Market digesting lots of key news

The news wires are running hot today with loads of key developments, including a large slate of economic data that was released at 8:30 a.m. ET.

Currently, the S&P 500 futures are down 22 points and are trading 0.4% below fair value, the Nasdaq 100 futures are down 102 points and are trading 0.5% below fair value, and the Dow Jones Industrial Average futures are down 152 points and are trading 0.4% below fair value.

Here is a snapshot of the news that is making news in a big way:

• President Trump says India offered to remove all tariffs on goods from U.S., according to Bloomberg
• Top Iranian official Ali Shamkhani says Iran is prepared to sign nuclear deal with President Trump in exchange for removal of all sanctions, according to NBC News
• Conservative Republicans are upset about demands from New York lawmakers that the state and local tax deduction get increased in large reconciliation bill, according to The Wall Street Journal
• Russian President Vladimir Putin will not attend Ukraine peace talks in Turkey today, according to BBC
• U.S. considers lowering capital requirements for banks, according to FT
• Fed Chair Powell to give speech at 8:40 a.m. ET on monetary policy framework review
• Alibaba (BABA) misses by $0.04, misses on revs; approves special dividend
• Apple (AAPL): President Trump says he would like APple to stop making its products in India
• Cisco (CSCO) beats by $0.04, reports revs in-line; guides Q4 EPS above consensus, mid-point of revs above consensus; Scott Herren has decided to retire as Executive Vice President and CFO effective July 26, 2025
• Deere (DE) beats by $1.08, beats on revs; lowers FY25 net income guidance
• DICK’S Sporting Goods (DKS) confirms it will acquire Foot Locker (FL); FL shareholders can elect to receive either $24.00 in cash or 0.1168 shares of DICK’S Sporting Goods common stock for each share of Foot Locker common stock
• Starbucks (SBUX) wants to revamp its business in China, which could include a stake sale, according to Bloomberg
• UnitedHealth (UNH) under criminal investigation for alleged Medicare fraud, according to The Wall Street Journal
• Walmart (WMT) beats by $0.03, reports revs in-line, U.S. comps up 4.5%; reaffirms FY26 EPS guidance and constant currency net sales guidance and notes that consumers could start seeing higher prices later this month and certainly in June

There isn’t a cascade of bad news pressuring the equity futures market. Rather, it is more like a cascade of thought that the market is overbought and due for a pullback following the V-shaped recovery from the April 7 low. Given the scope of that massive and expeditious recovery, the broad reaction to good news hitting the wires isn’t as impactful as bad news hitting the wires.

In terms of this morning’s economic data, there was some good news and some bad news, sometimes within the reports themselves.

• The Producer Price Index for final demand decreased 0.5% month-over month in April (Briefing.com consensus 0.3%). That was the good news. The bad news is that the prior month was revised up to unchanged from a 0.4% decline. The Producer Price Index for final demand, less foods and energy, decreased 0.4% month-over-month (Briefing.com consensus 0.3%), again good news, but the bad news (again) is that the prior month was revised up to 0.4% from -0.1%. On a year-over-year basis, the index for final demand was up 2.4%, versus an upwardly revised 3.4% (from 2.7%) in March, while the index for final demand, less foods and energy, was up 3.1%, versus an upwardly revised 4.0% (from 3.3%) in March.
  • The key takeaway from the report is that the big drop in the index for final demand was driven by a 0.7% decline in the index for final demand services (the largest decline since December 2009). Over 40% of that 0.7% decline was driven by margins for machinery and vehicle wholesaling, which dropped 6.1%. That suggests wholesalers were likely absorbing some tariff impacts, which is good for the end customer but not necessarily for earnings.
• Total retail sales increased 0.1% month-over-month in April (Briefing.com consensus 0.2%) following an upwardly revised 1.7% (from 1.4%) in March. Excluding autos, retail sales were also up 0.1% month-over-month (Briefing.com consensus 0.5%) following an upwardly revised 0.8% increase (from 0.5%) in March.
  • The key takeaway from the report is that the pace of spending on goods decelerated in April, speaking to the tariff frontrunning evident in the strong sales for March and reflecting the consumer’s cautious mindset following “Liberation Day” and the stock market’s volatility.
• Initial jobless claims for the week ending May 10 were unchanged at 229,000 (Briefing.com consensus 226,000), while continuing jobless claims for the week ending May 3 increased by 9,000 to 1.881 million.
  • The key takeaway from the report is that the initial jobless claims filings — a leading indicator — still reflect an otherwise solid labor market that will remain supportive of consumer spending, albeit perhaps at a slower pace in the face of higher prices.
• The May Empire State Manufacturing Index checked in at -9.2 (Briefing.com consensus 1.0) versus -8.1 in April. The May Philadelphia Fed Index checked in at -4.0 (Briefing.com consensus -6.0) versus -26.4 in March.
  • The key takeaway from these regional manufacturing reports is that the breakeven point between contraction and expansion is 0.0, so each reflects a contraction in activity in May versus April, somewhat faster for the Empire State report and somewhat slower for the Philadelphia Fed Index.

The equity futures market saw some modest improvement in the wake of the reports, yet its current leaning still points to a lower start for the cash market.

Treasuries have been a bit volatile in the wake of the data and Fed Chair Powell’s observation that the Fed thinks it would be appropriate to also reconsider its average inflation targeting. The 2-yr note yield is down five basis points to 4.00%, and the 10-yr note yield is down four basis points to 4.49%.

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Originally Posted May 15, 2025 – Market digesting lots of key news