NVDA Pops, Tariff Relief Fizzles, and Macro Headwinds Hit Stocks

Markets kicked off with optimism after NVDA reported strong earnings and a federal court temporarily blocked Trump’s proposed tariffs, sparking a broad rally. But gains quickly unraveled as jobless claims rose, home sales plunged, and GDP revisions pointed to softening consumer demand. To make matters worse, a federal appeals court paused the tariff injunction, allowing tariffs to stay—for now. NVDA held up relatively well, but most of the market faded. Volatility is ticking up, and with the PCE inflation report due tomorrow, traders are bracing for more whiplash.

“Strong data fades. Tariff headlines fizzle. Volatility creeps back in.”

The overnight session kicked off with bullish momentum—NVDA earnings beat (excluding China) and a federal court ruling temporarily blocking Trump’s tariffs sparked a rally across global equity markets. But like most early optimism in this market… it didn’t last.

⚖️ Tariff Whiplash: From Injunction to Delay

Markets initially jumped more than 2% on the S&P after the news broke that a federal court placed an injunction on Trump’s tariffs, prompting speculation that relief was coming for cost-sensitive sectors like semiconductors and industrials.

Then reality hit. Goldman Sachs and others clarified that the legal blockade likely held minimal immediate weight, and traders began factoring in an inevitable appeals process.

Right on cue:

• A federal appeals court paused the injunction, allowing Trump’s tariffs to stay in place temporarily.
• The court noted it needed time to review filings, signaling a prolonged legal process likely to end up in the Supreme Court.

“TRUMP TARIFF RULING TEMPORARILY PAUSED BY APPEALS COURT”

“APPEALS COURT ALLOWS TRUMP TARIFFS TO STAY IN EFFECT FOR NOW”

Market reaction to the appeals ruling? Muted. This outcome was largely anticipated.

📉 Macro Data Disappoints

While tariffs dominated headlines, the macro backdrop took a turn for the worse:

• Jobless claims came in higher than expected
• Pending home sales plunged
• GDP consumption was revised sharply lower

That combo killed the rally. By the end of the day, all major indices were basically flat, with modest gains that faded fast.

💼 Positioning Update: The Squeeze May Be Over

UBS’s trading desk shared some key flow insights: 1. Short flow is now net long – The excess sell flow was completely covered by May 27 2. Most shorted stocks are +36% since April 8, but have already started to cool off 3. Short leverage (PB L/S) is near 13th percentile – historically low 4. SPY put/call ratio is at 14th percentile – the market is under-hedged

Translation? The short squeeze is losing steam, and markets are less protected on the downside.

🧠 Tech Recap: NVDA Leads, Then Fades

NVDA popped on strong earnings, but the follow-through wasn’t sustained: • Gave back half its post-earnings gains intraday • Still closed up +3%, showing strength relative to peers • The broader Mag 7 surged 2% early, only to fade alongside weak macro prints • The S&P 493 stayed flat, underlining how concentrated the strength remains

Spoiler alert: We are eyeing NVDA for possible calls with our Options Team.

📉 Rates & Yields: Bond Bulls Get a Boost

• Seven-year Treasury auction crushed expectations, sending yields lower • Yields fell 5–6 bps across the curve, with the long-end outperforming • Seven-year yield hit a two-week low • Inflation swaps dropped hard, briefly reversing after the appeals court tariff update • Dovish rate cut expectations increased for 2025, while 2026 cut forecasts softened

💱 Commodities, Bitcoin & Volatility

• The U.S. dollar was volatile and mirrored equity chop • Gold broke above $3,300 again • Oil surged early, pricing in growth from tariff relief, but retraced on macro weakness • Bitcoin dropped to $106,000, despite ongoing ETF inflows • Volatility is creeping in, and tomorrow’s PCE report is expected to move markets

🧭 Where We Stand

Despite the initial optimism, markets are now navigating the summer doldrums. Rate cuts are being priced sooner again, but uncertainty around tariffs, Trump’s next move, and macro data is growing.

What did GAR do today?

On the Options Side, we initiated a new long position in one of the MAG 7 tech names as part of our continued focus on strength in the sector. We’re still holding three open positions set to expire tomorrow—though those aren’t looking too promising at all heading into expiry day.

As for Futures Family, we took a disciplined approach today, sitting on the sidelines and locking in overnight gains from our prior long position. No new entries were made, as we look to finish the week strong tomorrow with fresh setups in sight.

Final Take For now: • NVDA showed relative strength • Short squeeze is running out of gas • Bonds are firm • Equities are stuck • And volatility is stirring

Keep your hedges tight, keep your positioning tactical. Cheers and happy trading, — Carlos G GAR Capital

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