April 28th Market Overview

Happy Tuesday

The chip rally pumped the brakes a bit today on the OpenAI scare.

Microsoft was the only major OpenAI partner that closed green. They quietly amended their deal last month, dumped the compute risk on everyone else, and kept all the upside through 2032.

Let’s dig in...

Today's Big Picture

Microsoft Walks Free From the OpenAI Mess

Oracle, CoreWeave, Nvidia, and Broadcom all closed down hard. SoftBank fell almost 10 in Tokyo against its $60 billion OpenAI exposure. Microsoft finished green because the recent deal amendment kept its access to OpenAI's tech through 2032 while letting OpenAI go multi-cloud for the heavy compute. Microsoft kept the upside and walked away from the bill.

The Cartel Just Lost Its Stabilizer

UAE leaving OPEC on May 1 is now sinking in for analysts. The country has 4.8 million barrels a day of capacity but was capped at 3.4 million under quotas. Once Hormuz reopens, that extra supply pressures Saudi Arabia's role as the price stabilizer. Rystad and SocGen are framing this as the start of producers racing to monetize reserves before the energy transition forces it.

Bond Markets Are Testing Five Percent Worldwide

The US 30-year is back at the ceiling that's pressured stocks every time it's hit over the last three years. The UK 10-year gilt actually crossed five percent today, the highest since 2008. When the long end of two major economies hits the same level for the same reason (inflation plus political dysfunction), that's a signal, not a coincidence. Housing, small caps, and high-multiple growth feel this first.

Market Overview

Index Performance

Stock Spotlight

Erasca $ERAS ( ▼ 48.3% )  
Got cut nearly in half after a patient died in their pancreatic cancer trial. The deeper red flag is they didn't release safety data from the parallel China trial, where the response rate was three times higher than the US. Stifel called the data slicing "typically a red flag for investors."

Centene $CNC ( ▲ 13.61% )  
Beat earnings and the whole managed care complex caught a bid alongside it. UnitedHealth and Elevance got dragged up too. After last year's meltdowns this is the first read that pricing fixes and cost cuts are actually sticking.

Polaris $PII ( ▲ 8.93% )  
Up sharply because new tariffs hit Mexico-based rival BRP much harder. BRP suspended guidance entirely with a tariff bill that could top $500 million. Polaris's bill is $215 million, and they're getting a $125 million Supreme Court refund on top. Clean tariff arbitrage.

Smithfield Foods $SFD ( ▼ 7.55% )  
Got hit because Iran war diesel costs are eating margins on every truckload of hogs and pork. They've been raising prices to offset, but the diesel pass-through isn't done yet. This is what stagflation looks like at the company level.

Big Name Updates

Oracle $ORCL ( ▼ 3.91% )  
The $300 billion OpenAI cloud deal is now the most scrutinized contract in tech. Management defended it publicly, pointing to GPT 5.5 keeping demand on track. Backlog is over $550 billion and most of it sits on this one customer.

Nvidia $NVDA ( ▼ 1.63% )  
Took a smaller hit than the rest of the AI complex. The diversification across hyperscalers, sovereign deals, and enterprise customers actually matters here. They're not the OpenAI proxy people were treating them as.

Apple $AAPL ( ▲ 1.12% )  
UBS bumped its target to $287 ahead of Thursday's earnings, calling for iPhone revenue up 20 year over year on iPhone 17 strength. Apple is the only Mag 7 with zero direct OpenAI exposure.

Other Notable Company News

Disney $DIS ( ▼ 0.97% )  
The FCC ordered eight Disney TV stations to renew licenses early, the latest administration pressure point. The stock barely moved but the regulatory drumbeat is getting louder.

Sysco $SYY ( ▼ 2.65% )  
National chain restaurant traffic is softening. Management is leaning harder into local mom-and-pop restaurants through the $29 billion Jetro deal. Solid inflation read at the consumer level.

AMD $AMD ( ▼ 3.28% )  
Northland downgraded to Market Perform with a $260 target. Their thesis: Intel is catching back up and TSMC partnering with Nvidia caps AMD's margin upside.

Nucor $NUE ( ▲ 4.7% )  
All-time highs, going back through the company's history to 1972. Earnings beat handily, and any infrastructure or onshoring narrative keeps pulling steel demand.

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Sector Watch

Bond Market

Tomorrow brings the $22 billion 30-year auction with the long bond already testing five percent. Demand here will say more than Powell's presser about how the world is really pricing US debt under wartime inflation. Watch the bid-to-cover.

Policy Watch

Fed

Two-day meeting started today, decision tomorrow at 2 ET, Powell at 2:30. Holding rates is consensus. Tillis cleared Warsh's path over the weekend but also said there's a "rational basis" for Powell to stay on the board through the inspector general review of the renovation project. I think Powell sticks around longer than people are pricing.

Fiscal & Trade

UAE leaving OPEC May 1 is a call to monetize reserves outside the cartel's quotas. The new tariff regime is reshaping competition in real time. Polaris's $215 million bill versus BRP's $500 million-plus exposure shows production geography now matters more than manufacturing scale.

International

• Bank of Japan held rates and sharply raised inflation forecasts as Iran supply shocks bite

• Iran is refusing to negotiate until the war ends, four ships through Hormuz yesterday

• UK political mess deepening, with Starmer facing a vote on opening an investigation over the Mandelson appointment

What to Watch

10 AI Stocks to Lead the Next Decade

MarketBeat did an excellent job on this AI infrastructure leaders report

Mag 7 Earnings Tomorrow Night

Alphabet, Microsoft, Amazon, Meta after Wednesday's close. Apple Thursday. Today's tape was positioning into this print, and after the OpenAI scare every word about hyperscaler capex commitments matters more.

OPEC's Response to the UAE Exit

Saudi Arabia still hasn't formally responded. How they handle it signals whether the cartel has any pricing power left.

Trump's Iran Decision

Still pending on the Hormuz proposal. Rejection and oil and inflation break further out. Acceptance and we get the biggest macro relief in months.

Thanks for reading - you are now the more informed 🙂

- John

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