Markets Overview
- ASX SPI 200 futures down 0.4% to 8,274.00
- Dow Average down 0.2% to 42,051.06
- Aussie down 0.6% to 0.6429 per US$
- US 10-year yield rose 7.0bps to 4.5363%
- Australia 3-year bond yield rose 3 bps to 3.60%
- Australia 10-year bond yield rose 5 bps to 4.48%
- Gold spot down 2.2% to $3,177.97
- Brent futures down 1.2% to $65.80/bbl
Economic Events
- 10:30: (AU) Australia to Sell A$1 Billion 70-Day Bills
- 10:30: (AU) Australia to Sell A$1 Billion 133-Day Bills
- 11:00: (AU) May Consumer Inflation Expectation, prior 4.2%
- 11:30: (AU) April Employment Change, est. 22,500, prior 32,200
- 11:30: (AU) April Unemployment Rate, est. 4.1%, prior 4.1%
- 11:30: (AU) April Participation Rate, est. 66.8%, prior 66.8%
- 11:30: (AU) April Full Time Employment Change, prior 15,000
- 11:30: (AU) April Part Time Employment Change, prior 17,200
Wall Street’s epic rebound from April’s meltdown is showing signs of exhaustion on speculation stocks have run too fast amid risks stemming from a trade war to an economic slowdown and sticky inflation.
After a 22% jump from last month’s intraday lows, the S&P 500 edged up just 0.1%. Most sectors fell, but big tech climbed. Boeing Co. gained on its largest-ever deal, with Qatar Airways placing an order for long-range jets during a visit to Doha by Donald Trump. The dollar erased losses as Bloomberg News reported the US is not working to include currency policy pledges in trade accords. Bond yields rose as Federal Reserve rate-cut bets receded.
A sharp rebound in risk assets — fueled by progress in trade talks and economic resilience — followed a month in which the consensus was to brace for the worst. The US-China truce, a UK pact and high-profile Gulf deals have reassured investors, yet lurking in the background is the worry that stocks get so extended that they’re vulnerable to surprises.
“As trade tensions ease, investors are pivoting back to fundamentals, but they may not like what they see,” said Mark Hackett at Nationwide. “The market has raced from oversold to overbought in record time. That limits near-term upside unless we see a clear re-acceleration in growth.”
To Matt Maley at Miller Tabak, a breather in the equity rally would be “quite normal and healthy.” The S&P 500’s 14-day Relative Strength Index is at the highest since December. Meantime, the CNN Fear/Greed gauge approached “extreme greed” levels.
“Stocks are getting a little short-term stretched, but we’d view modest pullbacks that confirm support as buying opportunities, especially among sectors with relative strength,” said Craig Johnson at Piper Sandler.
The Nasdaq 100 added 0.6%. The Dow Jones Industrial Average lost 0.2%. A gauge of the “Magnificent Seven” megacaps climbed 1.7%. In late hours, Cisco Systems Inc. gave a bullish forecast while Coreweave Inc. said artificial-intelligence cloud demand is accelerating.
The yield on 10-year Treasuries advanced seven basis points to 4.54%. The Bloomberg Dollar Spot Index was little changed.
Stocks remain vulnerable to further declines if deteriorating economic data reignite recession worries, according to Goldman Sachs Group Inc. strategists led by Peter Oppenheimer. The recent correction was rapid and consistent with an “event-driven bear market,” they wote.
“The average profile of these bear markets remains flat at best for some time after the initial fall,” the Goldman strategists said. “If this typical pattern is followed, the near-term upside is likely to be limited.”
To Rick Gardner at RGA Investments, the stock-market rally has legs.
“The trade negotiation with China was seemingly the toughest one on the docket, and the idea that there has been this much progress on the negotiations over such a short period of time, suggests that a resolution may be on the horizon,” he said.
Gardner says that what’s been remarkable about the rebound from April lows is the leadership of the tech sector — which was not leading the market in the early months of 2025 before the tariff situation escalated.
“We anticipate tech may continue to lead this market, as the sector stands to benefit from easing trade tensions and as investors once again resume their excitement over the promise of artificial intelligence,” he noted. “Even if we see a continued economic slowdown, the stock market may have already priced that in during the April selloff.”
Two of Wall Street’s major trading desks are making the same bold call on US stocks as trade tensions ease: Pile into this year’s biggest losers for quick, short-term profits.
Heads of equity trading at Citigroup Inc. and JPMorgan Chase & Co. say they’re particularly bullish over the next few weeks on small caps, technology hardware and homebuilders, which have each lagged the broader S&P 500 during the most recent leg up. In the current environment, Stuart Kaiser, who runs Citi’s desk as head of US equity trading strategy, also likes shares of companies with weaker finances, he said.
With the broader US stock indexes already erasing their declines of the year, the firms now say the traders and other speculative buyers who missed out will be on the hunt for pockets of opportunity to play catch-up before the next bout of tariff-induced turbulence strikes again.
“Despite this momentum, the full extent of tariff and earnings-related hits is still unknown,” said Daniel Skelly at Morgan Stanley’s Wealth Management Market Research & Strategy Team. “Investors may want to lean toward buying dips rather than chasing rallies, focusing on quality stocks with achievable earnings estimates.”
“Our neutral view is not a ‘negative’ stance,” said David Lefkowitz at UBS Global Wealth Management. “We believe the bull market is intact and stocks will likely rise further over the next year. But the economy will have to adjust to higher tariffs, and this could lead to a period of weaker economic data, which could be a modest headwind for stocks.”
Without any relevant economic data to digest, traders awaited a raft of reports scheduled for Thursday while sifting through the latest Fedspeak.
Fed Bank of Chicago President Austan Goolsbee said that it’s important for central bankers not to respond to day-to-day volatility in equities and economic policy pronouncements, noting that economic data remain steady for now. Fed Vice Chair Philip Jefferson said tariffs and related uncertainty could slow growth and boost inflation this year, but monetary policy is well positioned to respond as needed.
“Fed vice chair Jefferson’s speech today leans a little dovish after a run of more hawkish commentary from Fed officials, signaling that the Fed leadership is (sensibly) wary of calling the all-clear on downside risk even after US-China de-escalation,” said Krishna Guha at Evercore.
TD Securities joined several other Wall Street banks in predicting the Fed will cut rates later than previously anticipated, and swap contracts ceased fully pricing in two quarter-point moves by year-end.
