U.S. stock indexes are trading mixed today as bond yields stabilize following a morning surge driven by fiscal policy developments. The S&P 500 Index (INDEXSP:.INX) is down -0.06%, the Dow Jones Industrial Average (INDEXDJX:.DJI) has slipped -0.11%, and the Nasdaq 100 Index (INDEXNASDAQ:.NDX) is slightly up +0.20%. Despite early declines, dovish comments from Federal Reserve officials helped soothe bond markets and lifted investor sentiment.
Bond Yields Stabilize After Hitting Multi-Month High
Markets opened lower after the 10-year Treasury yield spiked to 4.625%, a 3-1/4 month high, on news that President Trump’s tax and spending package passed the House of Representatives. The bill, which now heads to the Senate, aims to avoid a year-end tax increase but risks ballooning the federal deficit.
Despite the initial rise, bond yields stabilized later in the session following remarks from Federal Reserve Governor Christopher Waller. He suggested that if Trump’s proposed tariffs cap at 10% this summer, “we’re in a good position at the Fed to move with rate cuts through the second half of the year.” That dovish outlook triggered short-covering in Treasury notes and eased pressure on equities.
Economic Data Offers Mixed Signals
The latest U.S. economic indicators provided more optimism. Weekly jobless claims dropped by 2,000 to a one-month low of 227,000, signaling labor market resilience. Additionally, the May S&P Global U.S. manufacturing PMI surprised to the upside, rising to 52.3 versus expectations of 49.9, pointing to unexpected expansion in factory activity.
Market Movers: Tech and Crypto Rally, Energy Slips
Several tech and crypto-linked stocks surged on bullish Bitcoin sentiment and earnings beats. Crypto-related companies gained as Bitcoin (CRYPTO:BTC) hit a new record high following Senate progress on stablecoin legislation.
- Marathon Digital Holdings Inc. (NASDAQ:MARA) rose over 7%
- Riot Platforms Inc. (NASDAQ:RIOT) jumped more than 6%
- MicroStrategy Inc. (NASDAQ:MSTR) gained over 5%
- Coinbase Global Inc. (NASDAQ:COIN) climbed more than 4%
On the tech front, Snowflake Inc. (NYSE:SNOW) rose over 9% after beating Q1 revenue expectations and raising its full-year guidance. Urban Outfitters Inc. (NASDAQ:URBN) jumped more than 22% following strong earnings, while Advanced Auto Parts Inc. (NYSE:AAP) soared over 42% after delivering a positive sales forecast.
Meanwhile, energy stocks were under pressure as WTI crude oil prices declined over 1% to a one-week low. Notable decliners included:
- Devon Energy Corp. (NYSE:DVN)
- ConocoPhillips (NYSE:COP)
- Halliburton Co. (NYSE:HAL)
- Diamondback Energy Inc. (NASDAQ:FANG)
All were down more than 2%.
Managed Healthcare Falls on Regulatory Concerns
Healthcare stocks stumbled after the Centers for Medicare & Medicaid Services announced plans to expand audits of Medicare Advantage plans. Major losers included:
- Humana Inc. (NYSE:HUM)
- CVS Health Corp. (NYSE:CVS)
- Centene Corp. (NYSE:CNC)
- UnitedHealth Group Inc. (NYSE:UNH)
- Elevance Health Inc. (NYSE:ELV)
Global Markets and Central Bank Updates
European and Asian markets posted declines, with Germany’s DAX and Japan’s Nikkei both slipping. The European Central Bank signaled dovish intentions, citing tariff-driven economic strain and forecasting weaker growth in 2025.
German and UK bond yields also rose slightly, while the Eurozone composite PMI fell unexpectedly. However, the German IFO business climate index reached an 11-month high, offering a bright spot in the region.
Outlook: Focus on Tariffs and Rate Cut Signals
As bond yields stabilize, investor attention is shifting toward potential interest rate cuts later this year. Markets are currently pricing in a 5% probability of a 25 basis point cut at the June FOMC meeting, though expectations could change with new inflation or trade data.
With G7 finance leaders meeting in Canada and tariff policies under scrutiny, the market’s direction will likely hinge on whether fiscal stimulus can coexist with long-term deficit control. For now, the bond market’s calming signals are offering cautious optimism to equity investors.
Featured Image – Freepik
