Wall Street Eyes Trump-Xi Call

Wall Street entered the week with cautious optimism, buoyed by renewed hopes for progress on U.S.-China trade talks. But that optimism remains tempered by the lingering effects of Donald Trump's latest tariff threats, rising geopolitical risks, and mixed macroeconomic signals.

The main driver of early-week sentiment is the long-awaited - and still tentative - conversation between President Trump and Chinese President Xi Jinping. According to Treasury Secretary Scott Bessent, a discussion is “imminent,” with the focus expected to center on two particularly thorny issues: critical minerals and specific Chinese export restrictions. The mere prospect of renewed dialogue has offered equity investors a glimmer of hope after Trump reignited tensions on Friday, accusing Beijing of dragging its feet on trade negotiations.

In a gesture interpreted either as diplomatic goodwill - or, the U.S. has temporarily extended tariff exclusions for certain solar equipment. This move, though limited, has been received positively by investors eager for any sign of detente.

Thanks in part to these developments, U.S. markets opened June with modest gains. The metals sector got a lift from Trump's vow to double tariffs on imported steel and aluminum from 25% to 50%. Investors see this as a potential boost for domestic producers, giving the sector a short-term jolt.

Meanwhile, the ever-resilient tech sector continues its strong run. The so-called "Magnificent Seven" - Microsoft, Nvidia, Apple, Amazon, Alphabet, Meta, and Tesla - have collectively gained 15% since April 1, nearly triple the S&P 500’s 5.5% increase. Still, 2025 has not been universally kind: only Meta and Microsoft are up year-to-date, while Apple is lagging with an 18% decline, weighed down by concerns over its AI competitiveness and supply chain tensions tied to China and India. Nvidia, thanks to a recent surge, is roughly flat on the year.

Beyond equities, unease over the direction of U.S. policy is more visible in currency and bond markets. The U.S. dollar remains near its lowest level since 2022 against a basket of major currencies, as investors pile into bearish positions on the greenback. At the same time, long-term Treasury yields are climbing - an unusual divergence, since high yields are typically accompanied by a stronger dollar.

This dislocation reflects investor uncertainty over the macroeconomic consequences of Trump's aggressive tariff stance and fiscal policy agenda. Many are wary of the inflationary implications and potential disruptions to global trade flows, even as some see opportunities in the volatility.

Crude oil prices surged nearly 3% on Monday, driven by a mix of supply-side disruptions and mounting geopolitical tension. OPEC+ declined to accelerate production increases, and wildfires in Alberta have taken roughly 7% of Canadian output offline. Compounding the pressure is a weaker dollar - making oil cheaper for foreign buyers - and renewed geopolitical risk following Ukrainian drone strikes deep inside Russian territory. Meanwhile, U.S.-Iran nuclear talks remain stalled, adding another layer of uncertainty to global energy markets.

Investors are also monitoring a series of economic data releases. In the U.S., today’s JOLTS report on job openings and April industrial orders could offer insight into labor market strength and manufacturing demand. Overseas, eurozone inflation data for May is due, though early releases from Germany and France suggest few surprises.

In Asia-Pacific trading, markets showed mixed momentum. Australia gained 0.5%, while Japan barely advanced. Hong Kong and Taiwan posted stronger gains, while India held flat. South Korean markets were closed for local presidential elections. In Europe, indices are slightly bearish, with the Stoxx Europe 600 down 0.2%.

Today's economic highlights:

On today's agenda: the Caixin China Manufacturing PMI; the CPI and unemployment rate in the eurozone; in the United States, durable goods orders, factory orders, and JOLTS job openings. See the full calendar here.

• Dollar index: 99,190
• Gold: $3,350
• Crude Oil (BRENT): $65.20 (WTI) $62.70
• United States 10 years: 4.43%
• BITCOIN: $105,380

In corporate news:

• Walt Disney implements mass layoffs across film, TV, and corporate finance divisions.
• Elon Musk's Neuralink raises $650 million; xAI targets $113 billion valuation through $300 million share sale.
• UnitedHealth Group CEO apologizes for earnings underperformance, pledges improvement.
• JetBlue Airways CEO dismisses merger possibility with United Airlines.
• Merck in talks to acquire Swiss biotech MoonLake for over $3 billion.
• Keysight must divest certain Spirent businesses to proceed with $1.5 billion merger.
• Regeneron's weight loss drug helps patients on Wegovy preserve muscle mass.
• Boeing has rolled out the first B737MAX since switching to a monthly production rate of 38 units, according to Air Current.
• Microsoft is investing $400 million in Switzerland in artificial intelligence and cloud computing.
• Exxon has signed an agreement with Azerbaijan's national oil company SOCAR to explore onshore oil production in the country.
• KKR is pulling out of the Thames Water rescue plan.
• Snowflake acquires Crunchy Data.
• Lowe's completes acquisition of Artisan Design Group.
• Braze completes acquisition of Offerfit.
• Mattel merges its film and television divisions to create Mattel Studios.
• Oil services provider Baker Hughes sells its stake in a unit to Cactus.

Analyst Recommendations:

• Block, Inc.: Evercore ISI upgrades to outperform from in-line with a price target raised from USD 58 to USD 75.
• Booking Holdings Inc.: William O'Neil & Co Incorporated upgrades to buy from dropped coverage.
• Cardinal Health, Inc.: Wells Fargo upgrades to overweight from equalweight with a price target raised from USD 136 to USD 179.
• Cencora, Inc.: Wells Fargo upgrades to overweight from equalweight with a price target raised from USD 274 to USD 337.
• Marvell Technology Group Ltd: CTBC Securities Investment Service Co LTD upgrades to add from buy with a target price raised from USD 67 to USD 70.
• Maximus, Inc.: Zacks upgrades to outperform from neutral with a price target raised from USD 72 to USD 82.
• Pinterest, Inc.: JP Morgan upgrades to overweight from neutral with a target price raised from USD 35 to USD 40.
• Broadcom Inc.: Citigroup maintains its buy recommendation with a price target raised from USD 210 to USD 276.
• Credo Technology Group Holding Ltd: BNP Paribas Exane maintains its outperform recommendation and raises the target price from 71 to USD 94.
• Ge Aerospace: RBC Capital maintains its outperform rating and raises the target price from USD 220 to USD 275.
• Lululemon Athletica Inc.: Evercore ISI maintains its outperform recommendation and raises the target price from USD 320 to USD 400.
• Roblox Corporation: JP Morgan maintains its overweight recommendation and raises the target price from 80 to USD 100.
• Unitedhealth Group Inc.: Piper Sandler & Co maintains its overweight recommendation and reduces the target price from USD 552 to USD 353.
• Zscaler, Inc.: President Capital Management Corp maintains a neutral recommendation with a price target raised from 195 to USD 330.