/ May 30
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Daily Briefing
*NVIDIA (NVDA, +3.2%) was primed to be the center of the stock market's attention after it delivered some impressive quarterly results and guidance following the previous session’s close; market participants, though, were forced to divert their attention to a couple of legal rulings regarding the Trump administration's tariff measures and a spate of weaker-than-expected economic data that stirred some growth concerns;
*Specifically, the U.S. Court of International Trade got things started with a ruling that President Trump does not have the legal authority to enforce reciprocal tariffs; the White House did not waste any time appealing that ruling, and it became known late in the day’s trade that the U.S. Court of Appeals granted the White House's request to temporarily reinstate the tariffs;
*As a result, the 10% global tariff, the 30% China tariff, and the 25% Canada/Mexico tariffs remain in place; the court gave the Trump administration until June 9 to respond; what both rulings did, though, was inject more uncertainty into the market that kept overall buying and selling efforts in check;
*SPY consolidated around recent prices and managed to finish in the green and not far from the day’s open; it did not manage to scale new highs, even relative to the recent peak; the overall vibe is one of mounting selling pressure and loss of momentum in the face of uncertainties; Resistance stands at $620 (M-Trend), while a confluence of support levels clusters around the $570 mark to the downside;
*The MACD signal has crossed over to the negative side more clearly now, although the downside extension is very shallow; rather than indicating any imminent danger, we view this as a sign of consolidation;
*Finally, Dark Pool investors have shown some signs of life, with institutional trading favoring at least a part of the top 20 S&P 500 stocks; while far from a bullish reading, yesterday’s 50% average has restored some balance to the recent weak trend in Dark Pool flows (averaging around 44% over the last 2 weeks);
*In economic data, the second estimate for Q1 GDP, showed a downward revision for personal spending; jobless claims data showed the highest level for continuing jobless claims since November 13, 2021; and a 6.3% decline in pending home sales was recorded for April;
*Some increased layoff activity and some increased difficulty in finding a new job after being laid off was apparent in the latest interim report;
Continuing Jobless Claims
*That collection of reports helped fuel a stark reversal in the Treasury market, which saw the 10-yr note yield and 30-yr bond yield hit 4.53% and 5.03%, respectively, in the overnight trade, with some deficit angst acting as a selling catalyst (the administration has been highlighting the collection of tariffs as a resource for paying down the national debt);
*The push lower in yields was not met with a concomitant surge in stock prices, given that growth concerns were behind much of the improvement in the Treasury market; those concerns were augmented by Best Buy (BBY, -7.3%) cutting its FY26 guidance and Dow component, Salesforce (CRM, -3.3%), posting earnings results that were accompanied by a deceleration in growth for many of its core cloud segments;
*Still, NVIDIA's results, and the AI growth optimism that followed them, offered some influential support for the broader market; the S&P 500 traded down to 5,873 at its worst level of the day, but buyers were quick to show up to help it regain a posture above the 5,900 level where it closed;
*Ten of the 12 S&P 500 sectors were higher, but none were up more than 1.0%; the real estate sector (+0.9%) led that pack, with other defensives following - Healthcare (XLV) and Utilities (XLU); the communication services sector (-0.8%) and transports (XTN, -0.1%) were the only sectors to finish with a loss;
*The 10-yr note yield settled the session at 4.43%, while the 30-yr bond yield backed up to 4.93%, further fortified by a $44 billion 7-yr note auction that was met with strong demand; the U.S. Dollar Index was down 0.5% to 99.39 after being up 0.7% in the overnight trade;
*TLT rose +0.93% on the day, breaking above the pivot level of $85.6; in our view, treasuries are a great buy at current levels, being the most hated asset class at the moment, with heavy short positioning that’s ripe for a squeeze;