Daily Market Review & Forecast: Thursday, May 22, 2025ew Post

As the Stocks Churn: Episode 5,844 – The Great Treasury Tantrum

Welcome back to Wall Street’s favorite soap opera, where the market plays a diva who can’t stop throwing tantrums! Yesterday, our leading lady, the S&P 500, tripped over her stilettos, plunging 1.6% in a dramatic faint. Why? Because Treasury yields, that ex who always shows up uninvited, crashed the party with a bond auction that screamed, “Pay up or get out!” Today, futures are sipping espresso, hinting at a recovery, but the script’s still full of plot twists. Grab your popcorn—let’s recap the chaos and preview the next episode!

Market Review: The Cliffhanger Collapse

Previous Trading Day (Wednesday, May 21, 2025)
Oh, honey, Wednesday was a hot mess! The market staged a full-on meltdown, with all major indices diving like they forgot their lines:

• S&P 500: Slumped to 5,844.61, down 95.85 points (1.6%), clutching its pearls.

• Dow Jones: Stumbled 816.80 points (1.9%) to 41,860.44, like a cowboy tossed off his horse.

• Nasdaq Composite: Tripped 270.07 points (1.4%) to 18,872.64, muttering about tech troubles.

• Russell 2000: Plummeted 59.02 points (2.8%) to 2,046.56, the underdog who took the hardest hit.

The drama started when fiscal fears and U.S. debt concerns teamed up like scheming soap opera villains. Stocks were already wobbling after Target’s “meh” retail forecast, but the real plot twist came when the government’s 20-year bond auction flopped like a bad audition. Yields spiked, and stocks screamed, “We’re done!” Ten of eleven S&P 500 sectors—real estate, healthcare, financials, you name it—face-planted, leaving technology looking like it forgot its lines.

Overnight Session
Cue the late-night redemption arc! E-Mini S&P 500 futures clawed back some dignity:

• S&P 500 E-mini June 2025 Contract: Trading at $5,865.50, up 4.25 points, like the diva dusting off her gown.

• Overnight Range: High of $5,876.75, low of $5,851.00—less a comeback, more a “let’s not cry in public” moment.

Key Announcements & Events: Guest Stars Stir the Pot

No Federal Reserve drama queens are scheduled to monologue today, but at 4:15 p.m., the Fed’s H.15 Interest Rates report might drop some shade on yields. Meanwhile, corporate earnings are stealing the spotlight like reality TV stars:

• Toronto Dominion Bank (TD): Expected EPS of $1.24, down 17.33% from last year—ouch, that’s a budget cut.

• Analog Devices (ADI): EPS of $1.69, up 20.71%, strutting like it’s got a new contract.

• Williams-Sonoma (WSM): EPS of $1.76, down 13.73%, looking a bit last season.

• BJ’s Wholesale Club (BJ): EPS of $0.91, up 7.06%, the scrappy underdog.

• Ralph Lauren (RL): EPS of $1.99, up 16.37%, serving high-fashion realness.

• Advance Auto Parts (AAP): EPS of -$0.82, down 222.39%—yikes, someone call a mechanic!

These retail and consumer reports are like tea-spilling confessionals, hinting at whether shoppers are splurging or pinching pennies amid tariff rumors. Watch for the drama!

Market Forecast Indicators: The Plot Thickens

Yield Curve
The yield curve’s trying to play nice, with spreads no longer inverted (translation: no recession red flags… yet):

• 10-year/2-year Spread: 0.58% (up from 0.51%), like a shaky truce between exes.

• 10-year/3-month Spread: 0.22% (up from 0.10%), barely holding hands.
  But these spreads are still skinny compared to their long-term averages (0.85% and 1.11%). It’s like the market’s saying, “I’m fine!” while sweating bullets.

Credit Spreads
Credit markets are getting nervous, with Investment Grade and High Yield spreads puffing up like a villain’s ego:

• IG spreads hit their 5-year average, all “business as usual.”

• HY spreads flirted above their 10-year average, screaming, “Risk alert!”
  This widening is the market whispering, “Fiscal policy? More like fiscal panic.”

Technical Breakdowns
The S&P 500’s still above its 200-day moving average (5,770.67) and 200-week average, like a diva refusing to exit stage left. Yesterday’s 5,844.61 close says the long-term uptrend’s holding—for now. But don’t pop the champagne yet.

Investor Sentiment & Volatility
The AAII Sentiment Survey (May 1, 2025) reads like a horror movie cast:

• Bullish: 20.9%, down 1.0, hiding under the bed.

• Neutral: 19.8%, down 2.7, just eating popcorn.

• Bearish: 59.3%, up 3.7, screaming, “The sky’s falling!”
  With bearish sentiment at 59.3% for 10 weeks straight, it’s the longest panic attack in survey history. Meanwhile, the VIX spiked to 20.87, up 15.37% from 18.09 and 75.97% from last year’s 11.86. It’s like the market chugged an energy drink and forgot how to chill.

Overall Analysis: Will the Diva Rise or Flop?

Futures are teasing a comeback, but the market’s still reeling from fiscal fears, debt drama, and tariff rumors—like a soap opera star dodging paparazzi. The S&P 500’s above key moving averages, and the yield curve’s not inverted, so the long-term script still screams “uptrend.” But with credit spreads widening, sentiment tanking, and the VIX throwing a fit, it’s less “triumphant return” and more “nervous rehearsal.”

Morgan Stanley’s analysts, ever the optimists, predict the S&P 500 hitting 6,500 by Q2 2026, like a director promising a happy ending after three years of plot twists. They say “rolling earnings recessions” are setting the stage for a big comeback. Sure, but first, we’ve got to survive this season’s drama.

Key Factors to Watch Today

• Retail Earnings: Will TD, ADI, WSM, BJ, and RL drop bombshells about consumer spending or tariffs?

• Treasury Yields: The 10-year (above 4.5%) and 30-year (topping 5%) are like divas demanding higher pay. More spikes could tank stocks.

• Technical Levels: S&P 500 support’s at 5,770 (200-day average); resistance’s at 5,940 (yesterday’s open). Break either, and cue the gasps.

• VIX: Above 21, it’s panic city; back to 18-19, it’s a deep breath.

• Tariff/Tax News: Trump’s tax bill or tariff chatter could flip the script faster than a season finale.

The market’s in a messy transitional phase, balancing growth dreams with fiscal nightmares. Short-term, it’s cautious—like a diva checking her makeup before a big scene. Long-term, the technicals say, “Keep the faith.” Stay tuned for the next episode of As the Stocks Churn!