Market recap – U.S. indices pause amid Fed caution and inflation watch
U.S. stock markets ended Wednesday’s session on a mixed note as investors digested comments from Federal Reserve Chair Jerome Powell and braced for key economic releases. The S&P 500 closed flat near 6,092, just under its record high, while the Nasdaq Composite advanced 0.3%, extending its winning streak to three days. The Dow Jones Industrial Average slipped 0.3%, breaking its recent upward trend.
Sector highlights – Technology leads as other sectors lag
Technology stocks were the primary drivers of Wednesday’s modest market movements, while other sectors saw muted or negative performance.
Nvidia hits record, Tesla faces pressure
Nvidia jumped 4.3%, reaching a new all-time high after receiving a bullish price target upgrade. In contrast, Tesla shares edged lower, driven by disappointing sales figures in Europe. While tech-powered higher, sectors such as real estate and utilities underperformed.
Bond market and inflation sentiment
The bond market remained stable, with 10-year U.S. Treasury yields holding just below 4.3%, and 2-year yields staying around 3.78%. Powell signaled the Fed’s wait-and-see approach as inflation risks tied to potential tariffs loom.
Macroeconomic backdrop – Housing softens and trade concerns persist
Recent economic indicators underscore growing caution around housing and global trade, even as investors stay upbeat on earnings and easing global tensions.
Home sales decline signals weakness
Fresh economic data showed that new home sales for May declined more than expected, hinting at continued pressure in the housing sector. Despite these signs, major U.S. indices remain close to record highs, buoyed by corporate earnings optimism and easing geopolitical tensions.
Asian markets mixed as investors brace for tariff decision
Asian equities reflected cautious sentiment, with investors navigating between regional optimism and looming U.S. policy deadlines.
Regional performance overview
South Korea’s KOSPI dropped over 2% due to profit-taking.
China and Hong Kong saw mild declines.
Japan’s Nikkei rose more than 1%, powered by tech gains linked to Nvidia and optimism from U.S.-Japan trade talks.
European equities slide amid defence and trade tensions
European stock markets responded to mounting geopolitical risks and shifting defense strategies, revealing sector-specific divergences.
Sectoral winners and losers
Decliners: Food, beverage, and banks
Gainers: Defence firms like Rheinmetall and automaker Stellantis
U.S. Dollar weakens, Euro strengthens
The U.S. dollar index slipped to 97.5, its lowest in over three years, as expectations for rate cuts grew. The euro rose to 1.1694, benefiting from dovish Fed signals.
Oil prices rise on inventory draw and truce stability
Crude oil prices ticked higher in Asian trade after data revealed a substantial drop in U.S. inventories. Support also came from a weakening dollar and stability in Middle East tensions, although gains were limited by the fragile ceasefire between Israel and Iran.
China signals consumer stimulus as disinflation concerns mount
China’s Premier Li Qiang promised enhanced measures to boost domestic spending, which could involve expanded subsidies. Despite prior efforts, disinflation remains a hurdle, with a potential U.S.-China trade agreement offering additional support. Li emphasized the resilience of China’s economy based on steady recent growth data.
Diplomatic moves and leadership uncertainty
Amid the geopolitical thaw, President Trump confirmed upcoming U.S.-Iran talks, although Iran hasn’t verified this. Trump reiterated that Iran would not be allowed to develop nuclear weapons. At the same time, Iran’s parliament fast-tracked a bill that could end cooperation with the UN atomic watchdog, complicating diplomatic progress. Meanwhile, Trump is reportedly considering announcing a successor to Jerome Powell as Federal Reserve Chair before summer, citing frustration over Powell’s resistance to rate cuts. Powell, however, intends to remain until his term ends in 2026.
Company highlights – Analyst calls and market reactions
Key analyst notes and company developments shaped trading in several high-profile stocks, highlighting evolving investor sentiment.
Key movers
Nvidia: Reached new highs after Loop Capital raised its target to $250, citing AI demand and next-gen Blackwell chips.
Microsoft: Wedbush set a new $600 target, driven by Copilot adoption and AI enterprise momentum.
Tesla: Robotaxi trial in Austin faced safety criticisms, including erratic driving and dangerous drop-offs.
Micron: Forecasted Q4 revenue of $10.7 billion, driven by strong AI chip demand and nearly 50% HBM sales growth.
FedEx: Dropped 5.8% after weak Q1 outlook and withdrawal of full-year guidance—first time in 13 years. Concerns were heightened by China exposure and tariff impacts.
BP and Shell: Denied merger rumors after a Wall Street Journal report; Shell reaffirmed strategic independence. BP shares are down 23% over the past year, while Shell is up 8%.
Mars/Kellanova: Mars’ $36 billion deal was cleared by U.S. regulators but faces full EU review on pricing power concerns.
OpenAI & Microsoft: CEO Sam Altman acknowledged ongoing discussions with Satya Nadella about restructuring Microsoft’s investment. Despite tensions, both remain committed to their partnership. Altman also praised Trump’s recognition of AI’s geopolitical relevance.
Analyst upgrades
Carnival: Citi lifted the target to $30 on strong Q2 results and raised full-year EBITDA forecast to $6.9 billion.
Coinbase: Bernstein boosted its target to $510, highlighting its expanding role as a “crypto universal bank.”
Uber: Cantor raised its target to $106, expressing confidence in its competitive edge despite Tesla’s robotaxi plans.
Eli Lilly: Citi set a $1,190 target driven by optimism around oral obesity drug orforglipron, projecting over $40B in sales by 2030.
Chewy: Bank of America reiterated its Buy rating, forecasting 8% Q2 growth and 25% earnings growth in 2025.
Boeing: Barclays maintained a $210 target, citing the potential to liquidate $25B from its $87B inventory and return to positive free cash flow by 2028.
TSMC: Goldman Sachs raised the target to NT$1,210 amid robust AI-related packaging demand and raised revenue forecasts for 2025-2027.
Data and earnings calendar
Today’s key U.S. releases include:
- GDP figures
- Jobless claims
- Durable goods orders
- Pending home sales
Earnings to watch: Nike and Walgreens
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