June 12th Market Overview

Happy Thursday.

Tech led the way today as Oracle delivered a knockout quarter, giving the whole AI narrative another booster shot in the arm. It was enough to push the indices into the green, even as Boeing's stock took a nosedive after tragic headlines.

Softer(lower) inflation data also helped the mood, keeping the hope of a Fed rate cut alive.

Let's dig in...

Executive Summary

1. U.S. indices finished higher, with a strong earnings report and forecast from Oracle $ORCL ( ▲ 7.69% ) fueling a rally across the technology sector and reinforcing the market’s AI narrative.
   

2. Boeing $BA ( ▼ 1.68% ) shares fell sharply, weighing on the Dow after the tragic news of a fatal crash involving an Air India 787 Dreamliner.
   

3. Lowerr-than-expected wholesale inflation in May, combined with strong demand at a government bond auction, helped push Treasury yields lower.
   

4. Progress in U.S.-China trade talks is being tempered by lingering uncertainty over tariff timelines, keeping a lid on broader market enthusiasm.
   

Market Overview

Key Market Drivers

1. Tech Leads the Charge: It was all about tech today. Oracle $ORCL didn’t just beat its quarterly estimates; its forecast for over 70% growth in cloud infrastructure revenue, explicitly tied to AI demand, provided a significant boost to sentiment across the entire sector.
   

2. Good News on the Inflation Front: May’s Producer Price Index (PPI) offered a welcome surprise, rising just 0.1% against expectations of 0.2%. The soft reading on wholesale prices added to the view that inflation is moderating, giving the Federal Reserve more breathing room.
   

3. A Tragic Headline in Aerospace: The fatal crash of an Air India Boeing 787 Dreamliner, the first for this aircraft model, sent a shockwave through the industrial sector. The news hit $BA stock hard and created a ripple effect for key suppliers like GE Aerospace $GE ( ▼ 1.41% ) and Spirit AeroSystems $SPR ( ▼ 1.71% ) .
   

4. The Trade Policy Dance Continues: President Trump hinted at flexibility on the July 8 tariff deadline for some countries, while U.S. and Chinese officials agreed on a preliminary framework for future talks. Still, the lack of a final, signed deal remains a key source of market uncertainty.
   

Stock Spotlight

Oracle Corp. $ORCL ( ▲ 7.69% ) shares rallied after the company delivered a standout fiscal fourth quarter, beating on both revenue and earnings. Investors were especially focused on management’s bullish forecast for cloud growth, driven by what CEO Safra Catz called massive demand for AI training. The report prompted Barclays to raise its price target.

Boeing Co. $BA ( ▼ 1.68% ) saw its stock drop sharply. The decline followed the news of the Air India 787 Dreamliner crash, which involved 242 passengers and crew. This is the first fatal incident for the Dreamliner model, renewing safety and operational scrutiny for the aerospace giant.

Chime Financial $CHME ( ▲ 100.0% ) had a strong market debut on the Nasdaq. The fintech company priced its IPO at $27 a share, above the expected range, and opened for trading at $43. The successful listing, which raised $864 million, is being seen as a healthy sign for a recovering IPO market.

Novo Nordisk $NVO ( ▼ 1.51% ) shares gained after the company announced it will move its next-generation obesity drug, amycretin, into late-stage trials. The experimental drug targets both GLP-1 and amylin hormones and is being developed as both a pill and an injection.

CureVac $CVAC ( ▼ 0.54% ) shares jumped. The surge came after Germany’s BioNTech announced it has agreed to acquire the clinical-stage biotech firm in an all-stock deal valued at about $1.25 billion.

Big Name Updates

Lockheed Martin $LMT ( ▲ 3.66% ) was named a “bullish fresh pick” by Baird. The firm views the recent pullback in the defense contractor’s stock, which followed reports of a trimmed F-35 order from the U.S. Air Force, as a compelling entry point, arguing that long-term demand remains solid.

Other Notable Company News

Gold mining stocks had a good day, with Anglogold Ashanti $AU ( ▲ 4.14% ) and Newmont $NEM ( ▲ 3.54% ) posting solid gains. The move helped lift the VanEck Gold Miners ETF $GDX ( ▲ 1.74% ) , as August-dated gold futures hit their highest price since June 5.

Advanced Micro Devices $AMD ( ▼ 1.98% ) unveiled its new AI-focused MI350 series chips. As part of its push for an open AI ecosystem, AMD announced collaborations with key players like Meta Platforms $META ( ▼ 1.51% ) , OpenAI, Oracle , and Microsoft $MSFT ( ▼ 0.82% ) .

Sector Watch

Bond Market

The 10-year Treasury yield down to close around 4.358%.

• The move was driven by the soft May PPI report, which gave bond investors more confidence that inflation is trending in the right direction.

• The market also easily absorbed a $22 billion auction of 30-year Treasury bonds, which saw strong demand and signaled investor appetite for government debt.
  
  This combination of factors is hopes that the Federal Reserve will be in a position to cut interest rates later this year. Goldman Sachs is currently forecasting the first cut for December 2025.

Policy Watch

• Trade Policy Posturing: President Trump said he might extend the July 8 trade deadline for countries “negotiating in good faith,” but also suggested it might not be necessary. He told reporters that letters outlining “the deal” would be sent to various countries within a couple of weeks.
  

• Global Trade Negotiations:

  • China: U.S. and Chinese officials in London agreed on a preliminary framework for future talks, including easing some restrictions on rare earths and foreign students. The plan still requires final approval from both presidents.

  • Europe & U.K.: Commerce Secretary Howard Lutnick called the EU “thorny” to deal with, suggesting a trade pact would come at “the very, very end.” On a more positive note, he said parts of the U.K.-U.S. trade deal, including new quotas for autos and agricultural products, will take effect “in the coming days.”
    

• Federal Reserve Outlook: Goldman Sachs is holding firm on its forecast for one Fed rate cut in December 2025, followed by two more in 2026. Separately, President Trump renewed his criticism of Fed Chair Jerome Powell, calling him a “numbskull” for not lowering rates.
  

• Economic Projections: Citing a smaller-than-expected drag from tariffs, Goldman Sachs lowered its 12-month U.S. recession probability to 30% from 35%. The firm also nudged its 2025 GDP growth forecast up to 1.25%.
  

What to Watch

1. Forthcoming Trade Communications:

   • Keep an eye out for the “letters” President Trump mentioned. Any official announcements on trade terms in the next two weeks could create significant volatility for specific sectors and international markets.
     

2. U.S.-China Deadline:

   • The August 12 tariff deadline is the next key date to watch for U.S.-China relations. Progress toward a concrete deal—or a lack thereof—will be a major market driver.
     

3. Labor Market Signals:

   • Pay close attention to weekly jobless claims. Continuing claims recently hit their highest level since late 2021. If that trend continues, it would be a clear sign of labor market softening that could influence the Fed’s timeline.
     

4. Aerospace Investigation:

   • The investigation into the Boeing 787 crash will be critical. The findings will have long-term consequences for BA and its supply chain and could lead to new regulatory actions.
     
     
     Thanks for reading 🙂
     
     - John
     

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