By Alex Financials

📈 1. Market Reaches Record Highs Amid Trade Progress

• The S&P 500 and Nasdaq kicked off the day near all-time highs, driven by optimism after a U.S.–China trade framework was finalized. Both indexes saw gains of around +0.5%, with the S&P closing at record levels after touching intraday peaks.

• The Dow Jones also performed well, up roughly +0.9%, adding some 368 points, as nearly every sector contributed to the rally.

• Underpinning this surge: China agreed to reduce tariffs and resume exports of rare-earth minerals, and the U.S. removed a controversial retaliatory “revenge tax” from fiscal legislation.

🔥 2. Drivers Behind the Rally

• Trade breakthroughs emerged as the key catalyst: the U.S.–China announcement included tariff rollbacks and resumed rare‑earth exports, plus talks with multiple other countries nearing completion.

• Geopolitical relief also buoyed sentiment—news of a cease‑fire or reduced tensions in the Middle East helped stabilize oil, with WTI crude hovering around $65.60/barrel.

• Inflation data added to the backdrop: May’s PCE inflation clocked in at 2.3% headline and 2.7% core—slightly higher than expected—which dampened rate-cut hopes, but didn’t derail market enthusiasm.

🏛️ 3. Fed & Macro Outlook

• The Fed’s preferred inflation gauge (core PCE) rose to 2.7% year-over-year, above the 2% target—pushing markets to push back expectations for a rate cut beyond July.

• A 0.4% dip in personal income and a 0.1% drop in consumer spending were also notable, though seen more as nuanced shifts than alarms.

• Meanwhile, two Trump-appointed Fed governors expressed support for easing—stoking debate over whether monetary policy may become too loose.

🏢 4. Standout Corporate Movers

• Nike ($NKE) surged between +10% to +15% after reporting better-than-expected Q4 results and offering tariff-hedging strategies, even as it forecast a $1 billion tariff hit.

• Nvidia ($NVDA) climbed roughly +0.5%, continuing its rally as AI optimism underpins tech sector strength.

• Tesla ($TSLA) saw a slight dip after news of a top aide’s departure and shrinking European sales, despite recent gains from the Texas robotaxi rollout.

• Other names with notable moves: Amazon ($AMZN), Meta ($META), Netflix ($NFLX), Broadcom, and Intuitive Surgical, all registering 2–2.6% gains; Abbott ($ABT) fell ~3%.

🌍 5. Global Market & Sector Highlights

• India’s Sensex jumped over 250 points, with the Nifty crossing 25,600, led by PSU bank stocks—reflecting global risk appetite.

• Europe and Asia saw mixed results, with London’s FTSE rising on trade optimism, while Chinese industrials weighed on sentiment.

• Treasury yields edged higher (10‑year ~4.27%), oil reclaimed pre‑conflict levels, and gold remained steady.

🛑 6. Risks & What to Watch

• Despite the euphoria, markets face rising inflation and geopolitical uncertainty, particularly in the Middle East and around trade tensions .

• Valuations for the S&P 500 hover above long‑term averages, prompting caution amid potential economic headwinds .

• The market now pivots to upcoming May PCE data release and Fed commentary, which will further shape expectations for rate policy.

🧭 Bottom Line

U.S. equity markets surged Friday on a cocktail of trade breakthroughs, geopolitical calm, and sustained AI‑led tech momentum. Even as inflation remains sticky and Fed policy stays in focus, the backdrop of global cooperation and easing tensions continues to underpin investor confidence into late June 2025.