Investor sentiment improved further on Thursday as easing inflation data and tariff relief continued to calm market nerves. A surprise decline in wholesale prices, coupled with steady retail activity and supportive macro signals, helped extend the recent rebound across major indices. While the Dow and S&P 500 pushed higher, the Nasdaq cooled slightly after a strong multi-day surge in tech. Confidence in the outlook has grown following signs that price pressures may be subsiding without a sharp slowdown in growth. Still, traders remain mindful of risks ahead as the market gauges whether momentum can broaden beyond large-cap leaders.

Key Takeaways:

  • Dow Climbs Over 270 Points in Broad Market Advance: The Dow Jones Industrial Average rose 271.69 points, or 0.65%, to finish at 42,322.75, logging its fourth straight gain. The index is now up 2.6% for the week, supported by a stronger-than-expected macro backdrop.
  • S&P 500 Logs Fourth Consecutive Gain as Yields Retreat: The S&P 500 gained 0.41% to close at 5,916.93, extending its weekly rise to 4.5%. Technology stocks continued to lead performance for the week, helping the index edge closer to record territory.
  • Nasdaq Slips but Weekly Gains Remain Strong: The Nasdaq Composite dipped 0.18% to end at 19,112.32, underperforming its peers despite strong weekly advances in mega-cap tech. The index is still up 6.6% for the week, driven by double-digit gains in Nvidia and Tesla. 
  • Europe Closes Higher as Defence Stocks Rally and UK GDP Surprises: European markets ended broadly higher Thursday, with the Stoxx 600 up 0.56%, led by strength in defence and utilities. Germany’s DAX rose 0.72% as Hensoldt jumped 8.3% following support for increased NATO spending. France’s CAC 40 and Italy’s FTSE MIB both reversed early losses to close higher. The FTSE 100 added 0.57% after UK GDP grew 0.7% in the first quarter, surpassing expectations. French inflation was slightly above forecast at 0.9% year-on-year, and German wholesale prices increased by 0.8%. Eurozone GDP for Q1 was revised down to 0.3%, though labour and industrial figures showed resilience.
  • Asia Mixed as Markets Weigh Trade Optimism and Local Data: Asia-Pacific equities delivered a mixed finish, with many markets unable to follow Wall Street’s lead. Japan’s Nikkei 225 fell 0.98%, while South Korea’s Kospi and China’s CSI 300 each declined more than 0.7%. Hong Kong’s Hang Seng also finished lower, reflecting caution around trade policy shifts. India’s Nifty 50 slipped 0.16%. Australia’s ASX 200 was the region’s standout, rising 0.22% after a strong jobs report. Employment surged by 89,000 in April, far above forecasts, while the jobless rate held steady at 4.1%.
  • Oil Drops on US-Iran Deal Hopes and Supply Increase: Crude prices fell sharply after President Trump signalled progress in nuclear negotiations with Iran. Brent settled at $64.53 a barrel, down 2.36%, and WTI fell 2.42% to $61.62. Iranian officials indicated willingness to sign a deal in exchange for sanctions relief. At the same time, OPEC+ confirmed a June supply boost of 411,000 barrels per day. 
  • US Wholesale Prices Fall, Retail Sales Stay Flat as Inflation Cools: Wholesale inflation surprised to the downside in April, with the producer price index falling 0.5% and core PPI down 0.4%. The decline was driven by a sharp drop in services prices, which fell 0.7%, the steepest decline in the index’s history. Retail sales rose just 0.1% in April, in line with expectations but a sharp slowdown from March’s 1.7% increase. Sector performance was uneven, with gains in restaurants and building materials offset by weakness in sporting goods and other retail.
  • US Jobless Claims Steady, Regional Manufacturing Diverges: Weekly jobless claims held steady at 229,000, close to forecasts, indicating continued labour market resilience. Manufacturing data was mixed. The Empire State index fell to -9.2, slightly weaker than expected, while the Philadelphia Fed index jumped to -4.0 from -26.4. 
  • Treasury Yields Drop as Bond Market Cheers PPI Surprise: Treasury yields moved lower after the softer inflation report. The 10-year yield declined by 8.1 basis points to 4.447%, and the 2-year yield fell 9 basis points to 3.963%. Investors interpreted the PPI data as a sign that pricing pressures may be easing across the board. 

FX Today:

  • EUR/USD Holds Above 1.1100 as Bulls Defend Key Support: EUR/USD closed at 1.1182 on Thursday, rising 0.34% and extending its rebound from this week’s low near 1.1110. The pair found strong support at the 50-day SMA (1.1099), which contained the recent pullback. A sharp drop in US wholesale prices added pressure on the dollar, allowing the euro to regain momentum despite uneven eurozone data. Technical structure remains bullish, with the 100-day and 200-day SMAs trending upward at 1.0754 and 1.0797. As long as the pair holds above 1.1100, the broader trend remains intact. Initial resistance is seen at 1.1225, followed by 1.1300 and 1.1350. A break below 1.1100 would expose deeper support between 1.0950 and 1.1000.
  • GBP/USD Holds Firm as Bulls Eye a Break Above 1.3350: GBP/USD ended Thursday at 1.3306, gaining 0.27% on the day and hovering near the 2024 highs just below 1.3350. The pair remained well-supported by dollar softness and upbeat domestic data, particularly the stronger-than-expected UK GDP print showing 0.7% growth in Q1. Price action continues to consolidate after a strong rally from the April low of 1.2540. The 50-day SMA sits at 1.3109, with the 100-day and 200-day SMAs trending upward at 1.2780 and 1.2867. Bulls will need a close above 1.3350 to target 1.3450 and potentially 1.3600. Support lies between 1.3200 and 1.3100, with the 50-day SMA offering key defence.
  • USD/JPY Drops Below 146.00 as Rejection Triggers Bearish Shift: USD/JPY dropped to 145.56 on Thursday, losing 0.81% after failing to hold gains above the 146.75 resistance zone. The pair fell back below its 50-day SMA at 146.15, adding to the bearish tone following repeated rejections of the 100-day and 200-day SMAs at 150.06 and 149.59. A deeper pullback could now target support at 144.00, followed by the May low near 141.85. The inability to clear long-term averages has left momentum tilted lower. For any recovery to materialise, USD/JPY would need to close above 146.75, with further resistance seen at 147.80 to 148.50.
  • USD/CHF Slips Back Toward 0.9000 as Bulls Lose Grip: USD/CHF ended the session at 0.9022, down 0.65%, retreating from last week’s high at 0.9117. The pair broke below its 50-day SMA at 0.9069, confirming short-term weakness and increasing the risk of further downside. Price traded between the 100-day SMA at 0.9132 and the 200-day at 0.8987, with the latter offering the next support level. A break below the 0.9000 handle could open a move toward 0.8935 and 0.8850. On the upside, a recovery back above 0.9069 would be needed to reestablish bullish control, though momentum remains sluggish for now.
  • Gold Price Dips Thursday but Bullish Momentum Still Intact: Gold traded at $2,657 on Thursday, down 0.50% from its recent high of $2,685 as profit-taking set in. The retreat followed a multi-week rally off the April low near $2,488, supported by weaker US inflation data and geopolitical demand. The 50-day SMA now sits at $2,488, well below current price, while the 100-day and 200-day SMAs at $2,426 and $2,175 reflect a strong underlying trend. The $2,650 zone is now short-term support, with $2,600 also in focus near the September swing high. A close above $2,685 could re-accelerate gains toward $2,700 and $2,750.

Market Movers:

  • Dick’s Tumbles on Foot Locker Acquisition Announcement: Dick’s Sporting Goods plunged 14.6% after announcing it would acquire Foot Locker for $2.4 billion. Foot Locker shares soared nearly 86% in response to the takeover premium.
  • UnitedHealth Plunges on DOJ Investigation Report: UnitedHealth dropped 15% after The Wall Street Journal reported the DOJ is investigating the company for possible Medicare fraud. The company said it has not received any formal notification from the Justice Department. 
  • Fiserv Drops on Weak Clover Outlook: Fiserv fell more than 16% after signalling that growth in its Clover unit would remain flat in Q2. The update was delivered during JPMorgan’s tech conference. 
  • Coinbase Drops on Insider Hacking Scandal: Coinbase shares fell 7.2% after revealing an internal security breach involving bribed staff and stolen customer data. Hackers are demanding $20 million in ransom. 
  • Alibaba Falls After Mixed Results and Weak Sentiment: Alibaba slid 7.6% after missing fiscal Q4 expectations despite a 279% jump in net income. Investors remain cautious amid weak Chinese consumer confidence. Macro volatility continues to challenge the company’s outlook.
  • Walmart Slips After Sales Miss and Tariff Warning: Walmart shares fell 0.5% after first-quarter revenue came in slightly below estimates at $165.61 billion. Earnings of 61 cents per share beat forecasts, but management warned that tariffs could drive prices higher for consumers. 

Stocks extended their rally on Thursday as cooler inflation data and easing trade tensions continued to lift sentiment. Despite a mixed performance in the Nasdaq, the broader market gained traction, supported by falling yields and strong weekly showings from heavyweight tech names. In Europe, upbeat GDP and sector strength helped offset tariff-related uncertainty, while Asian markets reflected a more cautious tone. Oil retreated on renewed diplomacy with Iran, and wholesale price data further boosted hopes that inflation may be easing. Attention now turns to whether the rally can sustain into next week, or if consolidation sets in amid lingering macro risks.