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Market Report for Tuesday, June 10, 2025

Stocks rose Tuesday as traders squinted at London’s trade talks, decided the tariff drama was heading for a whole lot of nothing, and snapped up the opening-salvo losers. Shorts got squeezed while rare earths stayed rarer than geology intended.

Level Change 6/10/25 (%)
– – – – – – – – – – – – – – –
+0.3 Dow
+0.6 Nasdaq
+0.7 Nasdaq 100
+0.6 S&P 500
+0.3 S&P 400
+0.7 S&P 600

The rally kept inching forward, slow but steady, like a dog sniffing its way back to a buried bone. Tails are wagging, with the major indexes now close enough to record highs to lift a leg. The S&P sits just 1.7% from February’s peak, and the Nasdaq is 2.3% off its December high.

Beneath the calm surface, it was a feeding frenzy for misfits. Heavily shorted names, so-called low-quality fare, and year-to-date losers staged a comeback.

Shares of Tesla (TSLA +5.7%) rose nearly 6% despite last week’s pile-on of bearish bets during the Trump-Musk feud, which seems to have been more about setting up a trade than settling a score. Just sayin’.

Energy looks less recession-burdened these days. After plunging on “Liberation Day” tariff fears, the sector is up 11% from the bottom, with 4% of that since Thursday. As the outlines of doom blur, the market is slipping back into its favorite outfit: mindless optimism.

Investors kept eyes on London, where US-China trade talks resumed with the usual choreography: hopeful remarks, no details, and a promise to stay another day if the magic doesn’t happen tonight. Commerce Secretary Lutnick said things are going well, which in diplomatic terms means “not derailed yet.” Analysts expect a mutual loosening of export controls. The US might throw a few tech scraps back over the fence in exchange for China easing rare-earth restrictions.

From our “more than just two countries in the world” file, the US and India are reportedly closing in on an interim trade deal. It’s unclear whether this will involve actual trade, or just more interims.

Like investors, companies are starting to see through the trade war pantomime. The NFIB Small Business Optimism Index ticked up to 98.8 in May from 95.8 in April, snapping a four-month losing streak and beating expectations. Not everyone’s buying the recession postcards.

Markets are holding their breath for tomorrow’s CPI report, with whispers of a slightly cooler print. Analysts expect headline inflation to have risen 0.2% in May, pushing the year-over-year rate to 2.5%. Core CPI is seen ticking up 0.3%, nudging the annual rate to 2.9%.

The key question: have companies started cranking prices higher because they think costs will rise, or because they can’t get enough stuff to sell? Either way, it’s bad for demand and worse for Fed doves hoping to cut rates without looking reckless.

And you know whose social media impulses will flare up at that news. Brace yourself, “Too Late” Powell.

Finally, a check-in at the civilizational inflection point.

In a move that feels equal parts strategic and awkward, OpenAI has tapped Google (GOOG +1.3%) Cloud to help power its ever-growing appetite for compute. Reuters called it a surprise. It is—and isn’t. The two are fierce rivals in AI, but training those models takes a whole lot of horsepower, and apparently not even OpenAI can build it all alone. Google does sell cloud services, so…

Google’s cloud unit gets the win, supplying extra capacity to help OpenAI scale ChatGPT, the very product giving Google’s core search business night sweats. The threat to Google Search hasn’t gone anywhere. But at least now, it gets to bill the competition by the petaflop-second.

Over at Meta (META +1.2%), Mark Zuckerberg is reportedly unhappy with how Llama 4 is performing, and how the world is reacting to it.

So he’s doing what any frustrated billionaire would do: holding home-based AGI strategy meetings in Lake Tahoe and Palo Alto, handpicking a team of experts to build the superintelligence. Your correspondent needs to rethink his parties.

According to Bloomberg, Zuck’s hiring 50 people and reshuffling the Menlo Park layout to keep his new AI brain trust within walking distance of his office. The goal: catch up to OpenAI, which still leads the race Meta insists it’s not losing. The New York Times says the effort includes Alexandr Wang of Scale AI, with Meta considering a multi-billion dollar investment in his company.

And that was the day.

Stocks are drifting higher, trade talks are drifting sideways, and megatech is drifting into each other’s server farms. It might be the calm before something, but nobody’s quite sure what.

— Jason Kelly

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Market Report for Monday, June 9, 2025

Markets tiptoed into Monday like a cat into a bathtub, glancing at US-China trade talks underway. Gains were small, conviction smaller. Wall Street may lean bullish, but it’s twitchy, watching Washington stir the cauldron of surprise with eye-of-newt unpredictability…

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Market Report for Friday, June 6, 2025

Friday’s market pulled off a tidy hat trick: decent jobs data, a thaw in the Trump-Musk cold war, and China prying open the rare-earth pantry just enough to feign generosity. None of it tilted the field, but together, it prodded bulls to a 1% gain.

Level Change 6/6/25 (%)
– – – – – – – – – – – – – – –
+1.1 Dow
+1.2 Nasdaq
+1.0 Nasdaq 100
+1.0 S&P 500
+1.0 S&P 400
+1.2 S&P 600

Stocks rallied across the board, pushing the S&P 500 over the 6,000 mark, more than 20% above its early April low and within 2.5% of February’s record close at 6,144. The world may pull through this trade war after all.

Start with the jobs report.

May nonfarm payrolls rose 139K, beating the 130K consensus, though downward revisions to March and April took a little shine off. The unemployment rate held at 4.2%, supported by a dip in participation—fewer people looking for work. Wages came in hot at +0.4% month-over-month, reigniting the Fed’s internal debate between “wait” and “wait longer.”

In other words, soft landing enthusiasts got their Goldilocks moment.

Employment’s holding up, wage growth isn’t collapsing, and there’s just enough uncertainty to keep the Fed motionless. True, no imminent rate cut, but with the effective fed funds rate at 4.3%—lower than it was during the 1980s boom and the dot-com froth of the late ’90s—nobody’s exactly gasping for liquidity.

Tesla (TSLA +3.7%) bounced back from Thursday’s stomach-churning plunge—its second-worst day since 2020—after reports of a Trump-Musk detente. The White House denied any upcoming phone call but leaked that Trump plans to sell his Tesla, presumably while grousing that it won’t take commands in all caps. The bromance is broken, but for now, the revenge tweets are still in drafts.

Trade got a whiff of progress, too. The White House confirmed high-level US-China talks are set for Monday in London, confirming that this week’s call successfully produced the one thing both sides can always deliver: another meeting.

More important, Beijing cracked open the rare-earth vault ever so slightly, granting export licenses for magnets used in everything from EVs to missiles. The pace remains glacial, and the message clear: these aren’t concessions, they’re bargaining chips. China’s 90% stranglehold on rare-earth magnets makes OPEC look quaint, and they’re wielding it like a Bond villain petting a cat.

One Chinese policy advisor put it plainly: rare earths are leverage, and Beijing intends to use them. It seems to be working. Mercedes-Benz, among others, is already scrambling for supply workarounds that probably don’t exist. If you’re wondering whether geopolitics matters to markets, ask any factory engineer currently Googling “non-magnetic EV propulsion.”

Back in earnings land, Broadcom (AVGO -5%) beat slightly and kept the AI dream alive, but not enough to support high expectations. AI revenue jumped 46% to $4.4B, with CEO Hock Tan promising ten consecutive quarters of growth on hyperscale partners writing blank checks. But the stock still dropped 5% as investors focused less on the gold rush and more on the company’s non-AI business, which still moves at the speed of 2019.

Lululemon (LULU -19.8%) got pulled taut on the tariff rack, cutting its full-year outlook as rising costs and softer demand stretched those yoga pants uncomfortably thin. CFO Meghan Frank broke the news with athleisure-grade calm: gross margins are now expected to drop 110 basis points for the year, with nearly half the drop blamed on tariffs—30% on China, 10% everywhere else they source. Investors responded like consumers confronting a $98 tank top: they backed away.

The takeaway from Friday and indeed the week is that spring’s tariff-induced anxiety attack is over. The weirdness of this trade war will get ironed out. The craziest threats won’t stick, and companies will forge ahead, likely in moisture-wicking, duty-not-free performance fabric.

How long this optimism holds is Wall Street’s six-thousand-dollar question.

Kelly Letter subscribers, I’ll see you Sunday.

— Jason Kelly

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Market Report for Thursday, June 5, 2025

Thursday’s drift-down wasn’t about rates or China—though both made cameos. It was about a tech mogul and a president airing their breakup so loudly it could’ve used a moderator and a commercial break. With Tesla in a tailspin and egos fully engaged, markets did the sensible thing: ducked…

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Market Report for Wednesday, June 4, 2025

Wall Street spent Wednesday wrapped in a shawl of soft data and political shouting, unsure whether to brace for frost or flirt with summer. The market didn’t rally, didn’t retreat—just stood there, sniffling. Providing the soundtrack: President Trump’s latest ballad, “Too Late Powell,” performed in all caps.

Level Change 6/4/25 (%)
– – – – – – – – – – – – – – –
-0.2 Dow
+0.3 Nasdaq
+0.3 Nasdaq 100
+0.0 S&P 500
-0.2 S&P 400
-0.3 S&P 600

May’s ADP report landed with the grace of a brick in a birdbath: just 37,000 private payrolls, a miss of 93,000 and the weakest showing since March 2023. Wages held their ground, but it’s hard to admire a flat paycheck when the job offers stop arriving. With Friday’s government report on deck, traders are bracing for a possible miss, and more tweets.

What once looked like a strategic pause for the labor market now looks more like an unplanned intermission. As Indeed economist Allison Shrivastava put it, “the market can’t keep steadily cooling off forever before it just turns cold.” Wednesday’s numbers suggests we might be approaching that temperature threshold.

Trump, never one to miss a Fed critique opportunity, immediately pounced on the ADP release with characteristic subtlety:

“ADP NUMBER OUT!!! ‘Too Late’ Powell must now LOWER THE RATE. He is unbelievable!!! Europe has lowered NINE TIMES!”

The exclamation points did their work—Treasuries rallied as markets contemplated whether Fed Chair Powell’s spine might finally soften under pressure and prose.

The ISM Services index joined ADP in the cooling chorus, slipping back into contraction for the first time in almost a year. New orders nose-dived nearly six points to their weakest since December 2022, while price pressures reached their highest since the following November, an elegant symmetry if you like your pain evenly spaced. The one bright spot: employment crept back into expansion, a single green pixel in an otherwise bleak screen.

Survey comments read like excerpts from Tariff Cujo, a horror anthology in which HVAC systems go feral and timelines vanish in the fog.

One construction firm summed up the mood: “Tariff variability has thrown residential construction supply chains into chaos. … Major HVAC manufacturers are passing on cost increases from steel and refrigerant hikes. Planning is difficult for community projects that could be scheduled for the next 22 to 30 months.” Logistics firms called the whole setup a “moving target.”

If this is a soft landing, the seat cushions are on fire.

Meanwhile, the Fed’s Beige Book declared economic activity had “slightly” declined, a word serving as a tranquilizer dart for the anxious. Hiring was stable, but businesses flagged rising concerns about—you guessed it—rising prices.

In Washington, the nonpartisan Congressional Budget Office scored the GOP’s reconciliation bill with all the warmth of a hospital invoice: $2.42T added to the deficit over the next decade. Critics called the bill a fiscal fantasy. Supporters called the CBO “lefty.” The bill’s promised savings are still waiting on a calculator that runs on faith.

Still, the S&P kept its chin up, managing a third straight gain and up nearly 20% since April’s Liberation Day low. Investors, it seems, are betting that bad data will beget good policy, or at least easier money. Come on, “too late” Powell. Learn to blink on cue.

Whether that’s wisdom or wishful thinking will become clearer Friday. Until then, markets remain in wait-and-wince mode.

— Jason Kelly

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