Wall Street whistles past the tariff graveyard as JOLTS and AI mania drowns out OECD doom

Whistling past the tariff graveyard

Wall Street kicked off Tuesday’s session with a show of resilience that would make even the most cynical bear blink. Against the backdrop of an OECD downgrade that painted a grim global portrait—one where Trump's tariff war hangs over the economy like a sword of Damocles—U.S. equities chose optimism. Traders shrugged off the gloom and instead chased momentum, zeroing in on an upside surprise in the JOLTS report, where job openings printed 7.39 million versus the expected 7.1 million. That figure didn't just land—it landed with conviction, helping smother early-week whispers of a sub-100 NFP shocker and reanchoring the market’s faith in the durability of the U.S. labour engine.

The S&P 500 caught a bid, powered once again by its usual suspects: the megacap mafia. Nvidia, now crowned the world’s most valuable publicly traded company, added another 3% and strutted past Microsoft with a $3.444 trillion market cap—making it not just the belle of the AI ball, but the lead conductor of the market’s entire symphony. The GenAI trade, far from being yesterday’s news, has reasserted itself with vengeance. What started as a boutique strategy has now turned Broadway—long secular growth and fortress-balance-sheet tech names are the only game in town again.

Elsewhere, energy stocks laced up and joined the rally after oil prices found traction on renewed geopolitical jitters. Ukraine’s bold drone strike on Russian long-range bombers didn’t just rattle sabers—it stirred oil markets into a sticky bid, as traders priced in a not-if-but-when Russian retaliation scenario. Brent barely blinked on the dip and is now firming again, dragging energy names higher into the close.

Small caps weren’t left behind in the chase. The Russell 2000, often seen as the canary in the domestic coal mine, rallied 1.5%, as traders broadened exposure—likely a tactical nod to signs that the real economy, tariffs or not, is still punching above its weight.

Yet beneath this surface-level rally lies a growing divergence. The OECD’s growth outlook for the U.S. now pegs 2025 GDP at a meagre 1.6%, sliding to 1.5% in 2026. The culprit? Trump's go-for-broke tariff policy is cooling global investment flows and freezing bets on the supply chain. Over in China, the Caixin PMI dropped to its lowest level since 2022, offering a bleak reminder that no one escapes this crossfire unscathed—not even the world’s factory floor.

All eyes now turn to Friday’s payroll print, with JOLTS setting the stage and equities already leaning bullish. But the big wildcard remains trade. Trump’s “reciprocal tariff” clock is ticking, and he's pressing partners for best-and-final offers by midweek. A phone call with Xi could offer relief—or reignite the fuse. Either way, the market is trading like it’s long optionality and short paralysis, betting that headlines—however frothy—can still power this tape higher.

For now, the rally persists. However, with tariffs looming and growth downgrades increasing, if they all collide at once, the question will then be who’s still swimming naked when it does.

The view: Squeezy

Small caps are back in play, vaulting above their 100-day moving average like a bat out of a macro basement. Retail sentiment? Still on full tilt—mom-and-pop flows are riding high on the belief that a robust labour market trumps tariff tremors. Meanwhile, the GenAI trade—thought to be taking a breather after the DeepSeek stumble—roared back with a vengeance, wiping out recent losses and helping push the Nasdaq 100 to within 2.5% of its all-time highs.

And just like that, Nvidia reclaimed its throne. The chip juggernaut leapt back above Microsoft to become the world’s most valuable company—yet again—closing with a $3.444 trillion market cap. The message from the street is crystal: fortress balance sheets and secular AI dominance are still the market’s holy grail, and nobody plays that theme louder than NVDA.

Under the hood, it was a classic “small beats big, laggards beat leaders” rotation, with SMID-cap names catching a violent bid. Call it a beta-chasing bonanza, or a good old-fashioned squeeze—the kind that leaves short sellers gasping for air. One-off movers off 52-week lows drew in hot money like moths to flame, and even with three of the six megacaps still in the red for the year, the index is climbing the wall of worry with ballet shoes.

On the rates side, things got punchy. Despite factory orders throwing up a red flag, yields surged as Bostic and his Fed colleagues leaned hawkish. Bostic’s no-nonsense tone—"still a ways to go" on inflation—cut through the rate-cut narrative like a chainsaw. The belly of the curve bore the brunt, with yields up 2–3 bps across the board, as traders re-priced the 2025–2026 easing cycle lower and sent the dollar ripping off Monday’s lows with freshly minted USDJPY shorts getting torched

Naturally, gold caught the wrong end of that stick, bleeding lower as the greenback flexed. Bitcoin, never one to miss a chance for theatre, did its usual pump-and-dump routine, echoing Monday’s chaos with another dizzying round trip.

Crude oil remained steady, maintaining its geopolitical premium. Brent Crude clung to the $65 handle, supported by a labour market that refuses to crack and the lingering spectre of a Russian reprisal after Ukraine’s drone strike on long-range bombers. Traders aren’t just watching barrels—they’re pricing in a fuse that may already be lit.

And volatility? The VIX drifted back to a 17-handle, but no one’s sleeping easy. All eyes are on Friday’s payrolls. A “too-hot” number could throw the dovish narrative overboard, while a “just-right” print might be the final push to ATHs. Either way, traders are bracing for a post-NFP exhale—or an all-out detonation.

This is not a market looking for balance. It’s a battlefield of conviction, momentum, and macro minefields. Welcome to June.