The Zhitong Finance APP noted that the frenzied rebound in the stock market over the past month has now paused, as concerns over the fiscal deficit have intensified, driving up government bond yields, while President Trump has once again threatened to raise tariffs.
Last Friday, Trump threatened to impose a direct 25% tariff on Apple products not made in the U.S. and warned that he might raise EU tariffs to 50% in early June. This led to major stock indices declining for a week in a row: the Nasdaq Composite Index and the Dow Jones Industrial Average both fell about 2.4% for the week, while the S&amp;P 500 Index dropped about 2.6%.
In the coming week, the progress of the trade war and Trump's pending tax bill will remain the focus of attention. NVIDIA (NVDA) is expected to be the market focus with its quarterly earnings report released after the market closes on Wednesday. The earnings reports of Okta (OKTA.US), Salesforce (CRM.US), and Costco (COST.US) will also attract investor attention. In terms of economic data, the Fed's preferred inflation indicator—the core PCE price index for April—will be released on Friday. U.S. markets will be closed on Monday in observance of Memorial Day.
<h2>Tariff Escalation Impacts the Market</h2>
Trump's policies continue to affect the market. Concerns that his tax bill could widen the government deficit have pushed up U.S. Treasury yields: the 30-year Treasury yield briefly touched 5.1%, nearing its highest level since 2007; the 10-year Treasury yield broke through 4.6%, reaching a new high since February.
However, last Friday's bond sell-off eased somewhat, as Trump threatened to raise tariffs again, reminding investors that even with a 90-day pause on tariffs for multiple countries, the uncertainty surrounding trade policies is far from over.
Michael Kantrowitz, Chief Investment Strategist at Piper Sandler, wrote, &#34;It can be said that we are currently in a trough of trade uncertainty,&#34; adding, &#34;At this stage, the market needs to see these tariffs removed and bond yields no longer soaring to achieve substantial gains.&#34;
Last Friday, the decline in U.S. Treasury yields brought the 10-year yield below the key level of 4.5% that Kantrowitz is watching. As Kantrowitz emphasized in the chart below, in recent years, when the 10-year Treasury yield has surpassed 4.5%, interest rate-sensitive stocks have often performed poorly.
<img src="https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20250526/1748217022655453.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="image.png" original-src="https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20250526/1748217022655453.png"/>
This situation was reflected in last week's market performance: the Russell 2000 Index (whose constituent stocks face higher interest rate risks than those in the S&amp;P 500) fell nearly 4%, while the S&amp;P 500 Index dropped 2.6%.
<h2>AI Leading Companies Release Earnings Reports</h2>
NVIDIA (NVDA.US) will release its quarterly earnings report after the market closes on Wednesday. Investors will closely monitor demand trends from this major AI chip supplier. According to Bloomberg analyst consensus data, NVIDIA is expected to report an adjusted earnings per share (EPS) of $0.88 for the quarter, with revenue of $43.3 billion. In the same period last year, the company reported an adjusted EPS of $0.61 and revenue of $26 billion
Given that NVIDIA is an important component of the S&amp;P 500 index, investors will also pay attention to how this earnings report affects other tech stocks and the overall market. Under the influence of intensified AI competition and tariff concerns, NVIDIA's stock price has remained basically flat this year.
Since the launch of ChatGPT in November 2022, NVIDIA alone has contributed approximately 17% of the S&amp;P 500 index's increase.
<img src="https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20250526/1748217080342363.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="image.png" original-src="https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20250526/1748217080342363.png"/>
<h2>Earnings Guidance Remains Stable</h2>
NVIDIA's earnings report will mark the end of the first quarter earnings season for S&amp;P 500 companies. FactSet senior earnings analyst John Bartels stated that 93% of companies in the index have completed their earnings releases, with S&amp;P 500 company earnings growing 12.9% year-on-year, far exceeding the 7.1% expected on March 31.
Bartels' latest earnings research also shows that a major risk that Wall Street strategists were concerned about before the earnings season has not materialized. Despite increased policy uncertainty, only 8 companies have withdrawn their full-year earnings per share guidance. This is far lower than the 185 companies that withdrew guidance in the first quarter five years ago, when the pandemic cast a shadow over business prospects.
<img src="https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20250526/1748217146709056.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="image.png" original-src="https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20250526/1748217146709056.png"/>
Confidence in companies' ability to cope with tariffs is a key factor supporting the recent market rebound and is also why strategists like Morgan Stanley's Chief Investment Officer Mike Wilson believe the stock market will rise in 2025.
&#34;We remain more optimistic about U.S. stocks than international stocks, as the earnings revisions for the S&amp;P 500 have begun to trend higher relative to the MSCI All Country World Index (ACWI) excluding the U.S.,&#34; Wilson wrote while defending his year-end S&amp;P 500 target of 6,500 points.
<h2>Inflation Data</h2>
Tariffs have heightened concerns that inflation may soar again. However, so far, there has been little evidence in economic data indicating a rebound in inflation, and economists expect the situation to remain similar in the coming week.
The PCE data for April, to be released on Friday, will provide the latest observation on key inflation indicators. Economists expect the core PCE, excluding the volatile food and energy categories, to grow by 2.5% year-on-year in April, down from 2.6% in March. Month-on-month, economists expect core PCE to grow by 0.1%, up from 0% the previous month.
Bank of America senior economist Aditya Bhave wrote in a report to clients that the inflation data for May, to be released in June, may show the first impact of tariffs on prices.
<img src="https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20250526/1748217175411598.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="image.png" original-src="https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20250526/1748217175411598.png"/>

NVDA

The rebound in U.S. stocks pauses as concerns over the fiscal deficit push up Treasury yields, and Trump threatens to raise tariffs. Major stock indices fell last week, with the Nasdaq and Dow Jones each down about 2.4%, and the S&P 500 down about 2.6%. In the coming week, NVIDIA's earnings report and inflation indicators will be the market focus. U.S. Treasury yields are nearing their highest levels since 2007, and the market needs to pay attention to tariff policies and changes in bond yields

- The recent stock market rebound has paused due to rising concerns over fiscal deficits and increasing Treasury yields, exacerbated by President Trump's tariff threats.  
- Major indices fell approximately 2.4% to 2.6% last week, with upcoming trade developments and Nvidia's earnings report expected to be focal points.  
- Despite tariff concerns, corporate earnings have shown resilience, with S&P 500 companies reporting a 12.9% year-over-year profit increase, indicating confidence in their ability to manage tariff impacts.

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The frenzy rebound of the US stock market pauses, with NVIDIA's earnings report, Trump's tariffs, and inflation indicators being the three major tests this Wednesday