June 2nd Market Overview

Happy Tuesday

New highs again, but it's really two markets right now. The companies building all the AI stuff are winning, and the software names are slowly getting left behind. Google said today it wants to raise 80 billion to keep building, which pretty much tells you this spending isn't slowing down.

Jobs came in strong, so the Fed's in no rush to cut rates. Oil and Iran are the one thing I'm keeping half an eye on, but nothing today feels like a reason to get worried.

Let’s dig in...

Today's Big Picture

1. Alphabet's $80 Billion Capital Call 
   Alphabet $GOOGL is raising $80 billion through stock sales to fund its data center buildout, with Berkshire Hathaway taking $10 billion of it. Google already throws off plenty of cash, so raising this much tells you one thing. The spending on AI infrastructure is nowhere near done.
   

2. The Hardware Trade Is Still Winning 
   
   Hewlett Packard Enterprise $HPE posted a record order backlog driven by server demand. The same day, Nvidia's CEO stood on stage and called Marvell Technology $MRVL the next trillion-dollar company. Money is flowing to the firms making the physical gear while enterprise software gets sold off.
   

3. Job Openings Run Hot 
   The April job openings report came in above 7.6 million, the highest in nearly two years and a big beat. Layoffs fell too. It's still a "no hire, no fire" market, and a labor market this firm takes the pressure off the Fed to start cutting rates.

Market Overview

Index Performance (Today is peace deal probability)

Stock Spotlight

Strategy $MSTR ( ▼ 9.96% )  
sold a chunk of its bitcoin for the first time since 2022. They've been the loudest "never sell" voice in crypto, so the about-face rattled traders and pushed bitcoin back below 70,000.

Victoria's Secret $VSXY ( ▲ 47.44% )  
beat earnings and raised its full-year outlook, helped by lower tariff costs and stronger bra sales. The turnaround is pulling in younger shoppers and letting the company charge more.

Dollar General $DG ( ▼ 2.91% )  
raised its profit outlook and beat on earnings, though revenue came in a hair light. Traffic rose as shoppers hunted for cheaper essentials.

Big Name Updates

Intel $INTC ( ▼ 2.09% )  
says its new 18A manufacturing process is running at full scale with hundreds of design wins. The stock still slipped as Nvidia pushed deeper into PC chips.

Microsoft $MSFT ( ▼ 4.1% )  
rolled out a tool that uses AI agents to hunt for software flaws before hackers find them. In security, speed is everything, and this is built for it.

PepsiCo $PEP ( ▲ 0.49% )  
is testing smaller cans and bottles to hold prices down. Shoppers are pushing back on higher prices, so it's shrinking the package instead.

Other Notable Company News

Cboe Global Markets $CBOE ( ▼ 8.74% )  
and other exchange operators sold off as traders worried that newly approved prediction-market and perpetual futures products could eat into Wall Street volumes.

Legend Biotech $LEGN ( ▲ 42.22% )  
said its experimental blood cancer treatment wiped out detectable tumors in early trials, and the stock had its best day on record.

Generac $GNRC ( ▲ 5.97% )  
signed a global deal to supply backup generators to a major data center operator.

GoPro $GPRO ( ▲ 4.09% )  
warned it may not survive a memory chip shortage that has sent component prices through the roof.

Anthropic filed confidentially for an IPO, joining a crowded line of giant tech names tapping public markets this year.

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Sector Watch

Bond Market

The 10-year Treasury yield barely moved today, even with the Middle East tension simmering. Bond traders look parked until Friday's jobs report before placing any real bets.

• Gold passed US Treasurys as the top reserve asset for foreign central banks, though that's more about gold's price climbing than fresh buying.

• Central banks have actually slowed their gold purchases as prices got expensive, and a few have started selling.

Policy Watch

Federal Reserve 
Cleveland Fed President Beth Hammack said current rates may not be high enough to get inflation back to target, and she's open to hiking if prices stay sticky. She votes on policy this year, so it carries weight.

Fiscal and Trade

• Trump lowered tariffs on imported farm equipment and air-conditioning parts through 2027 to ease costs.

• The administration also proposed new tariffs on some Brazilian goods over deforestation and digital taxes, with most food exports exempt.

International 
Iran said it will stop negotiating through intermediaries and threatened to fully close the Strait of Hormuz. Trump said talks are still "continuing at a rapid pace," but prediction markets now see only a slim chance of a near-term deal. Oil pushed higher on the standoff. In Europe, inflation ran hotter than the ECB's target, and the central bank is expected to raise rates when it meets next week.

What to Watch

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Palo Alto Networks Earnings 
Palo Alto Networks $PANW reports after the bell. The number to watch is whether security budgets are holding up or getting squeezed by all the infrastructure spending.

Friday's Jobs Report
The government payroll data lands Friday. After today's hot job openings, a strong number would take near-term rate cuts off the table.

Oil and the Strait of Hormuz 
Trump floated a deal to reopen the strait within a week. If it slips, crude keeps grinding higher and so does pressure at the pump.

Thanks for reading - you are now the more informed 🙂

- John

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