US OPEN: Weaker economic data fuels rate cuts expectations (04.06.2025)

Investors on Wall Street are cautiously optimistic, reacting to a mix of weaker-than-expected economic data and renewed hopes for two interest rate cuts by the end of 2025. Big cap indices are trading in the green (S&P500: +0.18%, Nasdaq: +0.2%, DJIA: +0.2%), while small caps are underperforming due to discouraging outlooks from the latest ISM reports (Russell 2000: 0.13%).

Adding to the cautious sentiment, the ADP employment report showed a sharp slowdown in job creation. Only 37,000 new private-sector jobs were added in May—well below the expected 110,000 and nearly 50% lower than April’s figure. This signals weakening hiring activity amid uncertain economic growth.

Meanwhile, the ISM Services Index also pointed to a cooling economy. The index fell to 49.9 in May, below the expected 52, indicating contraction in the services sector. Price pressures continue to mount, largely due to the unsettling tariff expectations.

Together, these data points have increased market bets that the Federal Reserve may intervene with interest rate cuts to avoid a potential recession. This sentiment is echoed in bond markets, where the yield on the 10-year U.S. Treasury has fallen by 1.6%.

US2000 (D1)

Small-cap stocks are under pressure today, dragged down by disappointing ISM data. The Russell 2000 stands out as the only major index in the red, reflecting investor concerns over the economic outlook for smaller companies.

Despite a strong start to the day, the index failed to hold its gains and slipped back to the 2,100 level—a key resistance point previously tested in late March and mid-May. Ongoing producer price pressures and uncertainty surrounding tariffs are weighing heavily on smaller firms. These headwinds are now being reflected technically, with the exponential moving averages (EMAs) for the index showing signs of flattening—an indicator of weakening momentum.

Source: xStation5

Company news:

• AnaptysBio shares are down 12% in spite of premarket gains fueled by the news that Phase 2b trial data showed its drug rosnilimab delivered JAK-like efficacy in moderate-to-severe rheumatoid arthritis. Patients achieved low disease activity, remission on the CDAI, and ACR70 responses over six months, with effects lasting two months off treatment.

• Chart Industries (GTLS.US) and Flowserve (FLS.US) agreed to an all-stock merger valuing the combined company at ~$19B. Chart holders will get 3.165 Flowserve shares per share owned and hold 53.5% of the merged firm. The deal promises $300M in synergies and EPS accretion in year one, with closing expected in Q4. Nevertheless both stocks are currently losing around 4%.

• Couchbase is up 4,3% despite issuing a rather cautious Q2 outlook despite strong Q1 results. Annual recurring revenue grew 21% to $252.1M, beating estimates, and driven by Capella cloud adoption and strategic wins. While Q1 revenue and earnings topped forecasts, guidance for Q2 revenue was soft, reflecting prudence amid macro uncertainty. 

• Guidewire (GWRE.US) shares surged 19% after raising full-year revenue guidance above estimates, driven by strong cloud migration execution, new deals, and cost management. Q3 revenue rose 22% YoY to $293.5M, with adjusted EPS beating at 88c vs. 46c expected. Analysts praised its growing market share among large carriers and raised price targets amid a robust sales pipeline.

• Hewlett Packard Enterprise (HPE.US) shares rose 0.3% following Q2 results that topped expectations with broad-based strength. Revenue rose 5.9% to $7.63B, led by solid growth in Servers (+5.6%), Hybrid Cloud (+13%), and Intelligent Edge (+7%). The company raised the low end of its full-year EPS forecast and sees continued revenue growth of 7–9% in constant currency. Despite modest AI-related revenue and mixed guidance, analysts noted improved server execution and solid margin performance, with Q2 EPS beating consensus at $0.38 vs. $0.33 expected.

• Snowflake (SNOW.US) shares are up 0.5% premarket after its Summit event showcased a robust AI-driven product roadmap, including advancements in core analytics, support for unstructured workloads, and accelerated AI capabilities. Analysts noted strong enterprise interest, streamlined go-to-market strategies, and hiring momentum as signs of durable growth. They were also positive on the entire data investment cycle.