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Market Report for Tuesday, May 27, 2025

Wall Street sprinted back from last week’s slump on Tuesday, fueled by Trump’s trade policy spin cycle, a jolt in consumer confidence, and falling bond yields. Threats receded, optimism returned, and risk-on got its groove back.

Level Change 5/27/25 (%)
– – – – – – – – – – – – – – –
+1.8 Dow
+2.5 Nasdaq
+2.4 Nasdaq 100
+2.1 S&P 500
+2.1 S&P 400
+2.6 S&P 600

President Trump opened Tuesday by declaring victory over Europe—again. After threatening a 50% tariff blitz just days ago, he now says he’s delaying it until July 9 thanks to “a very positive call” with European Commission President von der Leyen. The call, reportedly free of shouting, ended with Trump hailing EU willingness to “fast-track” trade talks.

It was the second mood shift on EU tariffs in 72 hours, leaving allies, advisers, and probably autocorrect in a state of confusion.

Supporters hailed Trump’s Friday duties diatribe as tactical brilliance, arguing that only a presidential cannonball could dislodge fossilized Europe. Critics saw it less as strategy, more as another reel in his audition to become the face of attention-deficit diplomacy. Either way, markets applauded the cooling—if not of tensions, then at least of trigger fingers.

Falling yields helped, too.

Japanese officials unfurled a delicate origami of intent to trim super-long bond issuance, soothing global bond markets still rattled from last week’s rout. Yields dropped, the yen slipped, and the ripple carried across the Pacific to US Treasuries. The 30-year yield notched its biggest drop since April. Apparently, when Japan whispers “shōshō omachi kudasai,” the market sits quietly and behaves.

Even Main Street cracked a grin.

May’s consumer confidence jumped to 98 from 85.7 in April, snapping a five-month skid. The report pinned the rebound on easing trade tensions—proof, if any were needed, that America’s mood swings are now pegged to Trump’s tariff meter.

Concerns about inflation, employment, and personal finances eased for now. But the labor market component slipped again, suggesting Americans feel better about the future, but less sure about keeping their jobs in it.

Tech came roaring back, even as Apple (AAPL +2.5%) remained in Trump’s penalty box. The president publicly grumbled about CEO Tim Cook skipping his Middle East trip, then followed up with a not-so-veiled threat: 25% tariffs on iPhones made abroad. It’s the latest twist in a once-cozy relationship, now frostier than a 2 a.m. FaceTime from Mar-a-Lago. Cook may soon need to choose between assembling in Texas or assembling a really good excuse.

It’s not “Made in the USA,” exactly, but close enough to pacify the president. Screwing together a few iPhones in Texas offers a compromise between full reshoring’s $3,500 fantasy price tag and the political need to slap a flag on something. “Assembled” is the new Mom and apple pie—if Mom baked with apples that came shrink-wrapped from Zhengzhou.

So, the market found a narrative it could love for a day: tariffs delayed, rates down, consumers marginally encouraged. It may not be stable footing, but in 2025, a hopscotch path is the only path.

— Jason Kelly

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Market Report for Friday, May 23, 2025

Markets sagged again Friday after a fresh round of tariff threats landed like a sandbag, flattening retailers still wheezing from the last batch. Stocks clawed back from session lows but still logged a 2% weekly drop. This trade war is the market’s Newtonian nemesis—what goes up meets tariffs and comes down.

Level Change 5/23/25 (%)
– – – – – – – – – – – – – – –
-0.6 Dow
-1.0 Nasdaq
-0.9 Nasdaq 100
-0.7 S&P 500
-0.2 S&P 400
-0.6 S&P 600

Trade returned to the front burner—and promptly boiled over. President Trump declared that talks with the EU are “going nowhere” and vowed a “straight 50% tariff” on all EU goods starting June 1. That’s more than twice the 20% bluff, quintuple the 10% goodwill pause, and roughly par for the posturing.

This followed reports that the US would reject the EU’s latest offer on a call with Trade Rep Jamieson Greer. Treasury Secretary Scott Bessent, reprising his role as tariff translator, said countries must “negotiate in good faith or face the US simply setting a tariff rate.” It’s trade policy by way of “clean your room or I’ll do it for you.”

The EU didn’t flinch. Trade Commissioner Maroš Šefčovič insisted that “mutual respect, not threats,” should guide policy, and pledged to defend EU interests. Analysts pointed out the White House vow wasn’t an executive order (yet) and called it a classic Trump tactic: threaten big, negotiate later.

Apple (AAPL -3%) took its turn in the barrel after Trump warned that iPhones must be made in the US or face a 25% tariff—“at least.” Precision vagueness aside, Wedbush dismissed the idea as “a fairy tale.” Tripling the iPhone’s price just to stamp “Made in America” on the back might rupture even Cupertino’s famed reality-distortion field.

Of course, there’s a reason iPhones aren’t made in America. Apple spent billions training engineers abroad, where China and India offer deeper talent pools at a fraction of US wages. Steve Jobs put it bluntly to President Obama in 2010: Apple needed 30,000 industrial engineers. “You can’t find that many in America to hire,” he said. “If you could educate these engineers, we could move more manufacturing plants here.”

Fifteen years later, the gap remains, and Trump’s tariff-driven wish won’t close it overnight. Attention spans matter, especially when paired with a long-term plan. Just ask China.

Retailers didn’t wait for tariffs to wreck margins—they jumped first. Ross Stores (ROST -9.9%) tanked after yanking its full-year outlook, blaming “evolving trade policies” and stubborn inflation. Deckers Outdoor (DECK -19.9%) fell even harder, warning of weakened demand and tariff tolls on its Hoka and Ugg brands. When shoes drop this hard, they leave a crater.

The Fed hasn’t exactly broken into song either.

Chicago’s Austan Goolsbee said the economy is holding up for now but warned that tariff-driven stagflation is “the central bank’s worst situation.” He’s still hopeful the US can return to the solid growth it enjoyed before the April 2 “Liberation Day” shock and suggested interest rates might be “a fair bit below where they are today” in 10 to 16 months. With luck, that’s enough time for the baby parade to march out of earshot.

And that was Friday: fresh tariff threats, falling shoes, and a president confident that wishful thinking can outpace engineering shortages.

Kelly Letter subscribers, I’ll see you Sunday. Bring coffee—we’ve got tariffs to untangle.

— Jason Kelly

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Market Report for Thursday, May 22, 2025

A quieter 10-year was all the lullaby stocks needed. After Wednesday’s rate spike startled traders awake, Thursday’s Treasury yawn eased them back into a light nap, tariff and national debt nightmares replaced by soft-focus rate-cut dreams…

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Market Report for Wednesday, May 21, 2025

Wednesday delivered a reminder that stocks don’t float when bond yields flood the room. Add in a geopolitical flare-up and a designer defection, and the day went downhill like a silk tie in a paper shredder.

Level Change 5/21/25 (%)
– – – – – – – – – – – – – – –
-1.9 Dow
-1.4 Nasdaq
-1.3 Nasdaq 100
-1.6 S&P 500
-2.7 S&P 400
-2.8 S&P 600

Wall Street’s latest skid was driven less by earnings and more by auctions—specifically, the Treasury’s lackluster $16B sale of 20-year bonds. It went off like a karaoke ballad at a funeral. The yield landed at 5.047%, the first 20-year above 5% since October 2023, and nearly 1.2 points above pandemic-era levels. After the gavel fell, the bond’s yield promptly spiked to 5.103%, its highest this year.

Why the cold shoulder? Investors demanded extra yield to take on what used to be considered the world’s safest debt, suggesting they now want hazard pay. Blame a rising tide of fiscal doubt, including a Republican tax bill that could add $3.3T to the debt by 2034—news that might have once rattled Moody’s, had Moody’s not already stripped the US of its perfect Aaa rating last week.

Investors got the memo: if Washington’s going to binge-spend like a college freshman let loose in a credit card kiosk, interest rates will climb. Morgan Stanley warned earlier this month that once the 10-year crosses 4.50%, high yields could start torching stock valuations again. It closed today at 4.58%, up from 4.17% just three weeks ago.

As stocks fell, so did hopes for diplomacy, with reports that Israel is preparing to strike Iran’s nuclear facilities. US-Iran negotiations are fraying, with enrichment capability the dealbreaker. Israel’s military believes that if talks fail, its operational window could close quickly—and it’s ready to act. The next round of talks is Friday in Rome.

Back in earnings land, Lowe’s (LOW -1.7%) cleared the low bar set for Q1, but investors weren’t impressed. Revenue dropped 2%, earnings slid nearly 5%, and tariffs have prompted a supply chain shakeup. Archrival Home Depot sees an opening to poach market share amid the trade turmoil. Lowe’s admitted it’s on the back foot—but not backing down. “We’re not in the habit of donating market share,” said CEO Marvin Ellison. The company is combing through supply chains one category at a time, looking for ways to escape the China tariff trap.

Then came the hardware headline of the day: Jony Ive, Apple’s former design deity, will lead product design at OpenAI. The AI oracle bought his LoveFrom studio in a $6.5B all-equity deal and unveiled plans to build a “family of AI devices.” OpenAI boss Sam Altman says the goal is to reinvent the very idea of a computer—something Siri has politely declined to do for over a decade. At Apple (AAPL -2.3%), the move lands like a well-designed slap from its past, just as critics accuse the company of sleepwalking through the AI boom.

Today’s bond backup alone was enough to flatten stocks. Breadth was lousy. The equal-weight S&P dropped more than 2%, its fifth-worst day of the year.

And that was Wednesday: bond blowback, budget bloat, brewing conflict, and the ghost of Apple past now prototyping elsewhere.

— Jason Kelly

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Market Report for Tuesday, May 20, 2025

After a six-day sprint, Wall Street idled Tuesday at the resting heart rate of a turtle. Whether lulled by tariffs, mixed earnings, or the reconciliation rodeo, the only thing up was torpor, as stocks slipped in slow motion…

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