Big Tech stocks fell in Thursday trading. SMCI fell 6%; Tesla, Amazon, AMD down 3%; Meta down 2%; Nvidia, TSMC down 1%.

Wall Street traders sent bond yields lower after tame inflation data combined with lackluster readings on retail and manufacturing bolstered the case for Federal Reserve rate cuts this year.

Prices paid to US producers unexpectedly declined by the most in five years suggesting companies are absorbing some of the hit from higher tariffs. Growth in retail sales decelerated notably. Factory production declined for the first time in six months while New York state manufacturing contracted again. And confidence among homebuilders slumped.

“If you are in the stagflation camp, these data aren’t confirming your thesis,” said Jamie Cox at Harris Financial Group. “While growth is slowing, disinflation remains intact.”

Recession remains a possibility as tariff fallout continues to buffet global economies, according to JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon.

“Hopefully we’ll avoid it, but I wouldn’t take it off the table at this point,” Dimon said in a Bloomberg Television interview Thursday at JPMorgan’s annual Global Markets Conference in Paris. “If there is a recession, I don’t know how big it would be or how long it would last.”

In a separate Bloomberg Television interview, Apollo Global Management Inc. President Jim Zelter described the Trump administration’s recent tariff pause and de-escalation with China as a “macro political pivot” that came after a key meeting with US retail executives who warned policymakers of the challenges their proposals were causing on the ground.

“You would have been saying recession went from 30% to 70% or 80%, now it is probably below 50%,” he said.

Mike Mayo remains bullish on the biggest Wall Street banks, saying management teams were mostly upbeat at a recent conference and “not blinking despite tariff risks.” The Wells Fargo analyst also expects the disconnect between optimistic management and investor concerns to keep narrowing, “so long as there are no new major trade shocks.”

Wells Fargo Investment Institute sees economic growth, clarity around Trump’s tariffs and continued earnings growth driving further stock-market gains through the rest of this year and next.

Strategists at the firm published new S&P 500 forecast for 2026, expecting US equity benchmark to climb to between 6,400 and 6,600 by year’s end. WFII’s new 2025 year-end target for gauge is range of 5,900 to 6,100, implying market could stay flat or eke out 3.5% advance.

“Our constructive equity outlook is not an all clear for the riskiest areas of the markets,” the team wrote, emphasizing preference from US large- and mid-cap companies.

Wells Fargo Investment Institute’s 2025 and 2026 forecasts for global equities benchmarks.Source: Wells Fargo Investment Institute

Equity gains will likely get harder from these elevated levels, so the relatively low cost of volatility hedges on offer right now hands investors an opportunity to build a defense against summer volatility.

A retreat in index and single-stock volatility has been accompanied by a decline both in measures of correlation and dispersion. All four gauges are now at or below the levels seen on April 2, before Trump’s “Liberation Day” speech. That suggests markets have fully removed any macro uncertainty premium.

“While we continue to expect a range of trade agreements to be reached to sustain the tariff rate at roughly the level during the pause period, ongoing uncertainty could trigger further bouts of market volatility,” said Solita Marcelli at UBS Global Wealth Management. “Phasing into the market can be an effective way for under-allocated investors to position for potential medium- and longer-term gains in US equities, while capital preservation strategies can help manage near-term risks of stock market declines.”

Meantime, tax-bill discussions in Congress show the US “appears unwilling” to rein in its fiscal deficit, while foreigners are less inclined to finance it, creating a “major problem” for the dollar and the bond market, said George Saravelos, Deutsche Bank’s global head of currency strategy.

“Running a wider fiscal deficit requires foreigners to buy an ever-expanding amount of US Treasuries and an ongoing rise of America’s foreign liabilities,” he wrote. “This we believe is no longer sustainable.”