The S&P 500 Index ($SPX) (SPY) on Monday rose +0.36%, the Dow Jones Industrial Average ($DOWI) (DIA) rose +0.14%, and the Nasdaq 100 Index ($IUXX) (QQQ) rose +0.66%. June E-mini S&P futures (ESM26) rose +0.32%, and June E-mini Nasdaq futures (NQM26) rose +0.61%.
Stock indexes ended the day higher, recovering from early losses tied to Iran’s halt of US-Iran ceasefire negotiations. Oil prices rallied as much as +8% early in the day and stocks fell after Iran’s Tasnim news agency reported that Iran’s government said in a statement that it halted the exchange of messages with the US regarding a draft ceasefire agreement due to Israel’s stepped-up attacks on Lebanon. Iran has consistently said there would be no US-Iran ceasefire without a truce in Lebanon.
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However, renewed hopes for a ceasefire emerged later in the day after President Trump said he had spoken with Hezbollah officials and Israeli Prime Minister Netanyahu, and that both sides told him they would agree to stop attacking each other. Mr. Trump then claimed in a post that “talks are continuing, at a rapid pace” with Iran. Crude oil prices still closed the day up more than +5%.
Tech stocks saw support as Nvidia rallied more than +5% after saying it will enter the PC market with a new chip aimed at PC’s that seeks to break the stranglehold of Intel and AMD. Moreover, software stocks did well, with Microsoft rising by more than +2%, after Nvidia’s CEO soothed concerns about AI disruptions.
Stocks also saw support after the May US manufacturing PMI rose +1.3 points to 54.0, stronger than expectations for a +0.3 point rise to 53.0. However, S&P’s final-May manufacturing PMI was revised -0.2 points lower to 55.1 from the preliminary report of 55.3, versus expectations for an unrevised report. On a positive inflation note, the May ISM prices-paid index fell by -2.5 points to 82.1 from 84.6, weaker than expectations for a +0.4 point rise to 85.0.
The markets are looking ahead to Friday’s US unemployment report, which is expected to show an unchanged unemployment rate of +4.3% and a rise in payrolls of +89,000.
The markets are discounting a 5% chance of a +25 bp FOMC rate hike at the next FOMC meeting on June 16-17.
The generally favorable Q1 earnings season is winding down. As of last Friday, 84% of the 485 S&P 500 companies that reported Q1 earnings have beaten estimates. Q1 S&P 500 earnings are projected to climb +12% y/y, according to Bloomberg Intelligence. Stripping out the technology sector, Q1 earnings are projected to increase around +3%, the weakest in two years.
Overseas stock markets on Monday closed mixed. The Euro Stoxx 50 closed down -0.26%. China’s Shanghai Composite closed down -0.27%. Japan’s Nikkei Stock Average rallied to a new record high and closed up +0.91%.
Interest Rates
June 10-year T-notes (ZNM6) fell -3.5 ticks, and the 10-year T-note yield rose +2.4 bp to 4.459%. T-note prices traded lower due to Monday’s rally of more than +5% in crude oil prices, which pushed the 10-year breakeven inflation expectations rate up +1.1 bp to 2.411%.
European government bond yields rose on Monday. The 10-year German Bund yield rose +6.5 bp to 3.003%. The 10-year UK gilt yield is up +8.5 bp to 4.897%.
Swaps are discounting a 94% chance of a +25 bp ECB rate hike at its next policy meeting on June 11.
European government bond yields rose. The 10-year German bund yield is up +7.5 bp at 3.013%. The 10-year UK gilt yield rose +8.6 bp to 4.898%.
Swaps are discounting a 94% chance of a +25 bp ECB rate hike at its next policy meeting on June 11.
US Stock Movers
Nvidia (NVDA) rallied more than +6% after saying it will enter the PC market with a new chip, which led to losses of -4.9% for PC-chip competitor Intel (INTC), -1.3% for Advanced Micro Devices (AMD), and -8.8% for Qualcomm (QCOM).
Microsoft (MSFT) rallied +2.3% after Nvidia’s CEO downplayed concerns that AI will severely disrupt the software sector.
Taylor Morrison Home Corp (TMHC) rallied +22% after news of its acquisition for about $8.5 billion by Berkshire Hathaway, which is the first acquisition made by Berkshire’s new CEO Greg Abel.
Strategy (MSTR) fell -5.8% after a regulatory filing showed the company sold 32 Bitcoin for $2.5 million, at an average sales price of $77,135.
MGM Resorts (MGM) rallied +17% after DealBook reported that Barry Diller’s People Inc will offer to buy the rest of the company at a valuation of $18 billion.
Earnings Reports(6/2/2026)
Dollar General Corp (DG), Donaldson Co Inc (DCI), Palo Alto Networks Inc (PANW), Gitlab Inc (GTLB), Ulta Beauty Inc (ULTA).
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