 |
|
Market Report for Friday, May 16, 2025
Wall Street wrapped the week on a high, still basking in the afterglow of trade-ledge talkdowns. Friday’s session closed near its peak, as if investors decided the safest hedge was optimism. Gold sulked at the absence of calamity…
_________________
Don’t just peek through the keyhole—unlock the full report and get the whole strange show. Subscribe here:
Look insideThe Kelly Letter
Market Report for Thursday, May 15, 2025
Wall Street kept its head above water Thursday, paddling through oil-country rumors, retail grumbles, and supply shock whispers. The Nasdaq paused for breath, but the rest of the market managed a modest rise despite a fresh round of tariff Tetris for corporate America.
Level Change 5/15/25 (%)
– – – – – – – – – – – – – – –
+0.7 Dow
-0.2 Nasdaq
+0.1 Nasdaq 100
+0.4 S&P 500
+0.2 S&P 400
+0.6 S&P 600
Stocks are trading like last month’s panic was just a fever dream. The S&P 500 is within 4% of record highs, and the Nasdaq 100 has pole-vaulted from bear to bull. Easing trade tensions and a White House that sounds less like it’s spoiling for a fight are giving buyers reason to keep pressing the gas.
And today, mixed data, middling earnings, and muted Fedspeak left equities to interpret their own tea leaves. They brewed a mild blend.
Bonds reminded everyone who’s boss, and gave permission for stocks to stretch their legs. Investors exhaled as Treasury yields edged lower. The 10-year yield fell 10 basis points to 4.43%, easing pressure on equities after flirting with 4.50% earlier in the week. It wasn’t a breakout, but it was a break.
Retail sales flubbed the forecast across the board—headline, core, control group all underwhelmed. March was revised higher, softening the sting, but April showed that shoppers didn’t just pause, they RSVP’d no.
However, core PPI surprised to the downside in its biggest monthly drop in five years, thanks to sagging wholesale margins on machinery and vehicles. Not bad news, suggesting as it does that inflation’s still curled up somewhere in the supply chain, hitting snooze.
Initial jobless claims ticked up a bit less than feared, but continuing claims moved higher. Industrial production flatlined, the Empire State survey flopped, and the NAHB housing index sank to a six-month low. The Philly Fed missed, but not by much—an achievement in a world where “less disappointing” counts as bullish.
Fed Chair Powell skipped rate talk Thursday, preferring the safer pastures of long-term strategy tweaks and a renewed love letter to the 2% inflation target. He warned the economy may be entering a stretch of frequent supply shocks, a theme he’s repeated in recent weeks. Tariffs didn’t make the script this time, but Powell and others have made clear: they expect tariffs to slow growth and stoke inflation—just the kind of balancing tightrope central bankers dream about.
Corporate highlights offered a study in contrasts.
Walmart (WMT -0.5%) beat earnings and stuck to its full-year guidance, but warned that even it can’t outmuscle tariffs forever. “We will do our best to keep our prices as low as possible,” said CEO Doug McMillon, but tariffs don’t shop at Walmart. April and May have already seen sticker creep. By June, said CFO John David Rainey, shopping carts will bear the full weight of a trade policy even its architects can’t quite explain. About 15% of Walmart’s products come from China—the tariff minefield—while 60% are groceries, mostly tariff-proof thanks to domestic and North American sourcing. Unfortunately, canned corn doesn’t offset a $50 toaster.
Cisco (CSCO +4.9%) beat estimates and talked up AI momentum: customers are spending big on security and software, but didn’t panic-order ahead of tariff hits. Sure, maybe a client here or there pulled the trigger early, said CEO Chuck Robbins, “But we looked at a ton of data points to see if we saw any signs of broad-based pull-ahead business, and we did not.” In this economy, AI spending is right up there with bread and milk.
Meanwhile in Qatar, Trump took time to scold Apple (AAPL -0.4%) for shifting iPhone production from China to India in a bid to sidestep tariffs. Build them in America, he urged, apparently unfazed by the $3,500 price tag such patriotism would require. That’s Wedbush’s estimate for a US-made model. Apple CEO Tim Cook may be Trump’s friend, but he’s not suicidal. Triple the price, and even Apple fans might start making eye contact again.
And in coffee news, Starbucks (SBUX +0.8%) is reportedly considering selling part of its struggling China business, according to Bloomberg. The Seattle siren has been out-foamed by local champs like Luckin and Chagee, which have now set their sights on US shores. America, gird your loins: the next great trade war may be fought in tapioca pearls and lavender cold brew.
No blowouts, no breakdowns. Just a market inching through muted data, cautious guidance, and the drip-drip of tariff fallout. Some days, treading water is a win.
— Jason Kelly
_________________
Enjoyed today’s market misadventures? They come around often. So should you.
Market Report for Wednesday, May 14, 2025
Wall Street split the difference Wednesday, as AI rode a sovereign wave and small caps got swept out to sea. The S&P tiptoed higher, the Nasdaq extended its winning streak, and Nvidia put on its Sunday best for the Saudi crown.
Level Change 5/14/25 (%)
– – – – – – – – – – – – – – –
-0.2 Dow
+0.7 Nasdaq
+0.6 Nasdaq 100
+0.1 S&P 500
-0.3 S&P 400
-1.1 S&P 600
The market split like a dinner party: AI aristocracy enjoying tea in the parlor with petro-royalty, small caps out back with the caterers. The Dow drooped, the S&P wobbled, and the Nasdaq sauntered higher on the shoulders of its datacenter demigods.
At the center of the fanfare was sovereign AI, the new global prestige project. Think building a national airline, only with more GPUs and fewer peanuts. In Riyadh, President Trump, Nvidia’s Jensen Huang, and a caravan of Silicon Valley titans unveiled a mega-deal with Humain, the Saudi Public Investment Fund’s AI darling. The blueprint: a 500-megawatt petaflop playground stacked with Nvidia’s next-gen GB300 chips. That’s a lot of thinking in a place where even the sand needs shade.
Nvidia (NVDA +4.2%) rode the headlines like a sultan on a stallion, robes billowing and valuation rising. Advanced Micro (AMD +4.7%) trotted close behind, chipper enough to tack another $6B onto its buyback plan, bringing the total to $10B. Bank of America pegs the long-term payoff for Nvidia’s global AI empire at $500B. That’s “B,” as in “buy every dip.”
The sovereign AI push isn’t just a sales opportunity, it’s geopolitical insulation. Countries want language models that speak their language, reflect their worldviews, and in the Saudi case, their selective historical memory. Humain’s new LLM, “ALLAM,” is trained in Arabic and English, but won’t say a word about Jamal Khashoggi, the Washington Post columnist the CIA says was murdered and dismembered by a Saudi hit squad in 2018. The model’s response? No comment, no memory, no trace. Even artificial intelligence can be taught which sand not to kick.
Elsewhere, a modest recession reprieve gave bulls reason to squint at the horizon. Back on April 19, Apollo’s chief economist Torsten Slok panicked over tariffs and slapped a 90% recession chance on 2025. Today, with tariffs on timeout, he dropped the odds to 30% and declared “tail risk has been removed.” If you ever doubted your own ability to flip a coin and spout off with the overpaid, under-correct crowd of macro mystics, here’s your cue. Nobody knows nuttin’.
Despite the collective exhale, Main Street’s not exactly uncorking the elderflower tonic. The Russell 2000 slumped 1.1%, suggesting sovereign AI deals don’t reach the hardware store in Dubuque. Gold tumbled 1.8% to below $3200/oz, its worst showing in a month, as traders shifted from shiny rock to silicon gods. Sorry, goldbugs: Armageddon missed its window.
The market’s mood remains directionally confused but semantically thrilled. If you’ve got export clearance and an AI roadmap, you’re golden. If you’re just trying to sell soda and lumber through a tariff maze, may fortune smile upon you. AI is the new oil. If you’re not in the room with the sheikhs and servers, you’re not just behind the curve, you’re in the wrong century.
— Jason Kelly
_________________
Free subscribers get the market’s mood ring. Paid subscribers get the diary, the therapy notes, and a seat at the intervention.
Market Report for Tuesday, May 13, 2025
Wall Street found reasons to cheer on Tuesday—the glow of temporarily lower-but-still-high tariffs, inflation riding an ice cube on a waffle iron—but one oversized HMO dragged the Dow to the infirmary…
_________________
If you’ve read this far, you’re probably curious enough to go the distance. Subscribe now for the rest of today’s report—and all the ones that follow:
Market Report for Monday, May 12, 2025
Last Thursday, President Trump said “buy.” Investors saluted, clicked, and positioned for a trade breakthrough. On Monday, they got one. Nothing moves risk-on sentiment quite like 115 percentage points of tariff relief and a bullhorn cranked to 11.
Level Change 5/12/25 (%)
– – – – – – – – – – – – – – –
+2.8 Dow
+4.4 Nasdaq
+4.0 Nasdaq 100
+3.3 S&P 500
+3.5 S&P 400
+3.7 S&P 600
Stocks exploded Monday on word that US-China tariffs will fall sharply for at least 90 days, a ceasefire engineered in the Alps and packaged as a Trump-branded miracle. The S&P jumped 3.3%, putting it within 5% of February’s record close and nearly flat on the year. When you open a 145%-tariff umbrella, closing it looks bullish.
Per the new deal, the US will slash its levies on Chinese goods from 145% to 30%, while China trims its 125% bite down to a daintier 10%. That 30% US number includes 10% for general irritation and a 20% fentanyl-linked penalty—because nothing has hampered US progress more than synthetic opioids.
The deal exceeded expectations. Just Friday, Trump floated 80% as a target, and weekend press whispers pegged a best-case cut at 50%. Instead, negotiators in Geneva spun a full policy pirouette. Treasury Secretary Scott Bessent declared “neither side wants a decoupling,” and everyone nodded like they hadn’t just spent two months saying the opposite.
The relief rally lifted all boats, tech luxury yachts first. Amazon and Meta led the Mag 7 charge with 8% gains, as optimism spread like a social media algorithm freed from content moderation. Even small caps joined the parade, wedged into the jet-ski compartment.
Outside of tariffs, the GOP’s reconciliation bill reached a $5T price tag—$500B over budget and still not counting Trump’s tax-cut promises. Medicaid cuts were reportedly dialed down, either to soften the optics or because someone hid the scissors.
Elsewhere in Washington, Trump announced a “most favored nation” drug-pricing policy. That means benchmarking US drug costs to cheaper foreign prices, a move sure to delight American patients and irritate every pharma lobbyist with a golf membership. Without the ability to fleece Americans, big pharma might need to hold their meetings at Marriott instead of Monaco.
The Fed’s April Senior Loan Officer Opinion Survey on Bank Lending Practices (SLOOS) report found banks tightening the screws on credit card lending, while leaving auto and other consumer loan standards mostly unchanged. Businesses of all sizes reported cooling credit appetite, and lenders seemed in no hurry to reignite it. The message to stretched households inching toward the checkout: bring cash—and maybe a coupon.
Fed Governor Adriana Kugler noted the economy’s resilience, but warned that tariff-related price hikes may outlast the tariffs themselves. If only she’d scheduled her remarks before the post-tariff party. All she could do was nod politely and admit the weekend deal was “obviously … an improvement” in trade relations.
Naturally, better trade news means worse odds for rate cuts. In this upside-down logic, progress is a problem. Markets now expect just over 50 basis points of Fed easing this year, down from 100 two weeks ago, before Geneva gave Powell a reason to keep his hands in his pockets.
Monday wrapped a classic Trumpian trade whiplash: Threaten, escalate, spook stocks, then declare victory near the original starting line. Stocks soared. Mission accomplished. Until the next tweet.
— Jason Kelly
_________________
The free list is where markets “might boom.” The paid tier is where we confirm, “Oh, there was a boom, all right.”
