.4% annually. Excluding food and energy, the core CPI also rose 0.1% for the month and 2.8% for the year, below estimates of 0.3% and 2.9%.
Federal Reserve officials generally view core inflation as a more accurate reflection of long-term price trends, and several have recently voiced concerns about the potential inflationary effects of tariffs.
The overall annual inflation rate ticked up 0.1 percentage point from April, while the core rate remained unchanged. Continued softness in energy prices helped ease broader price pressures, and anticipated tariff-related increases in areas like vehicles and apparel instead turned into declines.
Notables
- Tesla (TSLA) rose 1.7% in early trading Wednesday, building on strong gains from the previous session. The rally comes amid anticipation of a potential Robotaxi launch in Austin later this month and signs of easing tensions between CEO Elon Musk and former President Trump. Musk posted today that he regrets some of his past social media comments about Trump.
- Oracle (ORCL) dipped slightly ahead of its earnings report due after the close. The software giant has missed analysts’ expectations in its last two reports, and investors will be closely watching its cloud infrastructure segment—which jumped 49% last quarter thanks to AI-related demand. However, Oracle’s forecasts have disappointed for two straight quarters, and concerns remain over rising capital expenditures. Still, the stock is up more than 26% this quarter.
- GitLab (GTLB) slid 12% after its forward guidance failed to impress Wall Street, despite earnings and revenue that met or beat consensus estimates and a solid performance in the reported quarter.
- Steelmakers like Nucor (NUE) and Cleveland-Cliffs (CLF) dropped between 3% and 4% following a Bloomberg report suggesting the U.S. and Mexico may be nearing a deal to slash the 50% steel tariffs introduced under the Trump administration.
- GameStop (GME) tumbled 4.7% in pre-market action after the retailer reported a 17% decline in quarterly revenue, missing Wall Street’s forecasts.
- Chewy (CHWY) lost 7% before the open, despite beating earnings and revenue expectations and issuing above-consensus guidance. The stock has rallied in recent months, and today’s dip may reflect profit-taking.
- Dave & Buster’s Entertainment (PLAY) jumped 6.2% even though both earnings and revenue came in below estimates. Investor sentiment was lifted by positive commentary on improving business trends during the company’s earnings call.
- Intel (INTC) slipped 1% after a more than 7% surge on Tuesday, fueled by optimism around its announcement to build a new supercomputer. The project may indicate progress on its 18A process technology, which the company aims to move into high-volume production in the second half of the year.
What’s Ahead
Things to watch later today include earnings from Oracle (ORCL) after the close and a 10-year Treasury note auction.
Tomorrow investors can look forward to the May Producer Price Index (PPI) and expected earnings from Adobe (ADBE).
On Friday we will see Preliminary June University of Michigan Consumer Sentiment.
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