US Stocks Likely To Open Lower After A Solid May: ‘TACO’ Trade And ‘Run It Hot’ Optimism ‘Are Consensus At This Point,’ Says Expert

U.S. stock futures fell on Monday after a mixed close on Friday. Futures of major benchmark indices were trading lower in premarket.

After the Federal appeals court temporarily reinstated Donald Trump‘s tariffs, he accused China of violating an agreement with the U.S. to ease tariffs in his Truth Social post.

However, Trump did not specify the details of this violation. Treasury Secretary Scott Bessent on Sunday clarified that China was withholding critical minerals it agreed to release in a trade deal the country signed with U.S. negotiators last month in Geneva.

Meanwhile, the 10-year Treasury bond yielded 4.44% and the two-year bond was at 3.92%. The CME Group’s FedWatch tool‘s projections show markets pricing a 98.7% likelihood of the Federal Reserve keeping the current interest rates unchanged in its June meeting.

The SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF (NASDAQ:QQQ), which track the S&P 500 index and Nasdaq 100 index, respectively, fell in premarket on Monday. The SPY was down 0.53% at $586.24, while the QQQ declined 0.63% to $515.83, according to Benzinga Pro data.

Cues From Last Session:

Sectoral moves led the U.S. stocks to a mixed close on Friday, with energy, consumer discretionary, and information technology stocks posting the largest declines, while consumer staples and utilities ended higher.

Wall Street ended May on a strong note, with the S&P 500 up 6.2% and the Nasdaq soaring 9.6%, marking their best months since November 2023. The Dow gained 3.9% for the month.

Weekly gains showed the S&P 500 advancing, the Dow up 1.6%, and the tech-heavy Nasdaq rising 2%.

Dell Technologies Inc. (NYSE:DELL) shares dropped over 2% after mixed first-quarter results, while Ulta Beauty Inc. (NASDAQ:ULTA) surged about 12% on better-than-expected Q1 earnings and raised guidance.

Economic data revealed the University of Michigan consumer sentiment revised up to 52.2 in May from a preliminary 50.8, while the Chicago PMI fell to 40.5 from 44.6 in the prior month.

The Dow Jones index ended 54 points or 0.13% higher at 42,270.07, whereas the S&P 500 index fell 0.0081% to 5,911.69. Nasdaq Composite declined 0.28% to 19,113.77, and the small-cap gauge, Russell 2000, tumbled 0.41% to 2,066.29.

Insights From Analysts:

According to Bob Elliott, the CIO of Unlimited Funds, there was a “consensus” among the market participants that TACO trade or Trump Always Chickens Out’ trade is priced in, meaning investors anticipate Trump’s tariff retreats, especially now that he is embroiled in the legal battle over the validation of his levied tariffs.

He implied that TACO could pave the way for a “Run It Hot” economic environment, characterized by growth-oriented policies and sustained stimulus, further fueling market optimism.

Elliott’s post signaled a widespread belief that Trump’s possible tariff rollbacks or extensions are not only predictable but also conducive to a pro-growth economic stance.

Meanwhile, head of research at Fundstrat Global Advisors, Tom Lee, stated that a “new bull market” has emerged following the spike in the volatility gauge in April. –

“I think we had what was a miniature bear market, but has essentially rebirthed the new bull market,” he told CNBC as he expects “pretty shallow” dips from here, advising investors to consider small-cap stocks other than the Magnificent 7

“As I look at the second half, I think the small caps really have a strong case to be made, because as long as we move towards a tariff resolution, or the markets feel that way, then I think investors can actually start putting flows back into stocks other than the Mag Seven,” Lee said.

See Also: How to Trade Futures

Upcoming Economic Data

Here’s what investors will keep an eye on this week:

• On Monday, May’s S&P final U.S. manufacturing PMI will be released by 9:45 a.m. ET.
• ISM manufacturing data for May and construction spending data for April will be out by 10:00 a.m. ET.
• Dallas Fed President Lorie Logan will speak at 10:15 a.m., Chicago Fed President Austan Goolsbee will speak at 12:45 p.m., and Federal Reserve Chair Jerome Powell will speak at 1:00 p.m. ET.
• Auto sales data will also be released on Monday.
• On Tuesday, April’s factory orders and job openings data will be out by 10:00 a.m. ET.
• Chicago Fed President Austan Goolsbee will speak at 12:45 p.m., Federal Reserve Governor Lisa Cook will speak at 1:00 p.m., and Dallas Fed President Lorie Logan will speak at 3:30 p.m. ET.
• On Wednesday, May’s ADP employment data will be out by 8:15 a.m. ET.
• May’s S&P final U.S. services PMI will be released at 9:45 a.m., and ISM services data will be out by 10:00 a.m. ET.
• Atlanta Fed President Raphael Bostic and Federal Reserve Governor Lisa Cook will speak at the Fed listens event at 10:15 a.m. ET.
• Fed Beige Book will be out by 2:00 p.m. ET.
• On Thursday, the initial jobless claims data for the week ended May 31, April U.S. trade deficit, and first quarter’s U.S. productivity data will be out by 8:30 a.m. ET.
• Federal Reserve Governor Adriana Kugler will speak at noon, and Philadelphia Fed President Patrick Harker will speak at 1:30 p.m. ET.
• On Friday, May’s U.S. employment report, unemployment rate, and hourly wages data will be released by 8:30 a.m. ET.
• April’s consumer credit data will be announced at 3:00 p.m. ET.

Stocks In Focus:

• Campbell’s Co. (NASDAQ:CPB) rose 2.32% in premarket on Monday as analysts expect it to report quarterly earnings of 66 cents per share on revenue of $2.43 billion, before the opening bell.
• Science Applications International Corp. (NASDAQ:SAIC) was up 0.29% ahead of its earnings, which are supposed to be released before the opening bell. Analysts expect earnings of $2.13 per share on revenue of $1.87 billion.
• Credo Technology Group Holding Ltd. (NASDAQ:CRDO) declined 1.03% as analysts expect it to report quarterly earnings of 28 cents per share on revenue of $160.16 million, after the closing bell.
• Sanofi SA (NASDAQ:SNY) advanced 0.32% after it announced plans to acquire Blueprint Medicines Corp. (NASDAQ:BPMC), which jumped 26.78%, for $9.5 billion.
• Brand Engagement Network Inc. (NASDAQ:BNAI) surged 63.73% after its plans to acquire Cataneo GmbH for $19.5 million were extended, with $550,000 paid so far.
• Plus Therapeutics Inc. (NASDAQ:PSTV) gained 37.05% after its cancer drug REYOBIQ extended patient survival to 17 months.
• Ryvyl Inc. (NASDAQ:RVYL) climbed 26.19% after it received an extension from Nasdaq to regain compliance with listing requirements after failing to meet minimum stockholders’ equity criteria last week.

Commodities, Gold, And Global Equity Markets:

Crude oil futures were trading higher in the early New York session by 3.55% to hover around $62.95 per barrel.

Gold Spot US Dollar rose 1.78% to hover around $3,348.94 per ounce. Its last record high stood at $3,500.33 per ounce. The U.S. Dollar Index spot was lower by 0.64% at the 98.6940 level.

Asian markets closed lower on Friday except South Korea’s Kospi index. Australia’s ASX 200, China’s CSI 300, India’s S&P BSE Sensex, Japan’s Nikkei 225, and Hong Kong’s Hang Seng indices declined. European markets were lower in early trade.

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• Tom Lee Bets On ‘A New Bull Market,’ As Trump’s Tariff Retreat Fuels ‘TACO’ Trade Amid ‘Run It Hot’ Optimism
  

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