Fed sounds tariff alarm 28/05/2025

HOT stories for today

US market wrap:

• U.S. stocks rallied Tuesday, snapping a four-day losing streak. The Dow jumped over 700 points (1.8%), the S&P 500 climbed 2%, and the Nasdaq led with a 2.5% gain. Over 90% of S&P 500 stocks closed higher, while the Russell 2000 rose 2.5%, signaling broad market strength. The rebound was fueled by relief over former President Donald Trump’s decision to delay a 50% tariff on EU imports, calming trade tensions and lifting investor sentiment.
• Tesla (TSLA) surged 7% after Elon Musk said he’s shifting focus back to his companies, while Apple, Microsoft, and Nvidia also advanced. U.S. Steel (X) rose 2% amid reports Nippon Steel is nearing a $55/share acquisition. All eyes are now on Nvidia (NVDA) earnings after the bell and the FOMC minutes, as traders look for signals on chip demand and the Fed’s next policy move.

Fed sounds tariff alarm

• As Wall Street rallies, the Federal Reserve is adopting a more cautious stance. May FOMC meeting minutes, set for release today at 2 p.m., are expected to reveal rising concern that President Trump’s tariff strategy could trigger stagflation—higher inflation coupled with slowing growth. Fed Chair Jerome Powell has moved from a neutral tone to warning that both inflation and unemployment risks are rising. This sentiment was echoed in the Fed’s latest policy statement, signaling growing consensus.
• Meanwhile, the S&P 500 had climbed 18.5% off its March lows by May, with markets largely dismissing the Fed's warnings. Still, futures now price in 95 basis points of rate cuts through 2026, with the first expected in September 2025. The disconnect between market optimism and Fed caution suggests investors may need to reassess—especially if trade tensions escalate further.

Stocks on the move:

• Newmont (NEM) — Shares of the gold miner slipped 1% as spot gold prices fell in response to President Trump’s decision to delay tariffs on the European Union. The move eased market anxiety, undercutting demand for the safe-haven asset, which was down more than 1%.
• V.F. Corporation (VFC) — The apparel giant surged 13% after CEO Bracken Darrell purchased roughly 85,800 shares, signaling confidence in the company’s future. COO Abhishek Dalmia also disclosed the purchase of 50,000 shares. V.F. owns brands including Timberland, The North Face, and JanSport.
• Nvidia (NVDA) — The chipmaker rose 3% following a Reuters report that it will release a cost-effective version of its Blackwell chip designed specifically for China. Sources say mass production could begin as early as June.
• LifeStance Health (LFST) — Shares jumped 10% after UBS upgraded the stock to Buy from Neutral. Analyst Kevin Caliendo noted the market may be underestimating the company’s upside potential relative to its fundamentals.

Today’s action

• Asia-Pacific markets traded mixed on Wednesday, tracking Wall Street’s modest gains. Japan’s Nikkei 225 rose 0.31%, while Hong Kong’s Hang Seng Index slipped 0.55% as regional investors remained cautious ahead of key U.S. events.
• In the U.S., stock futures were little changed Tuesday night after the Dow Jones Industrial Average snapped a four-day losing streak. Dow futures edged up 21 points, or less than 0.1%, while S&P 500 and Nasdaq 100 futures ticked higher by 0.03% and 0.02%, respectively. In extended trading, Okta (OKTA) shares tumbled more than 12% after the company maintained its full-year guidance, citing continued macroeconomic uncertainty. All eyes are now on Nvidia (NVDA), with earnings set for release after Wednesday’s close. Traders will be watching closely for commentary on how U.S.-China restrictions may impact demand, despite continued strength in the AI chipmaker’s graphics processor sales. Additionally, investors will be reviewing the Federal Reserve’s May meeting minutes, scheduled for release Wednesday afternoon, for further clues on the central bank’s policy outlook.

Watchlist: OKTA, NVDA, CRM, DKS, M, TSLA, PLTR, SOUN

Bitcoin

• The crypto market is holding relatively steady after a volatile May, with Bitcoin (BTC) hovering around $108,500, pausing just below the key $110K level. The stall comes as traders await fresh U.S. inflation data and the latest FOMC meeting minutes, which could influence risk appetite. 
• Ethereum (ETH) remains resilient near $2,650, while altcoins like Solana (SOL) and Avalanche (AVAX) posted modest gains, reflecting cautious optimism. Meanwhile, strong institutional demand—evidenced by continued inflows into spot Bitcoin ETFs—is helping underpin sentiment despite macro uncertainty. Traders are watching for signs of a breakout, but with economic and regulatory headwinds still in play, short-term momentum remains capped.
  Watchlist: Bitcoin: 74 000-111 500, Ethereum:1500-2800, Solana: 80-183

Forex

• The Japanese Yen (JPY) weakened for a third consecutive session on Wednesday, sliding to a one-week low against the U.S. dollar. Selling pressure intensified after Japan’s Finance Minister Katsunobu Katō signaled potential intervention to rein in rising Japanese Government Bond (JGB) yields, dampening demand for the currency amid a broader risk-on tone. Meanwhile, a modest rebound in the U.S. Dollar (USD) helped lift USD/JPY, though gains may be capped by ongoing Bank of Japan–Federal Reserve policy divergence.
• Elsewhere, the EUR/USD pair extended losses for a second straight day, trading near 1.1310 in Asian hours. The euro came under pressure as the dollar gained ground ahead of the FOMC meeting minutes due later today. Additional drag came from reports that Japan may cut debt issuance, which spurred global bond demand and weighed on U.S. Treasury yields, currently at 4.46% (10-year) and 4.97% (30-year).
  Watchlist: EUR/USD: 1.0700-1.1600, USD/JPY: 140-151

Basic Materials

• Gold (XAU/USD) dipped below $3,300 on Wednesday after a modest overnight rise, pressured by renewed U.S. dollar strength and a broadly positive risk tone. Stronger-than-expected U.S. economic data reduced recession fears, boosting the dollar and weighing on the safe-haven metal. Still, trade uncertainty, Fed rate cut expectations, and fiscal concerns continue to provide some underlying support for gold.
• Meanwhile, West Texas Intermediate (WTI) crude oil drifted to around $60.90 in early Asian trading. Hopes for progress in U.S.-Iran nuclear talks and the potential for increased OPEC+ output are weighing on prices. Traders are now focused on Saturday’s upcoming OPEC+ meeting for fresh direction.
  Watchlist: GOLD 2600-3500, US Oil: 55.60-70.00
  
   

Key Economic Events Today:

EST time
10:00 am: USD  Richmond Manufacturing Index
02:00 pm: USD FOMC Meeting Minutes


Earnings

BMO (Before the US Market opens)
BMO          Bank of Montreal
DKS           Dick’s Sporting Goods
M               Macy’s
AMC (After the US Market closes): NVDA, CRM, A, NTNX

 

The TEFS Analyst team wishes you a successful day!