On Thursday, major U.S. stock indexes posted solid gains, with the S&P 500 Index closing up 0.40%, the Dow Jones Industrial Average rising by 0.28%, and the Nasdaq 100 climbing 0.21%. This upward momentum was catalyzed by positive corporate earnings, particularly from Nvidia, whose shares surged over 3% following remarkably strong quarterly results. The company’s CEO, Jensen Huang, projected “exponential growth” in the artificial intelligence sector, further bolstering investor confidence.
In the backdrop of these developments, the S&P 500 achieved a one-week high and the Nasdaq 100 reached its highest point in three months. E-mini futures for both the S&P and Nasdaq followed suit, indicating a continuation of the bullish sentiment into the next trading day.
A pivotal factor contributing to this market rally was a unanimous ruling by the U.S. Court of International Trade, which determined that former President Trump had improperly invoked emergency powers to impose certain import tariffs. The court’s decision effectively blocked Trump’s 10% flat tariff on global goods, along with additional tariffs levied particularly on China, Canada, and Mexico, related to fentanyl imports. Although this ruling included a 10-day window for the administration to act, it did not affect tariffs under other regulatory powers, such as those outlined in Sections 232 and 301, which encompass steel and aluminum, as well as automobiles.
The ruling not only sent stocks higher but had immediate repercussions on Treasury yields. Following the court announcement, the yields of 10-year Treasury notes dipped, influenced by additional economic data released the same day. The core Personal Consumption Expenditures (PCE) price index for the first quarter was revised downward from 3.5% to 3.4%, signaling a potential easing in inflation pressures. Concurrently, weekly jobless claims for the previous week climbed by 14,000, reaching 340,000—significantly above the anticipated figure of 230,000. Furthermore, pending home sales plummeted by 6.3% in April, marking the most substantial decline in over two and a half years and underscoring softer economic dynamics.
Comments from Chicago Fed President Austan Goolsbee added to the market’s optimism, suggesting that a resolution to the uncertainty surrounding trade policy might stabilize the economy and provide the Federal Reserve the necessary leeway to lower interest rates. As a result, the yield on the 10-year Treasury note fell by 5 basis points to settle at 4.43%.
Despite these positive developments, the market showed signs of volatility late in the trading session. A federal appeals court temporarily placed a hold on the International Trade Court’s ruling, as it considers further legal challenges, with the Trump administration indicating it might escalate the matter to the Supreme Court. This uncertainty interrupted the morning rally, illustrating the fragility of market sentiment.
In other economic news, the GDP for the first quarter was adjusted upward, indicating a contraction of only 0.2%, an improvement from the previously reported 0.3% decline. Despite the overall positive economic revisions, investor sentiment remained cautious as the Federal Reserve navigates between inflation control and economic growth support, with markets currently pricing in a 6% chance for a 25 basis point rate cut in the upcoming FOMC meeting scheduled for June 17-18.
Looking ahead, traders’ focus will pivot toward upcoming economic reports, including expectations of modest increases in personal spending and income for April. Analysts are also keenly observing the PCE price index, the Fed’s favored inflation metric, which is projected to rise by 0.1% month-over-month and 2.5% year-over-year.
In this evolving landscape, the earnings season has also shown strong performance thus far, with over 90% of S&P 500 companies having reported. An impressive 77% have exceeded earnings estimates, the highest proportion since the second quarter of 2024. Earnings per share growth for the first quarter currently stands at 13.1%, far surpassing the pre-season expectation of 6.6%. However, forecasts for full-year profits in 2025 for the S&P 500 have been slightly downgraded to a projected 9.4% growth from an earlier estimate of 12.5%.
International markets exhibited mixed results on Thursday, with Europe’s Euro Stoxx 50 index closing down 0.14%, while Asian markets saw positive performance—China’s Shanghai Composite rose by 0.7% and Japan’s Nikkei 225 surged 1.88%, reaching a two-week high.
Key interest rates also mirrored the domestic bond market’s positive trajectory. The June 10-year Treasury notes posted gains, closing up by 13.5 ticks and bringing the yield down to 4.428%. The decrease in yields was driven in part by the dovish signals from the Federal Reserve and the positive economic data. Such economic conditions appeared to quell fears of rising inflation, evidenced by a two-week low in the 10-year breakeven inflation rate of 2.312%.
Bond markets in Europe followed suit, with the yields of 10-year German bunds and UK gilts both declining. Specifically, the German bund yield dropped to a three-week low of 2.508%, while the UK gilt yield fell by nearly 8 basis points to settle at 4.648%.
U.S. stock movements on Thursday saw significant advancements, notably in technology and transportation sectors. Nvidia’s robust earnings contributed to an uptick of over 3%, reflecting broader trends in the tech industry heavily influenced by AI developments. Other noteworthy performers included Nordson, which saw its shares rise by more than 6% following a revenue beat in its second quarter, and Boeing, which announced plans to increase 737 jetliner production to 47 units per month by year-end, resulting in a gain of over 3%.
Not all companies fared well, however. HP Inc. faced scrutiny following a disappointing earnings report, with shares declining more than 8% as it revised down its full-year earnings forecast. Similarly, SentinelOne’s stock dropped over 11% after it cut its revenue forecast for 2026, raising concerns among investors about its future growth trajectory.
As the earnings season concludes and market sentiment fluctuates with economic data and geopolitical developments, investors remain alert to the potential for regulatory and legislative shifts that could impact trade policies and economic growth. With tariffs and trade arrangements on the horizon, stakeholders will continue to watch how these issues unfold in conjunction with domestic economic indicators, shaping the landscape for both corporate earnings and broader stock market performances.