Closing Recap 

U.S. stocks rallied off morning lows to finish mostly higher, with the S&P 500 reaching new highs for the month, led by a rebound in defensive sectors and renewed strength in AI-related tech; Treasury yields fell despite mixed economic data, while oil slumped and gold recovered. 

Key Takeaways 

• Rebound Secures Gains: Stocks overcame early weakness to finish mostly positive, with the S&P 500 hitting its highest level this month and extending its recent strong run. 
• Yields Fall Despite Mixed Data: Treasury yields declined, with the 10-year falling below 4.5%, even as some inflation components in regional surveys remained elevated. PPI data was softer than expected overall. 
• Trade News Quieter, Focus on Tax Cuts? While trade headlines were less prominent, the market anticipates potential tax cut news from the White House. 
• Sentiment Improves but Caution Lingers: Fear & Greed Index moved to “Greed,” but NAAIM exposure dipped, and AAII bears still outnumbered bulls. 
• Oil Slumps on Iran Deal Hopes: Crude prices fell sharply after President Trump suggested a nuclear deal with Iran was close, implying potential for increased supply. 
• Gold Recovers: Gold prices bounced back from overnight losses, finding support as yields eased.
•  Options Expiration Looms: A massive options expiration ($2.8 trillion notional) is scheduled for tomorrow, potentially influencing market dynamics. 

Market Overview 

U.S. equity markets demonstrated resilience today, shaking off early weakness to rally into the close, with the S&P 500 notching its sixth gain in the last seven sessions and reaching new highs for the month. The Nasdaq Composite also recovered significantly from morning lows, propelled by renewed investor enthusiasm for AI-related stocks, including Nvidia and data center plays, which have been a key market driver. This positive sentiment in tech comes after a period of consolidation and follows recent commentary from companies like Meta and Microsoft affirming their commitment to AI spending. 

Index	Up/Down	% Change	Last
DJ Industrials	271.69	0.0065	42322
S&P 500	24.35	0.0041	5916
Nasdaq	-34.49	-0.0018	19112
Russell 2000	10.89	0.0052	2094

The broader market saw leadership from defensive sectors like Utilities, Consumer Staples, and REITs, which benefited from a pullback in Treasury yields. Yields fell despite mixed economic data; while headline PPI inflation was softer than expected, some underlying components and regional Fed survey price indicators remained elevated. Retail sales also showed a slowdown. However, the bond market seemed to focus on the weaker aspects of the data and potential signs of an easing economy. 

Trade headlines were less dominant today compared to earlier in the week, although the market continues to digest the implications of recent tariff de-escalation announcements and potential new deals. President Trump’s comments suggesting a nuclear deal with Iran was nearing, which could bring more Iranian oil to the market, contributed to a sharp drop in crude prices. Investor sentiment shows signs of improvement, with the Fear & Greed Index moving into “Greed” territory, but other indicators like the NAAIM exposure and AAII survey still reflect underlying caution. A very large options expiration tomorrow could also contribute to market volatility.

Economic Data

Economic data yesterday was mixed, with softer headline inflation and retail sales contrasting with some persistent price pressures in regional surveys and weak manufacturing output. 

• Producer Price Index (PPI) (Apr): Headline PPI m/m fell -0.5% (vs. +0.2% est.). Core PPI m/m fell -0.4% (vs. +0.3% est.). 
• Philadelphia Fed Business Conditions (May): Improved to -4.0 (vs. -11.0 est., -26.4 prior). Prices Paid index rose to 59.8. New Orders improved to 7.5. Six-month outlook jumped. 
• Weekly Jobless Claims: Unchanged at 229,000 (in line with consensus). Continuing claims rose to 1.881 million. 
• NY Fed Empire State Current Business Conditions (May): Improved to -9.2 (vs. -10.0 est., -8.1 prior). Prices Paid rose to +59.0. 
• Retail Sales (Apr): Rose +0.1% m/m (vs. 0.0% est., after +1.7% surge in March). 
• Industrial Production (Apr): Unchanged m/m (vs. +0.2% est.). Manufacturing output fell -0.4% (vs. -0.2% est.). Capacity utilization dipped to 77.7%. 
• Business Inventories (Mar): Rose +0.1% (vs. +0.2% est.). Inventory/Sales ratio held at 1.34 months. 
• NAHB Housing Market Index (May): Fell to 34 (vs. 40 consensus and prior), indicating weakening homebuilder sentiment. 
• Atlanta Fed GDPNow (Q2 Forecast): Increased to 2.5% from 2.3%. 

Commodities, Currencies, and Treasuries 

Gold prices recovered from overnight losses to settle higher by $38.30 (+1.2%) at $3,226.60 per ounce, as easing Treasury yields and perhaps some lingering geopolitical concerns provided support. Crude oil prices slumped, with WTI falling $1.90 (-2.42%) to settle at $61.25/bbl. The drop was attributed to President Trump’s comments suggesting a potential nuclear deal with Iran could be near, which would likely increase global oil supply, along with broader economic demand concerns highlighted by the IEA. Treasury yields declined across the curve, with the 10-year yield falling about 7 basis points to 4.457%, reversing earlier strength. The rally in bonds was supported by the softer PPI data and general concerns about economic growth. The U.S. dollar index slipped slightly. Bitcoin prices pulled back below $103,000.

Asset	Up/Down	Unit / % Change	Last
WTI Crude	-1.9	USD/bbl	61.25
Brent	-1.7	USD/bbl	64.39
Gold	38.3	USD/oz	3226.6
EUR/USD	0	USD	1.1174
USD/JPY	-1.06	JPY	145.68
10-Year Note	-0.071	%	0.04457

Looking Ahead 

Today brings a massive options expiration, which could lead to increased volatility and positioning adjustments, particularly around key strike prices. With trade headlines relatively quiet for now, focus remains on digesting the week’s economic data and looking ahead to potential policy shifts (e.g., tax cuts). The performance of AI and tech stocks will continue to be a key theme, especially as earnings season winds down. Any developments regarding a potential Iran nuclear deal could further impact oil markets.