Market Report for Tuesday, June 3, 2025
While the heavyweights dozed through Tuesday’s gentle drift higher, America’s lightweights slipped through the ropes and scored a few points. Small caps took the lead, confirming that sometimes David gets to borrow Goliath’s limo.
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Market Report for Monday, June 2, 2025
Stocks centimetered higher Monday, undeterred by feeble factory data, a fresh outbreak of metals-based mischief—the last frontier of tariffs not yet tossed by the courts—and the usual pantomime between Washington and Beijing. When the bell rang, investors gave the day a reluctant nod.
Level Change 6/2/25 (%)
– – – – – – – – – – – – – – –
+0.1 Dow
+0.7 Nasdaq
+0.7 Nasdaq 100
+0.4 S&P 500
-0.2 S&P 400
-0.4 S&P 600
The S&P extended last week’s gains, which capped May as the market’s best month since 1997—awkward news for anyone who sold in May and went away, only to watch the market go up and stay. Another Wall Street adage that rhymes better than it performs.
Today’s modest climb came despite fresh frictions in the Trump-Xi trade series.
On Friday, President Trump signed off a post with “So much for being Mr. Nice Guy,” which, if the aim was coaxing China back to the table, might not have been the suavest opening line. China replied with its usual chill, reminding all concerned that it doesn’t do diplomacy under duress, and a note that talks conducted under threat are rarely talks at all. They’re usually theater.
Even so, a Trump-Xi call is reportedly in the works this week, because every on-again, off-again saga needs a reunion scene, and markets remain hopeless romantics, no matter how many times they’ve been jilted.
Back in America’s steel country, Trump staged a campaign-style event to unveil a doubling of steel and aluminum tariffs. A banner touting the golden age tested better than “A Pricey Future for Washing Machines.” The steel lobby cheered. So did swing-state strategists, who still call tariffs a wedge issue.
Less thrilled were the industries that actually use steel, and the nations that sell it to America—many of whom thought they had handshake deals that now look more like verbal IOUs shouted over jet noise.
The so-called TACO trade—Trump always chickens out—may be nearing its expiration date.
Halfway through the 90-day tariff pause, progress is scarce and a court ruling just tossed most of Trump’s tariffs into the legal trash heap. Trump has to show he’s more than just talk. With steel and aluminum tariffs among the few still standing, he promptly doubled them, flanked by flags, hardhats, and applause. Leverage, it turns out, is a perishable good.
But you don’t hear much applause on factory floors.
Manufacturing missed again in May, with the ISM index slipping to 48.5, its weakest since November. New orders stayed negative for a fourth month, imports fell to levels not seen since 2009, and high prices refused to budge. If this is reshoring, it’s having a rough onboarding.
Fed Governor Waller tried to soothe nerves, repeating his line that tariffs will have a “transitory” impact on inflation—provided they stay low and inflation keeps falling, which strikes your correspondent as a highly specific scenario. Nonetheless, he expects that outcome, and rate cuts later this year. And maybe a nomination to Fed chair.
In corporate news, Google (GOOG -1.4%) dipped after reports that Samsung may ditch Gemini for Perplexity, the AI search startup with actual footnotes. If true, Google’s AI crown may be headed for the same fate as Siri: quietly replaced and never mentioned again. Worse, if Perplexity becomes the default search on Galaxy phones, it could dent Google’s core business. Almost no one knows how to change a default setting. Just ask the people whose microwaves have been flashing 12:00 since the Clinton administration.
And that was enough for light green. Wall Street’s betting that no more “Mr. Nice Guy” just means “see you Thursday.”
— Jason Kelly
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Market Report for Friday, May 30, 2025
Wall Street limped into the weekend like a diplomat on day five of a failed summit. Sure, inflation’s inching toward 2% like the Holy Grail wrapped in red tape, but there’s a strong sense that someone, somewhere, will soon impose a tax.
Level Change 5/30/25 (%)
– – – – – – – – – – – – – – –
+0.1 Dow
-0.3 Nasdaq
-0.1 Nasdaq 100
-0.0 S&P 500
-0.4 S&P 400
-0.4 S&P 600
Despite Friday’s fade, May ended on a high note. The S&P and Nasdaq logged their best month since November 2023 — up 6.2% and 9.6%, respectively — fueled by AI exuberance, a few economic reprieves, and a US tariff policy that turned out less fearsome than feared. It helps that “Trump always chickens out” — the TACO trade.
That could change.
Trade once again hogged the spotlight, with President Trump jumping on Truth Social to accuse China of dragging its feet on tariff rollbacks. Treasury Secretary Scott Bessent echoed the frustration, calling talks “a bit stalled,” though he dangled the prospect of a Trump-Xi call. China, for its part, declined to confirm or deny the existence of Donald Trump.
USTR Jamieson Greer said Beijing removed tariffs as promised but is dragging its feet on non-tariff countermeasures, like rare earth restrictions and blacklisting US firms. That’s a problem when your green economy needs Chinese magnets to stay, well, magnetic. If only someone had thought this through in advance. Maybe, I don’t know … planned?
And just when you thought this trade war couldn’t get more inventive, along comes Section 899, the latest weapon from our Beltway Bureau of Unintended Consequences. The so-called “capital war clause” in the “One Big Beautiful Bill” would hike US taxes on investors from “discriminatory” countries. Think France, with its 3% digital services tax aimed squarely at US megatech, or Germany, reportedly weighing a 10% version of its own.
That could weaken foreign demand for Treasuries, just when the US needs every bond buyer it can get. As Deutsche Bank warned, “weaponization of US capital markets into law” may sound patriotic, but does risk spooking the very investors we count on to fund the deficit.
Well, at least the Fed got a rare win.
April’s core PCE rose just 0.1% month-over-month, pushing the year-over-year rate to a post-2021 low of 2.5%. It was the second straight cooler print and lent some credence to the idea that disinflation isn’t a myth after all, even if tariffs haven’t shown up in the numbers yet. No, it’s not enough to pry the Fed from its wait-and-see wall stare, but we can leave the Eccles smelling salts in the drawer.
Costco (+3.1%) rode consumer anxiety to a gain, touting tariff workarounds and the timeless appeal of bulk peanut butter. Dell (-2.1%) missed on EPS but dazzled with $7B in AI server shipments and an order book stuffed to the gills, proving that the next best thing to printing money is being Nvidia-adjacent.
And with that, May closed on a cautious high: tariffs unresolved, tax threats rising, inflation cooling, and AI still gunning for humanity’s user manual.
June arrives Monday. Brace for another chapter in the saga titled Economic Policy as Performance Art.
— Jason Kelly
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Market Report for Thursday, May 29, 2025
Wall Street faced a whirlwind of news Thursday—illegal tariffs! legal again!—but mostly shrugged, deciding that judicial drama and AI gold rushes cancel each other out, at least until tomorrow’s headline roulette spins again.
Level Change 5/29/25 (%)
– – – – – – – – – – – – – – –
+0.3 Dow
+0.4 Nasdaq
+0.2 Nasdaq 100
+0.4 S&P 500
+0.3 S&P 400
+0.4 S&P 600
Stocks wandered modestly higher in a session that offered more confusion than conviction.
The day’s main plot twist—President Trump’s signature tariffs declared illegal—was immediately spun into a bureaucratic blur, then promptly paused by a federal appeals court. So yes, tariffs are illegal, but also still legal, and possibly headed to the Supreme Court, where justices can weigh in on whether emergency powers include taxing toasters from Toronto.
The original ruling said Trump had overreached by invoking the International Emergency Economic Powers Act to slap duties on nearly every country. The White House called the ruling “rife with legal error,” appealed, and secured a stay just before the market close. As of now, the tariffs remain in effect, and traders remain unsure what just happened. Call them puzzled, not panicked.
That might be because Nvidia offered something better to focus on.
The AI bellwether (NVDA +3.3%) delivered strong results that didn’t just clear a high bar, they brought their own. Concerns over China export losses were drowned out by surging demand for inference computing and the full-speed launch of its new Blackwell rack system. CEO Jensen Huang declared that “every nation now sees AI as core to the next industrial revolution,” which is probably true, though some are eyeing it more like the next oil, with accompanying turf wars.
Elsewhere on this laid-back Thursday, Fed Chair Powell dropped by the White House for what the Fed described as a neutral, data-driven chat. Trump restated that the Fed should cut rates. Powell nodded politely and restated the importance of “careful, objective, nonpolitical analysis”—code for “you run your show, we’ll run the numbers.”
Goolsbee of the Chicago Fed dangled the idea that avoiding tariffs might clear a path for rate cuts. But FOMC minutes tilted hawkish, with slowdown anxieties top of mind. And don’t lose sight of this: Even if the biggest tariffs vanish, what’s left would still be the steepest since 1969, keeping pressure on growth.
So we’re left where we’ve been: staring at a market balanced between policy purgatory and AI euphoria. Nvidia lit the path forward, but Washington lit a legal fuse. Watch which burns faster.
— Jason Kelly
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Market Report for Wednesday, May 28, 2025
Wall Street flinched on Wednesday, unmoved by Japanese bonds or European chicken hawks, and mostly just waited for Nvidia’s earnings after the bell. With no fresh catalysts, stocks tripped, small caps hitting the pavement first…
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