President Trump's SALT Bill in Focus

Well, all week we had been looking for a market catalyst, with economic prints scarce and Q1 earnings season winding down. We finally got it yesterday, with news that the “big, beautiful bill” was about to pass the House — that which would extend the major tax cuts due to expire, among other things. It was what President Trump got elected on, after all, with Elon Musk’s DOGE project designed to cut waste in federal spending.

However, this bill is currently projected to add $3.1 trillion to the deficit over the next 10 years, which has riled credit agencies that wasted little time downgrading U.S. credit from AAA to AA1. This is before the Senate has gotten its hooks into the bill, and we know changes are going to be made. It has also gotten the attention of the bond market, which is now up over +4.6% on the 10-year, +4.0% on the 2-year and above +5.0% on the 30-year.

The 20-year bond option yesterday triggered the mid-day sell-off. Major indexes fell from -1.4% (Nasdaq) to -1.9% (Dow) by yesterday’s close. This morning, we sank temporarily but are climbing at this hour: -120 points on the Dow, -5 on the S&P 500 and +15 points on the Nasdaq. The small-cap Russell 2000, which dropped -2.6% yesterday, is down another -10 points currently.

Weekly Jobless Claims Stay In-Range

Thankfully, this morning we do have economic reports to parse. Among them, like every normal Thursday, we see Initial Jobless Claims remaining in the groove with a healthy labor environment, at 227K — 2000 lower than the unrevised 229K reported for the previous week. Every several weeks or so we tend to see a pop above 240K, but always come back down in the subsequent prints.

Continuing Claims came in at 1.903 million — above the psychological threshold of 1.9 million, but which has been revised down below it in all but one week of 2025 so far. This follows a downwardly revised 1.87 million from the prior week (these longer-term claims are reported a week behind initial claims). With aging workers taking their pink slips as a sign to call it a career, along with ex-federal employees currently living on severance packages, the long-awaited pressure on the labor market has been mild at worst to this point.

Earnings Reports Ahead of Today’s Open: RL, BJ

The parade of retailers reporting quarterly earnings continues this morning, with upscale retailer Ralph Lauren RL outpacing fiscal Q4 earnings estimates by 3 cents to $2.03 per share, on $1.70 billion in quarterly revenues, which surpassed the $1.63 billion in the Zacks consensus. Shares are up modestly on the news, adding to the stock’s +18% gains year to date.

Down the tax bracket a bit, BJ’s Wholesale BJ put up mixed numbers in its Q1 earnings report this morning. Earnings of $1.14 per share amounted to a nice beat on the bottom line, above the 91 cents analysts were expecting. Revenues, on the other hand, came in -0.5% from expectations to $5.15 billion. But reaffirming forward guidance has kept the stock up +2% this morning, adding to its +31% gains year to date.

What to Expect in the Stock Market Today

After the opening bell, we’ll see S&P flash PMI for both Services and Manufacturing for the month of May. While both are expected to tick down a tad, Services is expected to remain above the 50-threshold (between growth and loss) and Manufacturing is anticipated to dip back below it.

Existing Home Sales for April are expected to come in somewhat stronger: 4.13 million seasonally adjusted, annualized units versus 4.02 million posted a month ago. We have seen more homes come on line for sale of late, but off a very scarce base overall. New Home Sales, which come out tomorrow, are expected to slide back a bit.

Also, earnings continues the final leg of its tour for the quarter, with Workday WDAY, AutoDesk ADSK and Deckers Outdoor DECK coming out with results after today’s close. Calendar Q1 earnings season has not been exactly stellar, but far from the bleak levels many analysts had been expecting — especially on guidance. Earnings season unofficially ends next week, when NVIDIA NVDA reports.

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This article originally published on Zacks Investment Research (zacks.com).

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