One last thing...

“All 22 banks tested remained above their minimum CET1 capital requirements during the stress scenario, after absorbing total projected hypothetical losses of more than $550 billion.”

You can find more here, while you wait for any and all subsequent dividend announcements.

Have a wonderful weekend!

Alright my friends, the market may have stumbled a bit after the S&P 500 hit a new high but it did rally back at the end to finish the day up ~0.5%. As we close out the week, with one trading day left in the quarter, the Pro Portfolio remains nicely ahead of the S&P 500. We’ll be talking more about that in the June Monthly Roundup we’ll publish after Monday’s market close.

And a quick plug for our expected guest on next week’s Stocks & Market’s podcast. If you’re a regular Pro reader, odds are you’ve seen her charts, you love her wit, and you may be interested in her take on the current tennis season.

Also, a quick thanks to the eagle-eyed editorial team at TheStreet Pro for all they do. We couldn’t do it without them. Same goes for the video team. It really does take a village folks.

Enjoy the weekend, and watch out for the Fed’s stress tests and subsequent dividend announcements.

I’ll see you again here before too long. Until then, just click on the Pro Portfolio link and you’ll get my latest thoughts.

CV

While we get ready for the market close and the results of the Fed’s stress tests, here’s what’s on tap for next week's abbreviated trading.

Tuesday, July 1

S&P Global Manufacturing PMI (Final) – June (9:45 AM ET)

ISM Manufacturing PMI – June (10:00 AM ET)

Construction Spending – May (10:00 AM ET)

Jolts Job Openings & Quits – May (10:00 AM ET)

Earnings: MSC Industrial (MSCI), Constellation Brands (STX), Greenbrier Co. (GBX)

Wednesday, July 2

Challenger Job Cuts Report – June (7:30 AM ET)

MBA Mortgage Applications Index – Weekly (7:00 AM ET)

ADP Employment Change Report – June (8:15 AM ET)

EIA Crude Oil Inventories – Weekly (10:30 AM ET)

Thursday, July 3

Employment Report – June (8:30 AM ET)

Initial & Continuing Jobless Claims – Weekly (8:30 AM ET)

S&P Global Services PMI (Final) – June (9:45 AM ET)

ISM Services PMI – June (10:00 AM ET)

Factory Orders – May (10:00 AM ET)

EIA Natural Gas Inventories – Weekly (10:30 AM ET)

US equity markets close at 1 PM ET

Friday, July 4

US markets closed for the Independence Day holiday

The market’s earlier gains today have been largely erased following comments from President Trump that he ended trade discussions with Canada due to its 400% tariff on dairy products and digital services tax.

In typical Trump fashion, the president left things vague, saying, "We will let Canada know the tariff that they will be paying to do business with the United States of America."

That was followed by Treasury Secretary Scott Bessent saying the U.S. trade representative could implement section 301 on Canadian trade practices on Monday.

That seemed to have landed on some ears up north because the Business Council of Canada issued the following statement:

For many years, the Business Council of Canada has warned that the implementation of a unilateral digital services tax could risk undermining Canada's economic relationship with its most important trading partner, the United States. That unfortunate development has now come to pass.

In an effort to get trade negotiations back on track, Canada should put forward an immediate proposal to eliminate the DST in exchange for an elimination of tariffs from the United States.

We’ll add this to our list of weekend developments to watch, and depending on who the guests are, that may include tuning into Meet the Press on Sunday. If there ever was a time I wish Tim Russert was still around…

Add another name to the pending IPO list.

Education company McGraw Hill has filed for an IPO on the NYSE under the ticker "MH."

Goldman Sachs GS has been selected as book-running manager for the proposed offering that will also include BMO Capital Markets, J.P. Morgan JPM, Macquarie Capital, Morgan Stanley MS and others are book runners. Baird, BTIG, Needham & Company, Rothschild & Co, Stifel, and William Blair, are acting as co-managers for the proposed offering.

While it could happen, odds are that I won’t be sitting in on the Diary before the June quarter earnings season gets underway. To help you get ready for that, here are two charts that I look at every week when FactSet published them.

The first shows by sector how 2025 EPS growth expectations have evolved over since the end of the March quarter. Only one sector – Communication Services – has seen EPS growth expectations move higher. Now think about S&P 500 and Nasdaq Composite constituent weightings and how that overlaps with the Communication Services segment, which includes Alphabet GOOGL, Meta META Netflix NFLX and 20 other stocks. 

Applying some simple math to the chart below shows 2H 2025 EPS growth expectations for the S&P 500, as of today, stands at 8.5% versus 1H 2025. That’s down from a high of 13.9% exiting March of this year. Subject to what we learn on the tariff and trade deal front, Trump’s fiscal stimulus plans, and from upcoming economic data, we could see corporate guidance skew conservative or brighter than expected.

One area that is likely to remain robust is AI spending. As TheStreet Pro contributor Peter Tchir said on this week’s "Stocks & Markets podcast," if things are good companies will continue to spend on AI, and if things slowing, spending on AI will continue. We agree and that keeps us bullish on ServiceNow NOW, Elastic ESTC and Axon AXON among others. And yes, Wedbush’s perma-bull Dan Ives said the same as Peter.

Per FactSet’s latest Earnings Insight report, published today, here are the highest percentages of Buy and Sell ratings across Wall Street.

As we move into the back half of today’s trading, even though it’s a summer Friday, folks will want to stay tuned to get the results of the Federal Reserve’s “stress test” for banks.

The expectation is a less-strenuous methodology for this year’s test means most if not all banks should clear with flying colors.

Why this matters is those same banks, after showing they have ample capital on hand to withstand a severe economic downturn, can now revisit dividend payments to shareholders and funding for stock repurchase programs.

From what we’ve seen the last few years, this means a flurry of announcements for dividend increases and upsized stock repurchase programs are likely to ensue.

Based on the size of these announcements, we could see some price target adjustments for the likes of JPMorgan Chase JPM, Bank of America BAC, Citigroup C, Morgan Stanley MS and others early next week.

Earlier I mentioned the Nasdaq Composite’s RSI level moving into overbought territory. I asked Bob Lang to give us a closer technical look at that index.

Take it away Bob….

We are seeing stocks and indices all over the place getting to an overbought condition (based on certain technical criteria), but let’s remember that an overbought is not a signal. Rather, when overbought conditions are pervasive, it means being prepared for a pullback that can happen at any time. Sure, new highs are going to attract even more money flows and consequently more new highs, and it becomes a game of musical chairs. Can you stay in the game while the music is on and have a seat when it stops?

That is a great question, but the answer is out into the future. But we can take caution in the present by preparing ourselves accordingly. The Nasdaq is in full bull mode right now, with very strong momentum that is just not letting up. The parabolic move from the April lows is quite extraordinary, but an overbought condition can smack the bulls hard if you’re not careful.

Money flow has been strong, and the RSI is tipping over 70, another red flag signal. MACD is now turning up for a buy signal as the price moves above the old highs printed in December, January, and February.

Just a note here, I am not saying it is time to cut and run, we know stocks will move much more than expected and with the strong tailwind from momentum that makes it very likely, but if you’re so inclined then adding some puts for protection would be prudent (and cheap, with VIX at 16%). A basic pullback to the 20-day moving average at 19600 (3%) and rising could be very quick, puts could ease the volatility a bit.

File this under “are you surprised?”

House Speaker Mike Johnson says it is "possible" the July 4th goal for passing reconciliation bill could get delayed.

Breaking...

OPEC+ mulls another 411K bpd output hike as Saudi Arabia pushes market share agenda ahead of July 6 meeting.

For those who track it, and you should if you don’t, the relative strength index (RSI) levels for both the S&P 500 and Nasdaq Composite have pushed above 70, flashing overbought signals for these market barometers.

While the market could melt up further, it's time to walk the prudent path and be mindful of potential developments that could underwhelm the market… like next week’s inflation data or final terms for Lutnick’s 10 pending trade deals.

S&P

Nasdaq

The Final June University of Michigan Consumer Sentiment Index came in at 60.7, a big jump from compared to the 52.2 figure for both April and May.

What stands out even more in the report was the year-ahead inflation expectations, which dropped to a three-month low of 5% in June, slightly under the preliminary 5.1% estimate and well below May’s 6.6% reading. That May figure was the highest since November 1981. For context, the 5% figure for June is on par with expectations shared back in March.

Folks that have been calling for the Fed to cut sooner will see this as a positive, and we’re likely to see some movement in the second half of 2025 rate cut expectations.

But we’re still more focused on what next week’s June PMI data will say about input and output prices. If it echoes S&P Global’s (SPGI) Flash June inflation findings, with higher prices being passed onto consumers, the July University of Michigan findings may not be as rate cut friendly

Monness Crespi & Hardt upgraded shares of Elastic ESTC to Buy from Neutral with a target price at $111.

"After significantly underperforming our universe in 2024 with a 12% decline, Elastic's stock is down another 17% this year. Meanwhile, as AI-fueled tech stocks climb to new all-time highs in 2025, Elastic sits 56% below its peak reached in late 2021. Today, Elastic holds a depressed enterprise-value-to-revenue multiple relative to our consumption-based, software group and even our software universe at large. We find Elastic's valuation compelling at current levels, and we believe the company is well positioned for the gen AI movement. As such, we are upgrading our rating on Elastic to Buy from Neutral and assigning a 12-month price target of $111."

The Nevada Gaming Board reported May gaming win revenue fell 2.2% year over year to $1.291 billion, down 3.7% year over year to $713.8 million on the Las Vegas Strip.

That marks the fourth month of consecutive year over year declines.

Question: I am pondering, given Nike’s NKE comment last night that ongoing inventory liquidation will result in additional margin compression over the next two quarters, which discount retail company stands to benefit the most?

TJX Companies TJX?

Ross Stores ROST?

Costco COST?

Weigh in and post your view in the Comment section below.

Shares of Core Scientific CORZ spiked yesterday following reports CoreWeave CRWV may be interested in scooping up the company.

Roth Capital is out this morning giving its view that CoreWeave could pay up to $38/share for CORZ in potential all-stock deal.

We’ll keep an eye on this given the Portfolio’s position in BDC company SuRo Capital SSSS, which counts CoreWeave as one of its larger portfolio holdings. As a reminder, CoreWeave’s IPO lockup expiration is in September, which should allow SuRo to monetize its position. That and the recent IPO lockup expiration for Service Titan (TTAN) make us consider SuRo’s BDC status and what that means for potential dividends.

Treasury Secretary Scott Bessent is now saying that Pres. Trump's push for trade deals could be concluded by Labor Day.

This is a more aggressive timetable than telegraphed on May 6 when Bessent shared expectation for 80%-90% of trade deals to be “wrapped by the end of the year”.

Our view has been Trump needs to put some trade deals win on the board, and that as initial deals are announced we could see more trade deal dominos fall. That could be what’s starting to unfold following comments from U.S. Commerce Sec. Howard Lutnick about 10 trade deals coming in the next two weeks.

While we would welcome such progress, our view continues to be that the final details of announced trade deals will be what matters, and those details will be what shapes expectations for corporate earnings.

When we look at the monthly retail sales report, we have to acknowledge it skews more toward spending on goods than services. 

For more on services spending, we have to look at the personal spending report, which captures for more detail than the retail sales report. While the May retail sales report showed retail spending fell 0.9% compared to April, Table 1 of this morning’s May 2025 personal income and outlays report showed personal outlays on services was rose 0.1% compared with April. It also showed that for the first two months of Q2 2025 compared to the first two months of Q1 2025, spending on services was 1.0% higher. We see that as constructive for the Portfolio’s position in American Express AXP shares. Combined with telegraphed plans to majorly update its U.S. consumer and business Platinum cards later this year, a move that could leads to a higher membership fee, win new members or both, it’s looking like we will need to revisit our AXP price target. Much like at Costco COST, we prefer the membership driven business model and what it means for pre-tax income at Amex compared to the more transactional led one at Visa V and Mastercard MA. 

The May personal consumption expenditure price index figures are out, and core figures came in warmer than the market expected at 0.2% sequentially and 2.7% on a year-over-year basis. While headline PCE figures matched the 0.1% sequential expectation, on a year-over-year basis it came in at 2.7% warmer than the market forecast of +2.6%.

That will likely foster some questions about the impact of tariffs, and lead some to revisit what we’re likely to see in next week’s June PMI data from ISM.

But that doesn’t necessarily mean September rate cuts are off the table, especially after Minneapolis Fed President Neel Kashkari this morning reiterated that he still sees two Fed rate cuts this year, with the first in September.

Likely, the market will digest next week’s data, but with word we could get multiple trade deals in the next two weeks, the market may wait to see what those deal terms are and how they could impact July and August inflation figures.

My thinking is if the market melt up continues as we exit June and enter July, the greater the risk the market could be disappointed by announced trade deal terms. Also, watch out for how those announced terms impact corporate guidance for Q3 2025 and 2H 2025.

Upgrades

Affiliated Managers (AMG) upgraded to Buy from Neutral at Goldman, target price $218

Alphabet (GOOGL) upgraded to Outperform from Market Perform at Citizens JMP, target price $220

Amazon.com (AMZN) upgraded to Outperform from Neutral at BNP Paribas Exane, target price $254

Autodesk (ADSK) upgraded to Buy from Hold at Berenberg, target price $365

Boeing (BA) upgraded to Buy from Neutral at Rothschild & Co Redburn, target price $275

Estee Lauder (EL) upgraded to Buy from Hold at HSBC

Franklin Resources (BEN) upgraded to Buy from Neutral at Goldman, target price $29

New Oriental Education (EDU) upgraded to Buy from Neutral at Citigroup, target price $50

Nike (NKE) upgraded to Buy from Hold at HSBC, target price $80

The Trade Desk (TTD) upgraded to Outperform from In Line at Evercore ISI, target price $90

WisdomTree (WT) upgraded to Neutral from Sell at Goldman, target price $11.90

Downgrades

Alphabet (GOOGL) downgraded to Neutral from Outperform at BNP Paribas Exane, target price $172

AllianceBernstein (AB) downgraded to Neutral from Buy at Goldman, target price $40

Bank of America (BAC) downgraded to Neutral from Outperform at Robert W. Baird, target price $52

Crispr Therapeutics (CRSP) downgraded to Hold from Buy at Clear Street, target price $45

JPMorgan (JPM) downgraded to Underperform from Neutral at Robert W. Baird, target price $235

Molson Coors (TAP) downgraded to Neutral from Buy at BofA Securities, target price $50

TAL Education (TAL) downgraded to Neutral from Buy at Citigroup, target price $11.54

Uber (UBER) downgraded to Hold from Buy at Canaccord, target price $84

W. R. Berkley (WRB) downgraded to Hold from Buy at TD Cowen, target price $78

Others

A10 Networks (ATEN) initiated with a Buy at Deutsche Bank, target price $22

Arq (ARQ) initiated with a Buy at Fearnley, target price $9.50

Armada Hoffler (AHH) initiated with a Buy at Jefferies, target price $8

Emcor (EME) initiated with an Outperform at Robert W. Baird, target price $560

Fortis (FTS) initiated with a Buy at TD Securities

James Hardie (JHX) initiated with an Outperform at William Blair

Republic Bancorp (RBCAA) initiated with a Market Perform at Raymond James

S&T Bancorp (STBA) initiated with a Market Perform at Hovde Group, target price $41

Good morning! 

Ahead of the May PCE Price Index data at 8:30 AM ET, U.S. equity futures indicate the market’s melt-up should continue today. Lifting those futures, Nike’s NKE outlook was better than feared despite a reported $1 billion tariff headwind from Trump tariffs.

There is also the step forward in U.S.-China trade with both countries confirming details of a trade framework, with China to review and approve eligible applications for export of controlled items, including rare earths, and the U.S. to cancel restrictive measures taken against China.

Per U.S. Commerce Secretary Howard Lutnick, U.S. “countermeasures” imposed ahead of the London talks would be lifted BUT only once rare-earth materials start flowing from China.

Lutnick also said the White House plans to reach agreements with 10 major trading partners, with President Trump prepared to finalize with several trading partners, ahead of the July 9 deadline. Speculation is that India is among the 10, in part because a team of Indian trade officials, led by chief negotiator Rajesh Agarwal, is slated to hold meetings with officials in Washington over the coming days.

Back to the May PCE Price Index report, the market expects core PCE to rise 0.1% sequentially (mimicking its April print) and tick higher to 2.6% on a year-over-year basis, up from 2.5% in May. If the reported May figures are softer than expected, there will be those who see it as another reason for the Fed to cut sooner rather than later, even though the Flash June PMI report showed tariff-induced inflation pressures rising.

Here's the thing, though. The market has been on a tear with the S&P 500 climbing more than 20% and the Nasdaq Composite more than 30% since their respective April lows. Softer-than-expected core PCE figures, along with the developments discussed above, could tip the market indicators into overbought territory (relative strength index levels above 70) ahead of more June economic data next week.

Now to see what the May PCE data brings, how the market reacts, and go from there.