Market Update: June 10, 2025
Economic data included stronger job openings, while the ISM manufacturing and services PMI indexes weakened. The employment situation report showed in showing growth, but prior revisions downward, so generally neutral.
Equities gained globally, with few surprises on the trade front, and unsurprising economic data. Bonds fell back as interest rates ticked higher. Commodities gained, led by a sharp rise in crude oil prices.
U.S. stocks fared positively again last week, with small caps leading large caps. While trade tension between the U.S. and China remains, a late week phone call between the two leaders “resulted in a very positive conclusion for both countries,” as the President put it, and buoyed sentiment. Further discussions are scheduled in London this week. The Friday jobs reports, not too hot nor too cold, also was taken positively by markets. Overall, the U.S. stock market volatility from prior months appears to have calmed down a bit, with a general consensus that trade deals are expected to be in the works, and the maximum tariff rates won’t end up being a reality. On the other hand, U.S. steel and aluminum tariffs doubled to 50% last week.
By sector, communications and technology led the way (based on positive AI sentiment), along with energy as oil prices rose. Conversely, consumer staples, consumer discretionary, and utilities lagged as the sectors showing declines. Real estate gained slightly, despite interest rates moving again higher. Consumer discretionary would have fared decently for the week, other than the -15% drop in Tesla, which was negatively affected by the growing interpersonal falling out between Elon Musk and the President. Musk continued to rail against the large size of the Congressional tax bill, and pullback of EV incentives within it, along with a favorite choice for NASA leadership being overlooked, with the President threatening to pull further subsidies and contracts affecting the firm.
Foreign stocks also experienced gains for the most part, with Europe and the U.K. outpacing Japan, which lagged. The German corporate tax relief package aimed at helping push growth was a positive sentiment factor. At the same time eurozone growth was revised higher, to 0.6% for Q1, the ECB lowered their policy rate by another -0.25% to 2.00%, with President Lagarde noting moderating inflation and downside risks to economic growth as justifications. She also alluded to being near the end of their cutting cycle, having lowered rates by -2.00% over the past year, and the environment being in a “good place.” Emerging markets were boosted by gains in South Korea, Turkey, and South Africa, while positive returns in China were helped by weaker economic data leading hopes for additional stimulus. A somewhat buried portion of the recent Congressional tax bill, Section 899, has some observers concerned about near-term foreign investment in the U.S. That provision would impose a new tax on countries that impose “discriminatory” taxes on U.S. entities, the definition for which is vague, but is also seen as a bargaining chip to force European governments to lower punitive taxes on U.S. firms with significant European operations. It is also unclear whether this would affect tax withholding for other U.S. assets, like Treasuries. There will most certainly be more to come on that issue as the Senate hashes out the tax bill in the next month or two.
Bonds fell back last week as interest rates again rose across the U.S. Treasury yield curve. Investment-grade corporates outperformed governments, but leading segments included high yield and floating rate bank loans. Foreign bonds were mixed, with little change to the value of the U.S. dollar for the week.
Commodities saw gains across the board for the week, led by energy, although metals and agriculture also gained. Crude oil rose 6% for the week to $65/barrel, due to a combination of hoped-for progress in U.S.-China trade talks on the demand side and Canadian wildfires near oil installations threatening the supply side. Generally, wildfires, or any natural disaster really, tends to pressure commodity availability in the near-term, which can spook markets.
The information above has been obtained from sources considered reliable, but no representation is made as to its completeness, accuracy or timeliness. All information and opinions expressed are subject to change without notice. Information provided in this report is not intended to be, and should not be construed as, investment, legal or tax advice; and does not constitute an offer, or a solicitation of any offer, to buy or sell any security, investment or other product.