Market Pulse with Dan Sheehan

Good morning investors,

Markets may have opened June on a positive note, but the tone is shifting fast. Trade tensions are intensifying, global growth forecasts are being cut, and the White House is now pushing countries for "best offers" on trade ahead of a self-imposed deadline. With tariff threats, downgraded outlooks from the OECD, and signs of economic strain, it's clear that uncertainty is still in charge.

Still, the S&P 500 posted a gain on Monday, led by Big Tech and steel stocks, showing that investors are leaning into growth and betting on resilience. But with labor data on deck and trade talks in flux, the next market move will need to be earned.

Before the Bell

Futures are pointing lower this morning. S&P 500 futures are down 0.3%, the Dow is off by 133 points, and Nasdaq futures are slightly weaker. Treasury yields slipped as investors shifted into defensive positioning. The 10-year yield dropped to 4.42%, gold pulled back on profit-taking, and oil remained steady amid renewed focus on Ukraine and Iran.

Today's key data release is the April JOLTS job openings report, which will help set the tone ahead of Friday's more critical nonfarm payrolls data. If labor demand softens noticeably, rate cut expectations could rise. But that path is narrow—too much weakness and recession fears return, while a strong report gives the Fed breathing room to cut from a position of strength.

Market Framework

The OECD slashed its U.S. growth forecast, projecting the economy will slow from 2.8% in 2024 to just 1.6% this year. Investment and business confidence are both taking hits under the weight of ongoing trade disputes. The ISM Manufacturing PMI dropped to 48.5 in May, its lowest in months, and the import index hit 39.9—the lowest since 2009. More than 86% of ISM survey respondents cited tariffs as a major operational concern.

The administration is reportedly asking trade partners to submit final offers by Wednesday. This follows President Trump's threat to double steel tariffs to 50%. Whether any progress is made remains unclear, but markets will be watching closely for movement—or a direct call between President Trump and President Xi.

Despite these macro headwinds, Big Tech continues to drive the rally with fundamental strength backing the momentum. The Magnificent Seven accounted for more than 60% of the S&P's gains in May, supported by 27.7% year-over-year earnings growth in Q1—far ahead of the broader market. In an environment where investors don't trust the macro backdrop, they're turning to what works: strong, scalable, cash-generating platforms.

I continue to believe a major rotation back into U.S. equities is setting up for the second half of the year. Most global portfolios remain underweight U.S. exposure, and if we see rate cuts and economic acceleration, the rotation could be fast and aggressive.

Key Catalysts Ahead

This Week:

Earnings to Watch:

Stocks in Focus

Technology & AI Theme: Tesla's Model 3 and Y vehicles were added to China's rural EV promotion program for the first time, a win despite broader tensions.

Healthcare Innovation: Novo Nordisk is seeing increased adolescent use of Wegovy, while Merck is reportedly circling a $3 billion-plus acquisition of MoonLake Immunotherapeutics.

Corporate Restructuring: Mattel is reorganizing its content division into Mattel Studios to build on the Barbie movie's success. Paramount navigates board changes while awaiting merger clearance with Skydance Media.

These themes reflect where capital is flowing in a market still defined by macro noise and sector rotation.

Strategic Outlook

In the near term, I expect QQQ to pull back toward its 200-day moving average. The S&P 500 has already tested and bounced off that level, and QQQ returning to it would likely attract buyers looking for confirmation.

SPY has support near 575 and likely trades in a range between 575 and 600 until there's a clear update on trade or Fed policy. I expect a drift down into the 580s before we see a bounce, particularly if Jerome Powell's comments this week lean supportive.

The Fed continues to wait for more data. But if we get another cooling inflation report, I think a September rate cut becomes more than plausible. The best-case scenario here is a rate cut driven by controlled inflation and a strong labor market. That would be a green light for risk assets. A cut driven by rising unemployment, on the other hand, is a different story—that's not the setup we want.

Friday's jobs report will be critical. With unemployment still at 4.2%, below the long-term average, the labor market looks healthy. A stable job market alongside falling inflation is exactly the combination the market wants to see.

Final Thought

I still expect a modest near-term pullback, but the bigger picture is improving. If inflation stays contained and the labor market holds up, the Fed could cut rates from a position of strength. That would be bullish—and it would catch a lot of underweight investors off guard.

U.S. equities remain underowned relative to Europe. But if we avoid a recession and growth begins to pick up in Q4, there could be a fast and sustained rotation back into U.S. tech and large-cap quality. This market is coiled, and the second half of the year could offer more upside than most expect—especially if the Fed pivots into growth rather than fear.

Please feel free to reach out to me on LinkedIn or by email if you'd like help navigating this market environment or have any planning-related questions.

Dan Sheehan [email protected]

This newsletter is for informational purposes only and should not be considered investment advice. Please consult your financial advisor about your specific situation.