Consolidation interest following win streak

The early indication provided by the equity futures market is that the cash indices will start today’s session on a lower note. This, of course, follows a nine-session win streak for the S&P 500 that is the longest in 20 years, so there is naturally some consolidation interest in play with the S&P 500 also sniffing the underside of its 200-day moving average (5,746).

Currently, the S&P 500 futures are down 49 points and are trading 0.9% below fair value, the Nasdaq 100 futures are down 212 points and are trading 1.1% below fair value, and the Dow Jones Industrial Average futures are down 276 points and are trading 0.7% below fair value.

There is some weakness in the mega-cap stocks, which have been among the biggest movers during the winning streak. There isn’t any news per se responsible for their backtracking. Their collective weight, though, is acting as a key drag on the equity futures market.

Berkshire Hathaway (BRK.B) can be counted in this cohort, and it does have some news. At the annual shareholders meeting, Warren Buffett announced he will be retiring at the end of the year. The Board has voted unanimously to appoint Greg Abel, a previously identified successor, to become Berkshire’s president and CEO effective on January 1, 2026.

Other hangups include a weaker dollar and some hesitation as participants wait on trade deal news and policy decisions this week from the Federal Reserve, Bank of England, Brazil’s Central Bank, Norges Bank, and Riksbank.

Today’s session, meanwhile, will feature the April ISM Services PMI at 10:00 a.m. ET (Briefing.com consensus 50.2%; prior 50.8%) and the results from the $58 billion 3-yr note auction at 1:00 p.m. ET.

The Treasury market had a tough outing on Friday following the better-than-expected April employment report, but it is faring relatively better this morning. Lower oil prices (-1.9% to $57.19/bbl) following an announcement from OPEC+ that it will increase production by 411K bps in June 2025 have been a source of support, along with President Trump’s indication in a weekend interview that he is likely to lower China’s tariff rate “at some point.”

Nonetheless, an added indication that there is no plan to talk to President Xi in the near term has tempered enthusiasm, along with chatter that the dollar’s weakness against most major currency pairs is tied in part to a “sell America” trade. The U.S. Dollar Index is down 0.5% to 99.53.

The 2-yr note yield is down three basis points to 3.81%, and the 10-yr note yield is up one basis point to 4.33%.

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Originally Posted May 5, 2025 – Consolidation interest following win streak