May 29th, 2025
Market Performance:
- A U.S. trade court decision sent shares moving north on Thursday.
- Investors are still cheering Nvidia’s highlight earnings report from Wednesday where the company narrowly beat Wall Street’s estimates. The chipmaker beat on both earnings and revenue.
- Asia finished higher overnight while Europe slightly dipped.
Economic Takeaways:
- The government’s second estimate of first quarter gross domestic product (GDP) inched up to –0.2%. The quarterly GDP deflator was unchanged at 3.7%. This metric gives an indication of inflation.
- Initial jobless claims jumped to 240,000, about 10,000 above expectations. This marks the third consecutive week that jobless claims have risen.
- The 10-year yield was at 4.471% this morning and the two-year at 3.978%.
- Bond yields went higher despite decent demand seen yesterday in a $70 billion auction of U.S. 5-year Treasury notes. The auction “went well despite ongoing debt and deficit concerns,” said Kathy Jones, chief fixed income strategist at Schwab.
- WTI oil is trading lower today on the possibility of supply hikes from OPEC+.
- Bitcoin was up 1.3% this morning. The 2025 Bitcoin Conference in Las Vegas this week is still going/ Bitcoin’s recent rally to $112,000 has entered a stabilization phase. Ruslan Lienkha, Chief of Markets at Youhodler, views the recent net distribution by large holders as a correction within bitcoin’s established $90,000–$110,000 consolidation zone, not a reversal. “This area is saturated with market orders, suggesting strong trading interest and potential support,” he said.
- As of early Thursday, futures trading indicated just a 2% chance of a Fed rate cut in June, and 22% in July, according to the CME FedWatch Tool.
President Trump Faces Trouble from U.S. Trade Court
Some relief on the tariff drama came this week when the U.S. Court of International Trade ruled that President Trump does not have the authority to enact certain tariffs put in place in early April. The Court’s decision applies to the 10% global baseline tariff and fentanyl duties on China, which were based on the International Emergency Economic Powers Act based on the claim that trade deficits created a national emergency.
The court’s decision does not extend to steel, aluminum and auto import duties, which were implemented under other trade acts.
The Trump administration indicated it would appeal the decision and could seek an emergency stay pending a higher-court ruling. Alternatively, President Trump could also reimpose tariffs under other statutes.
If yesterday’s court ruling holds up, it would eliminate 30% tariffs on Chinese imports, 25% tariffs on Canadian and Mexican tariffs, and 10% tariffs on most other goods entering the United States.
“The decision will be appealed, first to the U.S. Court of Appeals and then potentially the Supreme Court,” said Michael Townsend, managing director, legislative and regulatory affairs at Charles Schwab. “So, this is definitely not over. Even before this particular ruling, I think there was a sense among investors that the tariff fever was slowing, though there was a lot of angst and interest about what July 9 would bring—because that’s the date when the 90-day pause on the reciprocal tariffs ends. What this decision does is add a new element of uncertainty to the already confusing tariff landscape.”
Notables
- GameStop (GME) shares slipped for a second day on Thursday after it was revealed that the retailer purchased about $500,000 worth of Bitcoin.
- Nvidia climbed 5.5% in pre-market trading, bringing in a second day of gains after the tech giant impressed with its results and guidance on Wednesday.
- Other chip stocks climbed this morning in suite. Shares of Broadcom (AVGO), Advanced Micro Devices (AMD), and Arm Holdings (ARM) all went higher.
- Apple (AAPL) climbed 1.8% in pre-market trading amid the court ruling on tariffs. The iPhone maker was recently threatened by President Trump with a 25% tariff possibility.
- Salesforce (CRM) slipped 0.25% in pre-market trading despite beating analysts’ revenue and earnings expectations on Wednesday. Revenue climbed 8% annually to $9.8 billion, a record, while closely monitored subscription and support service revenue climbed 8%. The company also raised its full-year revenue guidance and released second quarter guidance above Wall Street’s estimates.
- HP (HPQ) dropped 10% before the open as earnings and guidance fell short of analysts’ expectations. Quarterly revenue was in line with Wall Street’s forecasts but missed the FactSet EPS consensus by $0.09.
- Best Buy (BBY) fell 2.54% after earnings beat analysts’ expectations and revenue came in as expected. Investors were concerned about the retailer lowering its fiscal year guidance based on the tariff impact.
- Foot Locker (FL) swung to a fiscal Q1 loss of $363 million, or $3.81 a share, from net income of $8 million, or 9 cents a share.
What’s Important Tomorrow
Stay tuned tomorrow for the inflation report most closely followed by the Federal Reserve: The Personal Consumption Expenditures (PCE) price index. It’s due at 8:30 a.m. ET Friday. Analysts are anticipating readings of 0.1% month over month for both headline and core PCE (core excludes volatile food and energy).
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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