May 26th, 2025
Market Performance:
• U.S. markets are closed today on Memorial Day.
• European stocks climbed along with US equity futures after President Donald Trump extended a deadline on aggressive euro area tariffs. Trump agreed to delay the date for the levies to July 9 from June 1.
• In Europe, Thyssenkrupp AG jumped more than 8% after a report that the firm’s chief executive plans to turn it into a holding company. Volvo Car AB climbed as much as 4.9% after announcing plans to eliminate around 7% of its global workforce to cut costs and protect profits.
Economic Takeaways:
Stocks:
• S&P 500 futures rose 1.3%
• Futures on the Dow Jones Industrial Average rose 1.1%
• The MSCI World Index rose 0.3%
• Nasdaq 100 futures rose 1.5%
• The MSCI Asia Pacific Index rose 0.1% to the highest in more than seven months
• The MSCI Emerging Markets Index fell 0.2%
• Ibovespa rose 0.2% to the highest since May 20
• Mexico’s S&P/BMV IPC fell 0.2%
Currencies:
• The Bloomberg Dollar Spot Index was little changed
• The euro rose 0.2% to $1.1382
• The British pound rose 0.2% to the highest in more than three years
• The Japanese yen fell 0.1% to 142.77 per dollar
• The offshore yuan was little changed at 7.1775 per dollar
• The Mexican peso was little changed at 19.2244
Cryptocurrencies:
• Bitcoin rose 1.3% to $109,099.26
• Ether rose 0.5% to $2,537.75
Bonds:
• The yield on 10-year Treasuries declined two basis points to 4.51%
• The 10-year bund yield was little changed at 2.56%
• The 10-year gilt yield declined seven basis points, more than any closing decline since April 14
Commodities:
• West Texas Intermediate crude was little changed
• Spot gold fell 0.5% to $3,341.80 an ounce
President Trump Retreats Temporarily on European Threats
Last Friday’s tariff threat on the European Union sent shockwaves through the market. It was a week of decline for stocks as the Nasdaq Composite and Dow Jones Industrial Average dropped about 2.4%. The S&P 500 slid roughly 2.6% on the week.
European stocks were seeing a slight comeback on Monday after President Trump decided to slightly delay his threat on Sunday.
The President’s decision to extend the deadline came after a phone call with European Commission President Ursula von der Leyen.
Von der Leyen, who heads the EU’s executive arm, said earlier Sunday in a post on X that “Europe is ready to advance talks swiftly and decisively,” but “a good deal” will need “time until July 9.” That’s the date on which Trump’s 90-day pause of his so-called reciprocal tariffs had originally been set to end.
“One thing that is starting to concern us a bit is the fact that the rebounds that follow these selloffs are losing strength as we go on,” commented Frederic Rozier, a portfolio manager at Mirabaud France. “We can sense investor fatigue about this back-and-forth and there’s a risk sentiment will erode as markets run in circles on tariffs. The only thing we know is that even if there’s an agreement, there will be a cost for European stocks.”
“The stock market seems to dance to Trump’s tune: first a threat, then a pullback, quickly followed by a rebound as speculative investors anticipate a concession from the US President,” said Jochen Stanzl, chief market analyst at CMC Markets. “This morning’s confirmation of such expectations reinforces the so-called ‘Trump Pattern,’ which is increasingly seen as a successful strategy for risk-tolerant investors.”
What to Watch This Week:
A key event this week will be Nvidia Corp.’s results on Wednesday, which reports after the bell. The chip-making giant’s outlook will be crucial amidst tariff uncertainty. This earnings report will effectively mark the end of the first quarter reporting period for S&P 500 companies.
For the quarter, the chipmaker is expected to report adjusted earnings per share (EPS) of $0.88 on revenue of $43.3 billion, according to Bloomberg analyst consensus data. The company reported adjusted EPS of $0.61 on revenue of $26 billion in the same period last year.
Reports from Okta (OKTA) Salesforce (CRM) and Costco (COST) will also be given close attention to.
Investors are also awaiting the Federal Reserve’s preferred inflation measure, the US personal consumption expenditures price index excluding food and energy, which will be released Friday. The April reading is forecast to rise 0.1% based on consensus expectations.
BofA senior US economist Aditya Bhave wrote in a note to clients that the May inflation data, which will be released next month, will likely provide the “first read” of how tariffs are impacting prices.
How will the market do this week?
“Safe to say for the time being we’ve hit ‘trough’ trade uncertainty,” Piper Sandler chief investment strategist Michael Kantrowitz wrote in a note to clients on Friday. “At this point markets need to see these tariffs retracted AND bond yields to not spike again for any material move higher.”
Looking farther ahead…
Morgan Stanley chief investment officer Mike Wilson sees stocks finishing 2025 higher.
“We continue to prefer US over international equities as earnings revisions start to inflect higher for the S&P 500 relative to MSCI ACWI Ex US (CWI),” Wilson wrote while defending his year-end S&P 500 target of 6,500.
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