May 11th Market Overview

Happy Monday

Markets ground higher today as semiconductor stocks dragged the major indices into record territory for the sixth straight week. Oil is back above $104 after Trump rejected Iran's peace proposal over the weekend.

New Fed chair vote today, Trump flies to Beijing Wednesday, and CPI tomorrow morning. Busy week.

Let’s dig in...

Today's Big Picture

1. The AI boom is overpowering everything else. 
   
   Infrastructure Capital's Jay Hatfield: "The tech boom is just too powerful to let energy prices affect the US stock market. Everybody's tuning out the Middle East." S&P 500 semiconductor companies have added roughly $3.8 trillion in market cap over the past six weeks. The Roundhill Memory ETF $DRAM hit $6.5 billion in assets in 36 days, beating the record set by BlackRock's $BLK bitcoin ETF in early 2024. South Korea's Kospi gained 4.3 today, led by SK Hynix.
   

2. The oil supply crisis is getting worse, not better. 
   
   Saudi Aramco's CEO said the market has lost about 1 billion barrels of supply during the crisis. If reopening is delayed several more weeks, Aramco says oil markets may not normalize until 2027. The IEA calls this the biggest supply shock in history. Commercial traffic through the Strait of Hormuz remains at a near-complete standstill per JPMorgan, with more than 10 million barrels per day of supply lost per Goldman Sachs.
   

3. The market's internals don't match the headline. 
   
   The S&P 500 is 7.7 above its 50-day moving average, but only 52 of its components are above their own 50-day. BTIG's Jonathan Krinsky says that's never happened in the past 30 years when the index was this extended. Friday was just the third time since 1990 the S&P had more new lows than new highs on a record-setting day. On Monday, 34 stocks hit 52-week highs and 35 hit 52-week lows. BTIG's question: why can't anything else rally?
    

Market Overview

Index Performance

Stock Spotlight

Monday.com $MNDY ( ▼ 6.4% )  
crushed Q1 and raised full-year guidance. Revenue hit $351.3 million, beating the $339.1 million estimate, with record operating profits of $49 million. Their AI platform is actually driving revenue, not just a talking point. Every SaaS CEO is going to get asked "where's your AI revenue?" next quarter.

Corning $GLW ( ▼ 4.41% )  
hit an all-time high after Bank of America added it to its "US 1 List." The fiber optics maker recently partnered with Nvidia $NVDA to supply components for AI data centers. Optics is a bottleneck play in AI infrastructure.

Circle Internet Group $CRCL ( ▼ 6.16% )  
had a mixed quarter but the stock ran. Revenue grew to $694 million but missed the $722 million estimate. What moved the stock was a $222 million token presale for the new Arc blockchain, backed by BlackRock $BLK, Apollo, Andreessen Horowitz, and Intercontinental Exchange. USDC in circulation hit $77 billion.

Constellation Energy $CEG ( ▼ 2.03% )  
beat on both the top and bottom lines this morning. The nuclear-powers-AI thesis now has hard earnings numbers behind it.

Big Name Updates

Netflix $NFLX ( ▲ 2.59% )  
faces a new lawsuit from the Texas Attorney General. AG Ken Paxton alleges the streaming platform collected and sold subscriber viewing data to advertisers without consent. Paxton called Netflix "a logging company that records and monetizes billions of behavioral events, and occasionally streams movies."

Wendy's $WEN ( ▲ 16.86% )  
got downgraded to underweight by JPMorgan with a $6 price target. US same-store sales fell nearly 7 in Q1 and the company still has no permanent CEO since July. Shares are off almost 40 over the past year.

Fox Corp $FOX ( ▼ 2.8% )  
beat Wall Street estimates on both the top and bottom lines. The media company posted strong results despite not broadcasting the Super Bowl this year.

Other Notable Company News

Moderna $MRNA ( ▲ 0.74% )  
popped in premarket after a US citizen tested positive for the Andes strain of hantavirus. Three passengers have died from an outbreak on the MV Hondius cruise ship. Moderna is in early-stage development of a hantavirus vaccine. Gains faded through the session.

Apollo Global Management $APO ( ▲ 1.13% )  
is in talks to sell MidCap Financial Investment $MFIC, its publicly listed private-credit fund valued at roughly $3 billion. Defaults in the fund climbed to 5.3 in Q1 from 3.9 in December.

Tyson Foods $TSN ( ▲ 0.57% )  
dipped after reports the White House plans to temporarily lower tariffs on beef imports to ease domestic supply.

Plug Power $PLUG ( ▲ 1.14% )  
reports after the close today. Shares ran up in afternoon trading ahead of the print.

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Sector Watch

Bond Market

The 10-year yield ticked higher to 4.409 as the oil shock renewed inflation fears. The dollar index held mostly flat at 94.80. Traders are pricing in a longer wait for rate cuts as energy costs pressure the economy.

Policy Watch

Iran and the Strait of Hormuz 

Tehran offered to transfer some enriched uranium to a third country but refused to dismantle its nuclear facilities. Trump rejected the proposal outright and told reporters Monday the ceasefire is "unbelievably weak." More than 40 nations led by France and the UK are meeting today to plan naval escorts for vessels through the Strait once a stable ceasefire holds. Wall Street has a new acronym for the situation: NACHO, or "Not a Chance Hormuz Opens," coined by economist Paul Krugman. Polymarket puts the odds of normalized traffic by end of June at just 42, down from 88 a month ago.

Trump's China Trip 

Trump heads to Beijing Wednesday for a two-day summit with Xi Jinping. The business delegation is stacked: Tim Cook (Apple $AAPL), Elon Musk (Tesla $TSLA), Larry Fink (BlackRock $BLK), David Solomon (Goldman Sachs $GS), Jane Fraser (Citi $C), Steve Schwarzman (Blackstone $BX), Kelly Ortberg (Boeing $BA), Sanjay Mehrotra (Micron $MU), Cristiano Amon (Qualcomm $QCOM), Larry Culp (GE Aerospace $GE), Michael Miebach (Mastercard $MA), Ryan McInerney (Visa $V), and others. Jensen Huang of Nvidia $NVDA was not invited.

Gas Tax 
Energy Secretary Chris Wright said the administration is open to suspending the federal gas tax while pump prices stay elevated. The federal tax is 18.4 cents per gallon. With the national average at $4.52, the cut would bring it to about $4.34. Not a big move, but it tells you the administration is feeling the pressure from consumers

What to Watch

10 AI Stocks to Lead the Next Decade

MarketBeat did an excellent job on this AI infrastructure leaders report

April CPI Report, Tuesday 8:30 AM ET: 
The number that sets the tone for the week. Headline expected to accelerate from 3.3 to 3.8, driven by the oil shock. Core CPI expected to tick up to 2.7 from 2.6. A hot print kills the rate cut conversation for the summer.

Trump-Xi Summit, Wednesday Through Friday:
Two days in Beijing with one of the largest US business delegations in recent memory. War and tariffs expected to dominate. The real trade is whatever leaks mid-visit on chip export controls. Nvidia $NVDA and AMD $AMD are the two names most exposed to any shift in AI chip policy.

Thanks for reading - you are now the more informed 🙂

- John

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