There was so much green on the screen yesterday that it reminded me of those great scenes from “Crouching Tiger, Hidden Dragon.” The stock market acted like a crouching tiger and finally made its move.

I’m not sure about dragons, but the bears went into hiding and, at some point, very soon, have to fall on their swords and be carried out on their shields.

Consumer Discretionary (XLY) led the way, as all eleven sectors finished the session higher. Tesla (TSLA) set the pace for autos, although all the excitement is over the impending debut of the Robotaxi and not the company’s electric vehicles (EVs). Overall, consumer stocks raced ahead as signs of consumer spending and confidence sparked the overall market.

Market Breadth

It was one of the sessions to question any name that didn’t close in some hue of green.

Conviction

It was easy to be green yesterday, as more than 93% of names on the S&P 500 (SPX) advanced, 93.5% of midcaps, and 96.3% of small-caps.

Old-timers love it when the advancers are north of 90%; it signals moving closer and getting ready.  Conviction is contagious.

Small but Mighty

Small-cap revenue was the best factor in the session.

S&P 600 Small Cap Index (SML) has better quality names than the Russell 2000, but it is still below the key resistance point and 200-day moving average.

American Exceptionalism

The U.S. Dollar (DXY) edged higher, but I also think the “concern” has been overblown, and many were moving away from the notion that recent weakness signals the demise of the American Empire.

I would like to see the DXY in a trading range of 101 to 103.

Bonds Blow off Steam

The ten-year bond yield (TNX) eased considerably during the session, and now I would like to see a move and a close below 4.40%.

Consumers Filter out the Noise

Consumer Confidence Index posted an impressive rebound as Main Street ignored fear-mongering.

Tariff Comments

“Write-in responses on what topics are affecting views of the economy revealed that tariffs are still on top of consumers’ minds. Notably, consumers continued to express concerns about tariffs increasing prices and having negative impacts on the economy, but some also expressed hopes that the announced and future trade deals could support economic activity. While inflation and high prices remained an important concern for consumers in May, there were also some mentions of easing inflation and lower gas prices.”

Today’s Session

Speaking of consumers, check out initial reactions to retailer earnings this morning.

Monster gains as tariff worries and impacts ebb.

Abercrombie & Fitch (ANF) notes on guidance:  "Includes the estimated impact from the tariffs on goods imported into the United States in accordance with trade policies currently in effect. This includes a 30% tariff on imports from China, and a 10% tariff on all other global imports, but excludes other currently paused tariffs and any other potential future trade policy changes imposed by the United States or other countries. Net of planned mitigation efforts, the full year outlook assumes approximately $50 million of tariff expense, or 100 basis points as a percentage of net sales."

DICKS’S Sporting Goods (DKS) reaffirms guidance, sees FY25 EPS of $13.80-$14.40, revenue of $13.6-$13.9 billion, and comparable sales of +1-3%.

Macy's (M) lowered EPS guidance: “The company has revised its annual outlook based on current information to account for several factors including initial and current tariffs; some moderation in consumer discretionary spending; and a heightened competitive promotional landscape."

Comments

I have heard about the new baby gift and find it disgusting. More welfare and, no it won't grow until they're 18. It will be spent. Medcaid delay is a disappointment. The Congressmen being stubborn on cuts to protect their interest is disappointing. A Ariail on 5/28/2025 11:02:52 AM

It is so sad that our elected government is more interested in my finances than managing their own budget2 We speak often of waste in government but the difference in today's analysis is we simply do not know where the money is going. I am most interested in sound accounting policies and fraud enforcement. We must know what we have before we begin the painful process of unloading what we need the least. A balanced budget amendment would be nice but I fear this is a feat even Trump could accomplish. Clint on 5/28/2025 11:23:02 AM

I am disappointed that the promise of Social Security reduction did not meet promises. If my information on the bill is correct, seniors get a $4,000 deduction and rich Democrats get a $30,000 increase in SALT deduction. That is not promises made, promises kept Jon Thom on 5/28/2025 11:31:09 AM

Piss-off as many "so called law makers as possible " and cut the debt to the bone. NO Americans want or expect to pay for debt that is funding their own destruction. Thanks John John Cowger on 5/28/2025 11:51:52 AM

I think they are carving out the tax breaks on tips, OT, and SS earnings, either won't pass them or will means test the OT and SS parts. Again, not enough cuts. The gains made through tariffs and an expanding economy won't be used to reduce the deficit, will be wasted by more spending. Butch Edison on 5/29/2025 11:33:14 AM

Do not think the bill helps out retirees, especially once on Social Security and on a fixed income now that inflation has eaten up all over there present Social Security benefits. Thank you, mike mike strub on 6/1/2025 8:42:09 PM

I have little trust in Congress even to begin the problem o overspending. Too many congress people would purposely torpedo the bill too pad their personal interests and cause a major recession in the economy. Preparing for what appears to be a failure of the economy on a level that exceeds the depression of the 1930s is on my vision board i my expectation holds true. john case on 6/2/2025 11:23:53 AM

Balance the budget or loose your "job". Ron B. on 6/3/2025 10:01:22 AM

Needs to cut more. Republicans will find a way to NOT follow what the people asked them to do. Brad Lee on 6/9/2025 12:37:33 PM

Based on the constraints of reconciliation, the BB bill is probably the best that can be done right now. However, Congress needs to pick up DOGE's efforts and get busy with cutting the federal budget. In addition, they need to pass laws limiting the Judiciary so District Courts can't impose national injunctions. SCOTUS appears feckless. chris on 6/10/2025 2:35:00 PM

Sen.graham is a massive rino and will sabotage trump's New tax relief plans with2nd bill if allowed Fran on 6/10/2025 10:28:17 PM

Sen.graham is a massive rino and will sabotage trump's New tax relief plans with2nd bill if allowed Fran on 6/10/2025 10:55:04 PM

I appreciate making the tax cuts permanent but congress really needs to reduce government spending and deliver a balanced budget. Alfred T Meyer on 6/17/2025 11:36:42 AM

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