June 3rd Market Overview

Happy Tuesday.

Tech firmly in the driver's seat today and leading the charge today was Nvidia overtaking Microsoft in market cap. Chip names caught a bid on China trade optimism.

Dollar General highlighted something I’m noting - absolutely crushed earnings and explained why they think tariffs are actually good for their business (higher prices are driving traffic to discount chains.)

Let's dig in...

Executive Summary

1. Nvidia overtook Microsoft in market cap as chip stocks led the Nasdaq higher on hopes for China trade breakthrough talks this week.
   

2. Dollar General delivered its best day ever after beating earnings and positioning itself as the clear winner when tariffs push consumers toward discount chains.
   

3. Meta committed to its biggest power deal ever - 20 years of nuclear energy from Constellation $CEG ( ▲ 0.29% ) - signaling how tech giants will fuel AI infrastructure.
   

4. Trade deadline pressure builds as the administration demands final offers by Wednesday while the OECD cuts US growth forecasts on tariff uncertainty.

Market Overview

Key Market Drivers

1. Semiconductor Rally Continues: Nvidia and Broadcom led chip gains on China trade optimism. Citi sees Broadcom’s Thursday earnings showing AI strength while traditional semiconductor recovery creates additional upside.
   

2. Trade Deadline Pressure Intensifies: Steel tariffs double to 50% Wednesday as countries face Wednesday deadline for final trade offers. Chinese goods tariff pause extended to August 31 ahead of broader mid-July decisions.
   

3. Manufacturing Weakness Spreads: Chinese factory activity hit lowest since September 2022 while US factory orders fell 3.7% in April. OECD growth downgrade confirms trade uncertainty damage.
   

4. Tech Giants Embrace Nuclear: Meta’s Constellation deal shows how AI infrastructure demands drive new clean energy partnerships beyond traditional utility customers.
   

5. Tariffs Boost Discount Retail: Dollar General proves tariff-induced inflation pushes consumers to value chains, creating clear winners in inflationary environments.

Stock Spotlight

Dollar General $DG ( ▼ 0.42% ) delivered the perfect earnings execution, beating revenue by $160 million and EPS by $0.31. Management raised full-year guidance and positioned the company as a tariff beneficiary, explaining how higher prices drive traffic to discount chains.

Constellation Energy $CEG ( ▲ 0.29% ) landed the nuclear industry’s biggest corporate deal as Meta $META ( ▼ 2.27% ) committed to 1.1 gigawatts from the Clinton facility. The agreement validates nuclear’s role in AI infrastructure buildout.

Robinhood $HOOD ( ▲ 0.75% ) completed its Bitstamp acquisition, expanding crypto offerings internationally and adding institutional clients. The deal provides new revenue streams as crypto adoption grows.

Big Name Updates

Apple $AAPL ( ▼ 0.3% ) approaches WWDC this week with Evercore noting zero impact from the Epic ruling on App Store revenue. May US revenue grew 13% year-over-year as developers remain cautious about new rules.

Tesla $TSLA ( ▲ 1.39% ) advanced vertical integration across the entire battery supply chain, from lithium refining to cell assembly. Piper Sandler set a $400 price target highlighting unique positioning in battery technology.

Amazon $AMZN ( ▲ 0.2% ) announced EU-based sovereign cloud operations run entirely by EU citizens to address European data sovereignty concerns.

Microsoft $MSFT ( ▼ 0.59% ) continued workforce optimization with another 300+ layoffs following recent 6,000 staff reductions.

Other Notable Company News

Taiwan Semiconductor $TSM ( ▲ 1.06% ) reinforced AI demand strength with management expecting record 2025 revenue and earnings. CEO emphasized limited tariff impact while guiding for continued AI and HPC growth.

Hims & Hers $HIMS ( ▼ 2.0% ) expanded into Europe through its Zava acquisition, adding 1.3 million active customers across the UK, Germany, France, and Ireland.

Pinterest $PINS ( ▲ 0.89% ) gained on JPMorgan upgrade to overweight, highlighting progress in user growth and monetization strategies.

Bumble $BMBL ( ▲ 1.27% ) declined after JPMorgan downgraded to underweight, citing revenue declines and competitive pressure from Hinge. Recovery not expected until 2027.

Joby Aviation $JOBY ( ▼ 3.43% ) announced Saudi Arabia expansion plans with potential delivery of 200 aircraft through Abdul Latif Jameel partnership.

Sector Watch

Bond Market

Treasury yields declined with the 10-year at 4.465%. JPMorgan’s Jamie Dimon warned of potential bond market cracks due to rising debt levels.

• Japanese bonds showed strength following robust 10-year auction with highest bid-to-cover since April 2024

• Senate tax bill could add $3-5 trillion to national debt over next decade

• Ukraine defaulted on sovereign bond payment

Policy Watch

Trade negotiations intensify as steel and aluminum tariffs jump to 50% Wednesday. The administration demands final offers by Wednesday ahead of mid-July broader deadline.

• Chinese goods tariff pause extended until August 31

• EU threatens countermeasures on steel tariff increases

• Presidents Trump and Xi expected to speak this week on trade progress

• Elon Musk criticized Senate tax bill as “disgusting abomination”

• Atlanta Fed’s Bostic sees one rate cut possible but notes negative business sentiment

What to Watch

1. Thursday’s Broadcom Earnings: $AVGO reports after close with Citi expecting AI-driven beat. Non-AI semiconductor business down 40% from peak creates recovery potential while AI revenue accelerates.
   

2. China Trade Progress This Week: Presidents Trump and Xi expected to speak about negotiations. Positive developments could trigger semiconductor and China-exposed stock rallies. Watch for tariff rollback commitments.
   

3. Friday Jobs Report: May employment data will show tariff impacts on labor markets. Bostic’s comments about business hiring caution make this crucial for Fed policy direction.
   

4. Senate Tax Bill Dynamics: Musk opposition and debt concerns create uncertainty. Bond volatility could increase if passage appears doubtful or spending increases.
   

5. Nuclear Power Momentum: Meta’s deal could spark more corporate nuclear agreements from tech giants needing massive AI infrastructure power. Vistra $VST and other nuclear operators positioned to benefit.
   
   
   Thanks for reading 🙂
   
   - John
   

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