This Week

We begin the month of June with Sunday night stock futures slightly lower. That follows a very good month of May that has equities about 1% shy of their highs since the April V reversal, and just 4% or so off the all time highs made in February. This week sees Broadcom earnings, the May jobs report, and likely some more trade negotiation updates. More on the week ahead shortly—but first, a few weekend headlines:

• Big Tech Is Back in S&P 500 Driver’s Seat as Profit Engines Hum (Bloomberg)

  • a Bloomberg gauge of the so-called Magnificent Seven stocks — Nvidia, Microsoft, Tesla, Apple, Alphabet, Amazon and Meta Platforms — is outperforming the S&P 500 over the past eight weeks — a critical shift for the benchmark considering the group accounts for a third of the index. The cohort is responsible for nearly half of the S&P 500’s 19% rally from the April bottom, according to data compiled by Bloomberg. Despite the strong performance, the group is still trailing the S&P 500 for the year — a rare occurrence in the past decade. Shares of Apple and Amazon, which face greater risks from tariffs due to products imported, are weighing the cohort down and lag the overall market.

• Trump and Xi are likely to talk soon about trade, though no date has been set, Hassett says (CNBC)

  • White House National Economic Council director Kevin Hassett said that President Donald Trump and China’s President Xi Jinping could talk about trade as soon as this week. “My expectation is that both sides have expressed a willingness to talk,” Hassett said. He noted, however, that no specific date for those talks has been set. Hassett’s remarks come after Trump accused China of breaking its trade agreement with the U.S.

• Trump Administration Targets Tech Firms as It Cuts More Contracts (WSJ)

  • The government’s monthslong quest to wring savings from federal contractors is widening beyond consulting firms and entering a new phase focused on tech companies. The Trump administration is moving its spending review beyond consulting firms, such as Accenture and Deloitte, to now scrutinize contracts at a collection of companies providing sometimes obscure technology services to federal agencies.

• Ukraine Says It Destroyed Dozens of Warplanes Deep Inside Russia (WSJ) 

  • Ukraine launched audacious drone attacks on four military airports inside Russia, destroying more than 40 warplanes in the biggest blow of the war against Moscow’s long-range bomber fleet. The attack, dubbed “Spider’s Web,” took a year and a half to prepare, officials at Ukraine’s main security and intelligence agency, the SBU, said on Sunday. Ukraine’s drones targeted Russia’s Belaya, Ivanovo, Dyagilevo and Olenya air bases, all of which house Russian military planes.

• Europe stocks stage world-beating rally as trade war backfires (Bloomberg)

  • Five months into the year, eight of the world’s 10 best-performing stock markets are in Europe, according to data compiled by Bloomberg. That list features Germany’s DAX Index with a rally of more than 30% in dollar terms, as well as peripheral markets such as Slovenia, Poland, Greece and Hungary. The pan-European Stoxx 600 Index is beating the S&P 500 by a record 18 percentage points in dollars, powered by Germany’s historic fiscal spending plans and a stronger euro. Market participants say there’s more to come as resilient corporate earnings and attractive valuations make the region a safer bet when concern over trade and fiscal debt grips the US economy.

• Trump Says Steel Tariffs Will Increase to 50%. Cleveland- Cliffs Stock Soars. (Barron’s)

  • President Donald Trump dropped a bombshell at a Friday evening rally, announcing that tariffs on imported steel would go from 25% to 50%.

Volatility expectations for this week are slightly lower than last week as equities have spent most of the past two weeks in a 3% or so range. The VIX closed May just below 20. Typically this close to equity highs, and at this point in the earnings calendar implied vols would begin to relax. We’ll see if that’s the case this week, or does the market start ramping volatilty expectations higher as we approach the end of the tariff pause in early July.

This Week’s Expected Moves:

• SPX/SPY: 1.7% (5775-6010)

  • QQQ: 2.3%

  • IWM: 2.3%

  • TLT: 1.7%

  • USO: 4%

As far as potential market movers in the economic data we’ve got the Jobs Number on Friday that will garner the most attention, but tariff headlines will begin to pick up over the next few weeks, and it would make sense that we get a China update/non-update this week. The options market is not putting a ton of emphasis on Jobs Number volatility versus the days around it (every day this week is around 15-16IV as of now). We’ll see if that changes at all into Friday.

Economic Calendar: 

• Monday

  • 10am - ISM Manufacturing

• Tuesday

  • 10am - Factory Orders

  • 10am - JOLTS Job Openings

• Wednesday

  • 8:15am - ADP Employment

  • 10am - ISM Services

  • 2pm - Fed Beige Book

• Thursday

  • 8:15am - ECB Rate Decision

  • 8:30am - Initial Jobless Claims

  • 10am - Pending Home Sales

• Friday

  • 8:30am - NFP Jobs Number

Earnings season is winding down a bit but this week does feature Broadcom (AVGO) on Thursday:

Earnings (with expected moves):

• Tuesday

  • Pre-market: DG 8%

  • After-hours: CRWD 7%, HPE 8%

• Wednesday

  • Pre-market: DLTR 9%

  • After Hours: MDB 13%

• Thursday

  • After Hours: AVGO 7%, DOCU 10%, LULU 9%

We’ve got a great week of content, stay tuned and get those questions in for the shows.

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