Stocks rebounded with support from unexpectedly strong manufacturing data, halting a recent losing streak. Cyclical sectors and small caps led the rally, helped by optimism that U.S. industrial activity is finally regaining momentum. Meanwhile, bond yields rose and commodities, especially gold and oil, tumbled, signaling a shift in positioning amid evolving rate expectations and geopolitical recalibration.
Key Headlines & Market Movers:
Factory Rebound Sparks Optimism: The ISM Manufacturing Index jumped to 52.6, its first expansionary reading in over a year, beating every economist forecast. This points to strengthening demand and hints that U.S. industry may be turning a corner after years of stagnation. While survey commentary remained cautious, the headline data supports the narrative of a “Goldilocks” economy with stable growth and restrained inflation.
Bonds Drop as Rate Cut Bets Repriced: Treasuries sold off, pushing the 10-year yield to 4.28%, as traders dialed back near-term rate cut expectations. The stronger manufacturing report and comments from Fed officials, including Raphael Bostic who sees no cuts in 2026, signaled the Fed may hold steady longer than markets anticipated. Futures now price the next cut for July.
Gold Crashes, Then Stabilizes: Gold and silver were hit by a sharp unwind in speculative positioning, with spot gold dropping nearly 5%. The move follows Donald Trump’s mention of Kevin Warsh as a potential Fed Chair, perceived as hawkish. Analysts caution this is more about sentiment than fundamentals, as some investors rotate out of precious metals after a parabolic rise.
Earnings Momentum Supports Broader Rally: Despite Disney’s weak forecast, corporate earnings momentum remains strong. Over half of companies reporting 2026 EPS have beaten analyst expectations, well above historical norms. Strategists at Goldman Sachs and Morgan Stanley point to strength in value, small caps, and consumer discretionary names, suggesting opportunities beyond the megacap tech trade.
S&P 500 Sector Performance
Looking Ahead
The absence of Friday’s jobs report due to the government shutdown may leave markets more sensitive to alternative data and Fed commentary in the coming week. Investors will watch closely for signs of follow-through in manufacturing and any emerging cracks in the inflation narrative as positioning remains barbelled between risk-on equities and defensive hedges.
The Investment Management Group at Duncan Williams Asset Management is led by a team with extensive experience in investment management, financial planning, and client service. President David Scully, CFA®, CFP®, has more than 20 years of experience and is active in Memphis civic organizations. Chief Investment Officer Kyle Gowen, CFA®, CFP®, oversees investment strategy and is engaged with the local community. Investment Analyst Jack Eason, CFA®, provides research and supports charitable initiatives. The IMG team is committed to professional standards, client service, and community involvement. No statement is intended as an offer of investment advice or a guarantee of future results.
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