Stock Market Surges on Moderate US Inflation Report and Favorable Trade Updates from China

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Dive into the world of trading with Plus500! The S&P 500 Index ($SPX), Dow Jones Industrials Index ($DOWI), and the Nasdaq 100 Index ($IUXX) are soaring today, with gains of +0.32%, +0.42%, and +0.44%, respectively. June E-mini S&P futures ($ESM25) and June E-mini Nasdaq futures ($NQM25) are also up by +0.29% and +0.44%, respectively.

The rise in stock indexes is driven by the decrease in bond yields and a weaker-than-expected US May core CPI report, easing inflation concerns. The 10-year T-note yield is swinging down to 4.44%.

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The current trade deal between the U.S. and China appears to be shaping up. The two nations have reportedly established a framework to resume the flow of sensitive goods, with China supplying rare earths and magnets “up front”, and the U.S. allowing Chinese students into US colleges and universities. This development follows a two-day negotiation in London.

US MBA mortgage applications jumped +12.5% in the week ended June 6. The purchase mortgage sub-index increased by +10.3%, and the refinancing sub-index grew by +15.6%. The average 30-year fixed rate mortgage went up +1 bp to 6.93%.

The US May CPI rose by +2.4% y/y, in line with expectations. Core CPI, which excludes food and energy, remained unchanged at +2.8%.

The upcoming week will be crucial as markets focus on any new tariff announcements and the US-China trade negotiations. On Thursday, weekly initial unemployment claims are expected to fall to 241,000. The May final-demand PPI is projected to increase to +2.6% y/y, while PPI ex-food and energy is expected to hold steady at +3.1% y/y. On Friday, the preliminary June University of Michigan US consumer sentiment index is estimated to rebound by +1.3 to 53.5.

The FOMC meeting on June 17-18 is unlikely to see a -25 bp rate cut, with odds at 0%.

Global stock markets are mixed today, with the Euro Stoxx 50 down -0.22%, China's Shanghai Composite up +0.52%, and Japan's Nikkei Stock 225 climbing to a 3-1/2 month high, closing with gains of +0.55%.

💰💼 Up or Down: The September 10-year T-note Yield

September 10-year T-notes today are inching up +7 ticks. The 10-year T-note yield is slipping -3.2 bp to 4.438%. The T-notes made a recovery after the US May core CPI rose less than expected, which means the Fed's monetary policy could remain accommodative for some time. The 10-year breakeven inflation expectations rate dipped to a 1-month low today of 2.275%.

Initially, T-notes moved lower due to negative carryover from weakness in European government bonds. Also, supply pressures are swelling ahead of the Treasury's $39 billion auction of 10-year T-notes later today.

🇪🇺💶 European Government Bond Yields on the Rise

European government bond yields today are on the rise. The 10-year German bund yield is edging up +0.6 bp to 2.529%, while the 10-year UK gilt yield has moved up +1.4 bp to 4.556%.

The ECB's wage tracker predicts Q4 2025 wage growth in the Eurozone increasing by +1.7% y/y, above expectations of +1.6% y/y but still significantly below the +5.4% y/y observed in Q4 2024.

Swaps are pegging the probability of a -25 bp rate cut by the ECB at the July 24 policy meeting at 13%.

📈 Stock Movers of the Day: Winners and Losers

The strength of chip stocks is giving the broad market a boost. Companies like Micron Technology ($MU), Broadcom ($AVGO), Marvell Technology ($MRVL), Qualcomm ($QCOM), NXP Semiconductors NV ($NXPI), ARM Holdings Plc ($ARM), Microchip Technology ($MCHP), ASML Holding NV ($ASML), and KLA Corp ($KLAC) are all flying high with gains over +1%.

Palantir Technologies ($PLTR) is leading the way in S&P 500 and Nasdaq 100 gains, soaring by more than +4%, following an upgrade in price target to $116 from $94 by Mizuho Securities.

Talen Energy ($TLN) is soaring by more than +7%, expanding its nuclear pact with Amazon to provide 1,920 MW of power to Amazon's data centers through 2042.

Starbucks ($SBUX) is up by more than +3% after CEO Nicol comments suggested that selling a stake in its China business has received significant interest.

GE Vernova ($GEV) is surging by more than +2% following an upgrade in price target to $600 from $380 by Guggenheim Securities.

Urban Outfitters ($URBN) is jumping up by more than +1% as Baird upgrades the stock to "outperform" from "neutral" with a price target of $90.

Lockheed Martin ($LMT) is plummeting by more than -5%, dipping defense stocks, after the US Air Force cut its request for F-35 aircraft in half for Congress. Other affected companies include Huntington Ingalls Industries ($HII), Northrop Grumman ($NOC), General Dynamics ($GD), and L3Harris Technologies ($LHX).

US steelmakers are sagging today as talks about tariff reductions between the U.S. and Mexico raise speculations about additional concessions to other countries. As a result, concerns abound about increased competition, sending stocks like Cleveland-Cliffs ($CLF), Nucor ($NUE), Steel Dynamics ($STLD), and Commercial Metals ($CMC) down by more than -2%.

Airline stocks are plummeting due to an increase in the price of jet fuel, resulting from a surge in WTI crude oil to a 2-1/4-month high. United Airlines Holdings ($UAL), American Airlines Group ($AAL), and Delta Air Lines ($DAL) are down by more than -2%. Alaska Air Group ($ALK) and Southwest Airlines ($LUV) are also falling by more than -1%.

American Superconductor Corp. ($AMSC) is taking a dive by more than -14% after selling an underwritten public offering of common stock overnight at $28-$29 per share, significantly lower than its closing price on Tuesday ($34.35).

Chewy ($CHWY) is down more than -11% after falling short of expectations for Q1 gross margin, reaching 29.6%, instead of the consensus target of 29.9%.

Gitlab ($GTLB) is down more than -7% after forecasting Q2 revenue of $226 million-$227 million, far below the consensus of $227.1 million.

📅 Upcoming Earnings Reports

Stay tuned for the following earnings reports:

J Jill Inc (JILL)
Lifezone Metals Ltd (LZM)
Oracle Corp (ORCL)
Oxford Industries Inc (OXM)
PACS Group Inc (PACS)
Smith-Midland Corp (SMID)
Vera Bradley Inc (VRA)
Victoria's Secret & Co (VSCO)

Investing in the stock market today has been driven by a decrease in bond yields and a weaker-than-expected US May core CPI report, with indices such as S&P 500, Dow Jones, and Nasdaq experiencing gains. Meanwhile, the upcoming week is crucial as markets focus on any new tariff announcements and the US-China trade negotiations, with the FOMC meeting on June 17-18 being an important event. In the business world, American Superconductor Corp. faces a significant dip in its share price after an overnight sale of public stock at a lower price than its previous closing price.

Stock Market Surges on Moderate US Inflation Report and Favorable Trade Updates from China