MW Goldman says market is heading into a news vacuum, and there's weakness under hood

By Barbara Kollmeyer

Despite being in melt-up mode, Goldman specialist flags risks

Apart from an Elon's mea culpa (see below) it's quiet out there, as pins are dropping ahead of consumer price data.

A clear winner for the June quarter ticking down has been tech stocks, with the Nasdaq-100 NDX, which focuses on the biggest names, up 13% against a 7.6% return for the S&P 500 SPX. Given up for dead by some at the start of the year, Nvidia $(NVDA)$, Meta $(META)$, even drama-clogged Tesla $(TSLA)$, are up by double digits for the quarter.

Alas, Goldman Sachs, in our call of the day, sees trouble ahead. Peter Callahan, technology, media and telecom sector specialist at the firm, discusses how the Nasdaq-100 "remains in melt-up mode" - up six of seven days, in a note to clients.

He attributes that to several factors: continued trade optimism surrounding U.S.-China talks that just wrapped in London; better-than-expected data, the latest being improvement in small-business optimism; and strong corporate results, such as Taiwan Semiconductor Manufacturing's upbeat May revenue.

That has pushed the Goldman Sachs's own measure of U.S. financial conditions index to near the lows of the year, said Callahan. That gauge moving lower means easing financial conditions, for example, indicating companies have a less tough time borrowing from markets if they need.

Against this backdrop, the Goldman specialist flags some "choppiness" appearing "under the hood" of current market trends, such as the Cboe Volatility Index VIX, or the so-called fear index, that continues to push lower.

He points to Goldman's TMT momentum [air, which is a trade of both bullish and bearish positions, and in this case means a bullish call on tech winners over the past year and a bearish call on the laggards. That pair has lost around 7.5% in six days, underperforming the Nasdaq-100 by around 850 basis points. Here's his chart:

He also notes some slowing in the "leadership" names, with Netflix $(NFLX)$, Duolingo $(DUOL)$, Sea $(SE)$, Verisk Analytics (VRSK), Spotify (SPOT), Broadcom $(AVGO)$, MercadoLibre (MELI) and Carvana (CVNA) all down three straight sessions.

That's as so-called proxies for so-called quality stocks - those companies viewed as those with steady financials and balance sheets that can withstand a market storm - such as Costco $(COST)$ and GE $(GE)$ are also beginning to lag on the week and month.

Oher moves Callahan is seeing include small-caps starting to outperform big, cyclicals over defensives, and nonprofitable-tech over quality. Those shifts are coming just as "the market tries to reprice growth and tariff expectations into an expected newsflow vacuum into quarter end that starts as we move past the next 48 hours that features a busy TMT calendar + CPI + China/U.S. trade talks."

The markets

U.S. stock futures (ES00) (YM00) (NQ00) are dropping ahead of inflation data, with Treasury yields BX:TMUBMUSD10Y BX:TMUBMUSD02Y creeping up and gold prices (GC00) higher. Oil (CL00) (BRN00) is bouncing, which some credit to an interview that President Trump gave to the New York Post where he discussed less confidence in reaching a deal with Iran.

   Key asset performance                                                Last       5d      1m     YTD     1y 
   S&P 500                                                              6038.81    1.15%   2.59%  2.67%   12.34% 
   Nasdaq Composite                                                     19,714.99  1.63%   3.71%  2.09%   13.67% 
   10-year Treasury                                                     4.488      12.90   -5.00  -8.80   16.50 
   Gold                                                                 3360.7     -0.48%  3.26%  27.33%  44.00% 
   Oil                                                                  65.05      2.70%   2.23%  -9.49%  -16.79% 
   Data: MarketWatch. Treasury yields change expressed in basis points 

The buzz

Due at 8:30 a.m., economists say May consumer prices could show the first signs of tariff pressures, with headline inflation expected to rise 0.2% and 2.4% annually. Core prices are expected to rise 0.3%. The May federal budget is due at 2 p.m.

U.S. and Chinese negotiators reached a deal in London on a "framework" to implement previously agreed Geneva trade agreements. Meanwhile, a federal appeals court has ruled Trump's tariffs can stay in place during legal challenges.

Tesla's $(TSLA.UK)$ robotaxi service "tentatively" expected to start picking up passengers in Austin, Texas, on June 22, said Chief Executive Elon Musk.

Speaking of, Musk said on X that he regrets some of last week's posts about President Trump.

GameStop $(GME)$ late Tuesday reported weaker-than-expected revenue in the first quarter.

Best of the web

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Top tickers

These were the most-searched tickers on MarketWatch as of 6 a.m.:

   Ticker  Security name 
   TSLA    Tesla 
   NVDA    Nvidia 
   GME     GameStop 
   NCNA    NuCana 
   PLTR    Palantir 
   TSM     Taiwan Semiconductor Manufacturing 
   AAPL    Apple 
   PLUG    Plug Power 
   MLGO    MicroAlgo 
   AMD     Advanced Micro Devices 

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-Barbara Kollmeyer

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June 11, 2025 06:46 ET (10:46 GMT)

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