Trading results for 21 May 2025
No trouble in sight – until the Treasuries let us down. This is perhaps the best way to describe Wednesday’s trading session. A slight negative mood, triggered by discussions around the U.S. budget bill and the upcoming auction of long-term Treasuries, was evident from the morning. Despite futures on the main U.S. indexes being slightly in the red, no one expected a major sell-off.
In recent days, we have often seen early-session negativity melt away by the close as bulls gained the upper hand. Wednesday followed the same script. The main session opened with losses of up to 0.8% on key indexes (NASDAQ Composite), but the situation improved, and just 90 minutes later the NASDAQ was confidently in the green, with the S&P 500 stabilising near flat.
Only the conservative Dow Jones index (DJIA-30) lagged behind, mainly due to UnitedHealth (UNH, -5.78%), the health insurance giant that continues to swing wildly – mostly downwards. After a few days of gains, the company once again came under strong pressure from bears.
Overall, the first half of the day was relatively calm. The trigger for the sell-off was the Treasury auction, where demand for $16 billion in 20-year bonds proved weak, reflecting growing investor concerns over the country's financial outlook. Yields on long-term U.S. bonds immediately rose – by 9.4 basis points to 4.59% on 10-year notes and by 3.8 points to 4.02% on 2-year notes.
Investor anxiety is now centred on Trump’s tax proposal, which Democrats argue favours the wealthy while cutting social programmes. The bill also faces resistance within the Republican Party, from hardline conservatives who believe it does not cut spending enough. The Congressional Budget Office has already projected that U.S. national debt, currently at $36.2 trillion, will grow by another $3.8 trillion over the next decade. This comes just days after Moody’s downgraded the U.S. sovereign rating, citing rising interest expenses.
Some market participants had pinned their hopes on the quarterly report from retail heavyweight Target (TGT, -5.21%). But those hopes were dashed. Revenue was close to expectations ($24.11 billion vs forecast $24.23 billion), but the earnings per share fell well short – just $1.30 versus the expected $1.60, nearly 20% below forecasts.
Against such a backdrop, a market decline was inevitable. All major indexes dropped to finish near session lows – down 1.41% for the NASDAQ Composite and as much as 1.91% for the Dow Jones. The broad-market S&P 500 lost 1.61%.
The ITS indexes were also affected. The ITS Shariah Index (ITSS), which is entirely made up of U.S. stocks, suffered a 1.66% drop, in line with the U.S. benchmarks. Meanwhile, the ITS World Index (ITSW) fared better, losing only 0.88% thanks once again to its strong geographical diversification.
While all 30 stocks in the ITSS closed in the red, around 20% of the ITSW portfolio ended the day in positive territory. The best performer was Chinese EV maker Li Auto (LI, +3.08%). There was also decent demand for pharma giants Novartis AG (NVS, +0.45%) from Switzerland and Japan’s Takeda Pharmaceutical Co (TAK, +0.35%).
In summary: unpleasant and painful, but not yet critical. A brief cold shower may even prove healthy – provided it stays just that, and not the start of a downpour.