Opening Comment — Thursday, May 22, 2025
DJIA: 41,860.44, down 816.80
S&P 500: 5,844.61, down 95.85
NASDAQ: 18,872.64, down 270.07
Stocks mixed after tax bill passing
Stock futures are mixed Thursday morning as the U.S. budget deficit took the spotlight, with the House of Representatives passing President Trump’s comprehensive domestic policy bill following the release of a revised version late Wednesday which helped unify the divided Republican Party. Investors are also looking forward to today’s preliminary purchasing managers’ index (PMI) data for May and updates on existing home sales and jobless claims. As of 7:18 AM ET, the Dow is decreasing 0.1%, while the S&P 500 is up 0.1%. The Nasdaq 100 is increasing 0.2% relative to fair value on the GLOBEX.
U.S. equities were lower on Wednesday as investors awaited developments on the U.S. tax bill. The Dow was down 1.9%, while the tech-heavy Nasdaq Composite fell 1.4%. The S&P 500 decreased 1.6% with 10 of 11 sectors finishing in negative territory. The Communication Services sector was the top performer, rising 0.7%, while the Real Estate sector was the bottom performer, falling 2.6%.
On the data front, the Federal Reserve (Fed) Bank of Chicago’s National Activity Index for April is expected to come in at negative 0.25, down from the prior month’s negative 0.03. Initial jobless claims for the week ending May 17 are expected to come in at 230,000, slightly higher than the prior week’s 229,000, while continuing claims are expected to come in at 1.882 million for the week ending May 10, up from the prior week’s 1.881 million. The preliminary reading of S&P Global’s composite PMI for May is expected to come in at 50.3 versus the prior month’s 50.6, with the manufacturing and services PMIs forecasted at 49.9 and 51.0, respectively, compared to the prior month’s 50.2 and 50.8, respectively. Existing home sales are forecasted to have been at an annualized 4.10 million pace in April, versus the prior month’s 4.02 million pace, corresponding to an increase of 2.0% versus the prior month’s decrease of 5.9%. The Kansas City Fed will release their Manufacturing Survey for May, with the composite index expected to come in at negative 5, down from the prior month’s negative 4.
Across the pond, European stocks are lower in mid-day trading as the eurozone’s preliminary May manufacturing PMI rose more than expected, though remained in contractionary territory, while the services PMI unexpectedly fell into contractionary territory. Meanwhile, the U.K.’s preliminary manufacturing PMI unexpectedly declined further into contractionary territory, while the services PMI rose just into expansionary territory. Germany’s IFO Business Climate Index for May increased more than expected.
Overnight in Asia, stocks were lower as Japan’s preliminary May Jibun Bank manufacturing PMI rose but remained in contractionary territory, while the services PMI declined but stayed in expansionary territory. Meanwhile, the country’s core machine orders rose by 13.0% month-over-month in March, versus expectations of a decline. Australia’s preliminary May composite PMI declined but stayed in expansionary territory.
In FOREX trading, the dollar is higher ahead of today’s U.S. PMI data.
Over in the commodity pits, West Texas Intermediate (WTI) crude oil is 1.6% lower at $60.59/barrel following talks from the Organization of the Petroleum Exporting Countries of another large supply increase in July.
In the metals complex, gold is 0.5% lower at $3,298.40/ounce following a strengthening dollar.