"Markets are never wrong, but opinions often are."- Jesse Livermore
This quote reflects Jesse Livermore's belief that the market itself is the ultimate judge of value and truth. Individual opinions may be flawed or biased, but market prices aggregate all known information and sentiment.
The takeaway: respect the market’s message even when it challenges your convictions.
Market Wrap
Deals, Data, and Diplomatic Drama Drive the Day
U.S.–China Trade Agreement on Rare-Earth Exports:
The White House, alongside Chinese officials, announced a new framework to resume rare-earth exports from China to the U.S. in exchange for easing restrictions on high-tech exports. This deal boosted investor optimism, contributing directly to the S&P 500 and Nasdaq closing at record highs.
Trade Talks with Canada Halted:
President Trump abruptly ended trade negotiations with Canada in response to Canada’s proposed digital services tax targeting U.S. tech firms. He also threatened new tariffs on Canadian imports. This caused a brief dip in U.S. equities, though markets quickly recovered and closed strongly.
Consumer Spending Falls:
Personal spending fell 0.1% in May, while personal income dropped 0.4%, and real disposable income declined 0.7%. This was the first monthly spending decline since early 2024, signaling weakening consumer demand and pausing pre-tariff buying that occurred earlier in the year.
Core PCE Inflation Remains Elevated:
The Fed’s preferred inflation measure, the core PCE price index, rose 2.7% year-over-year in May, topping expectations of 2.6%. Monthly core PCE edged up 0.2%, keeping inflation above the Fed's comfort zone and complicating the rate-cut narrative.
Fed Annual Stress Test Results Released:
All 22 major U.S. banks passed, demonstrating resilience under a severe recession scenario. Notably, the Fed signaled a future move to average stress test outcomes over two years to reduce volatility in capital requirements.
Removal of 'Revenge Tax' in Fiscal Bill:
Treasury Secretary Scott Bessent announced that the controversial Section 899 “revenge tax” was dropped from a broader fiscal package and that U.S. firms would be exempt from the OECD global minimum tax regime. Markets reacted positively as it removed a potential headwind for multinational companies.
Uber Technologies Inc. shares fell 1.7% despite earlier reports of potential involvement in funding Travis Kalanick’s bid to acquire Pony.ai’s U.S. unit. While the news initially lifted sentiment, the stock closed lower as enthusiasm faded by the end of the session.
Nike Inc. shares surged approximately 15% after the company topped earnings expectations and the CEO reassured investors on tariff-related cost pressures, despite forecasting a $1 billion impact.
