Market Recap – Wednesday, June 4, 2025
US Equities Mixed Amid Choppy Trading
Stocks ended the day mixed with the S&P 500 (+0.01%) and Nasdaq (+0.32%) closing higher, while the Dow (-0.22%) and Russell 2000 (-0.21%) saw slight declines. The market was largely uneventful in today’s trading, continuing the trend of volatility with no clear direction.
Key Takeaways:
Homebuilders, Semis, and China Tech Stand Out: Outperformers included homebuilders, China tech stocks, semiconductors, and various sectors such as entertainment, life sciences, biotech, and real estate. META-US saw a significant gain, while TSLA-US lagged.
Softer Economic Data Adds to Scrutiny: The May ADP private payrolls report came in much lower than expected at 37K versus the consensus of 130K, signaling slower hiring activity. Additionally, the May ISM Services Index dropped into contraction, pointing to potential challenges ahead for the economy. The combination of weak data and rate rallies continues to add to the market's concerns.
Geopolitical Focus: The market also waits for confirmation regarding a potential call between President Trump and Chinese President Xi. Trade tensions between the US and China continue to keep investors on edge, especially with the looming tariff issues.
Trade Progress with the EU: There are signs of progress in US-EU trade negotiations, with the USTR highlighting constructive talks with EU officials, although no details have been released yet.
Federal Reserve Insights: The latest Beige Book report indicates a slight decline in economic activity across various districts, with uncertainty holding back business and consumer confidence. Fed officials continue to emphasize patience with regards to rate cuts.
Notable Movers:
Gainers:
YEXT-US (+31.5%) saw a strong Q1, with higher-than-expected EPS and revenue.
GWRE-US (+16.4%) reported strong results for Q3, raising its full-year guidance.
HQY-US (+9%) saw a solid Q1 with improved fraud-related cost control and raised guidance.
Decliners:
ASAN-US (-20.5%) faced a drop after lowering its FY revenue guidance, while still maintaining the high end.
GTLS-US (-9.5%) saw its stock drop following the announcement of a merger with Flowserve.
CRWD-US (-5.8%) struggled despite positive takeaways, as revenue missed expectations and Q2 guidance was light.
Economic Data:
ADP Private Payrolls Miss: May ADP private payrolls came in much lower than expected at 37K, signaling slower hiring.
ISM Services Index Contraction: The May ISM Services Index slipped into contraction territory at 49.9, below consensus estimates. New orders dropped, and prices paid surged, pointing to rising inflationary pressures.
May Factory Orders: Factory orders also missed expectations, declining by 3.7% m/m.
Looking Ahead
The market is focused on upcoming economic reports, including Friday’s Non-Farm Payrolls (NFP) report, which will offer more insight into the state of the labor market. Other data points to watch include trade balance, jobless claims, and unit labor costs due out tomorrow. Additionally, there will be more Fedspeak to keep an eye on, particularly comments from the Federal Reserve regarding their stance on future rate cuts.
Here’s Our Take
As we move into the next few sessions, investors should stay focused on the weaker economic data, particularly the soft ADP payrolls and the contraction in the ISM Services Index, which could impact expectations around Fed rate cuts. With trade tensions, especially between the US and China, remaining a key risk, market volatility could continue. However, sectors like homebuilding, semiconductors, and China tech may offer opportunities if the broader market stabilizes. We recommend using any dips to accumulate positions in high-growth areas while remaining cautious in the short term due to economic uncertainties.
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