Closing Recap 

U.S. stocks finished broadly higher, with cyclical sectors and small caps leading the advance, as investors digested mixed economic data and looked past a downward revision to Q1 GDP; gold and oil were little changed, while Treasury yields fell. 

Key Takeaways 

• Broad Rally, Cyclicals & Small Caps Lead: Equities posted solid gains (S&P +0.8%, Russell 2000 +1.5%), with Materials, Industrials, and Energy outperforming. 
• GDP Revised Lower, Data Mixed: Final Q1 GDP showed a larger-than-expected contraction (-0.5%), but Initial Jobless Claims came in better than forecast. Durable Goods orders surged, but Pending Home Sales were soft. 
• Fed Rate Cut Hopes Intact: Despite some hotter inflation components in the GDP report, the market continues to price in a high probability of a Fed rate cut in September. 
• Sentiment Improving but Cautious: AAII bulls increased, and the Fear & Greed Index remained in “Greed,” but some underlying indicators (Leading Economic Index) signal recession risk. 
• Quiet on Trade Front: A lack of major trade or geopolitical headlines allowed markets to focus on economic data and earnings. 
• Gold & Oil Steady: Gold prices edged slightly higher, and crude oil posted a modest gain in a relatively quiet session for commodities. 
• Yields Fall: Treasury yields declined across the curve, reacting to the mixed economic data and reinforcing expectations for future Fed easing. 

Market Overview 

U.S. equity markets climbed steadily higher throughout the day, closing with solid gains across the board in a broad-based rally. Small caps (Russell 2000) notably outperformed their large-cap counterparts, and cyclical sectors like Materials, Industrials, and Energy led the way, suggesting increased investor appetite for risk. The positive session came despite a downward revision to final Q1 GDP, which showed the economy contracted by -0.5%, worse than previously estimated. However, markets seemed to look past this backward-looking data, perhaps focusing more on forward-looking indicators and the prospect of future Federal Reserve easing. 

Index	Up/Down	% Change	Last
DJ Industrials	404.84	0.0094	43387
S&P 500	48.89	0.008	6141
Nasdaq	194.36	0.0097	20168
Russell 2000	31.22	0.0146	2167

Investors digested a heavy slate of economic releases this morning. While the final GDP print was a negative headline, other data was mixed. Initial Jobless Claims came in lower than expected, a positive sign for the labor market. Durable Goods Orders for May surged dramatically, though this was largely due to volatile transportation orders. Pending Home Sales for May also showed a modest rebound.

The market’s ability to rally despite some of these concerning underlying signals (like a nine-year low for the Conference Board Leading Economic Index) suggests a focus on the potential for Fed rate cuts to support the economy. Market pricing continues to indicate a high probability of a rate cut by the September FOMC meeting. With no major trade or geopolitical headlines to drive sentiment, investors were free to interpret the domestic data, ultimately pushing stocks higher.

Economic Data

Economic data yesterday was mixed, with a weaker final GDP reading contrasting with better jobless claims and a surge in durable goods orders. 

• Initial Jobless Claims (Weekly): 236k (Forecast: 243k, Prior: 246k). Continuing Claims 1.97M (vs. 1.95M est.). 
• Q1 GDP (Final): -0.5% (Forecast: -0.2%, Prior: -0.2%). GDP Deflator Final 3.8% (vs. 3.4% prior). Core PCE Prices Final 3.5% (vs. 3.4% est. & prior). 
• Durable Goods Orders (May): +16.4% m/m (Forecast: +8.5%, Prior: -6.3%). Ex-transportation +0.5% (vs. 0.0% est.). 
• Pending Home Sales (May): +1.8% m/m (Forecast: +0.13%, Prior: -6.3%). 
• Kansas City Fed Mfg. Composite (June): -2 (Forecast: -5, Prior: -3). 

Commodities, Currencies, and Treasuries

Gold prices were little changed, with August futures settling up just $4.90 (+0.15%) at $3,348.00 per ounce. With no major safe-haven catalysts today, gold traded in a tight range as investors digested the day’s economic data. Crude oil also saw a relatively quiet session, with August WTI futures settling up $0.32 (+0.49%) at $65.24/bbl. The modest gain came as traders continued to take advantage of the recent sell-off, with the broader risk-on mood providing some support.

Asset	Up/Down	Unit / % Change	Last
WTI Crude	0.32	USD/bbl	65.24
Brent	0.05	USD/bbl	67.73
Gold	4.9	USD/oz	3348
EUR/USD	0.005	USD	1.117
USD/JPY	-0.788	JPY	144.37
10-Year Note	-0.04	%	0.04253

Treasury yields fell across the curve, with the 10-year yield dropping about 4 basis points to 4.253%. The move lower in yields was likely a reaction to the weaker final Q1 GDP print and persistent concerns about an economic slowdown, reinforcing expectations for Fed easing. The U.S. dollar was mixed, weakening against the Euro but strengthening against the Yen.

Looking Ahead 

Tomorrow brings the week’s most anticipated economic release: the April Core PCE Price Index, the Federal Reserve’s preferred measure of inflation. This report will be critical for shaping the market’s expectations for future monetary policy, particularly the timing and number of potential rate cuts this year. With Q1 earnings season largely complete and trade headlines relatively quiet, macroeconomic data will likely remain the primary driver of market sentiment heading into the weekend.