May 12th Market Overview

Happy Tuesday

The chip trade finally caught a cold today. Qualcomm had its worst session since 2020 and the semi index hadn't bled like this in seven months ($SOX). Honestly I'm fine with it, that move had gotten too extended and we saw a bit of a recovery into end of day.

Interesting point I’m noting - real wages just went negative for the first time since 2023. The 2026 rate cut story is pretty much dead. Warsh takes over the Fed on Friday and the market is already pricing him like rates might actually go up.

Let’s dig in...

Today's Big Picture

1. The Chip Trade Cools Off 
   Semiconductors had their worst day in seven months. Qualcomm closing in its worst session since 2020 and Intel rolled over after a massive run. The group is still up big year to date so this looks more like profit taking than a broken thesis.
   

2. Real Wages Just Turned Negative
   Inflation adjusted hourly pay fell year over year in April. First negative print since 2023. Prices are rising faster than what workers actually take home. The stock market can ignore hot inflation. Paychecks cannot.
   

3. Rate Hike Now On The Table 
   The Senate confirmed Kevin Warsh to the Fed board today on a near party line vote. The chair vote comes Tomorrow and Powell exits Friday. Markets now see roughly a one in three chance the Fed hikes by December, up from one in four yesterday. The 2026 rate cut story is dead for now.

Market Overview

Index Performance

Stock Spotlight

Apple $AAPL ( ▲ 0.66% )  
closed at a fresh all-time high while every other major tech name got hit. The stock has separated from the AI trade and now moves like a cash flow story. That divergence is the cleanest tell on this market right now.

Qualcomm $QCOM ( ▼ 12.48% )  
closed in its worst session since 2020 as the broader semi tape rolled over. Even after today the stock is still up big over the past month.

Vestis $VSTS ( ▲ 28.71% )  
beat fiscal second quarter estimates and raised its full year outlook. A small cap industrial finally turning a corner after a brutal year.

Big Name Updates

Nvidia $NVDA ( ▲ 0.59% )  
hit a new all-time intraday high this morning before pulling back with the rest of the chips. Citi reiterated buy with a $300 price target ahead of earnings next week.

Micron $MU ( ▼ 6.04% )  
reversed after a parabolic run. Memory has been the cleanest piece of the AI trade and it's getting tested.

Tesla $TSLA ( ▼ 2.8% )  
- Musk is on the plane to Beijing tomorrow with Trump. When the most prominent China exposed CEOs travel with the President, the tape will react to every leak.

Lowe's $LOW ( ▼ 0.62% )  
got upgraded to buy at Citi ahead of next week's earnings. The bank thinks home improvement has bottomed.

Other Notable Company News

Wendy's $WEN ( ▲ 16.2% )  
held most of its premarket gains on the report that Trian Fund Management is raising capital for a take private bid.

Hims & Hers $HIMS ( ▼ 13.66% )  
slid after a surprise first quarter loss as it pivots from compounded GLP-1s to name brand Wegovy.

Under Armour $UA ( ▼ 17.18% )  
closed at a one year low after a revenue miss. The turnaround story isn't working.

Venture Global $VG ( ▲ 14.97% )  
bid up after beating and raising full year guidance. US LNG exporters are the cleanest energy trade with Hormuz shut.

GameStop $GME ( ▼ 2.46% )  
slipped after eBay's board rejected the $56 billion takeover bid as "neither credible nor attractive."

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Sector Watch

Bond Market

The 10-year Treasury yield closed at 4.46, near the highs of the year. Bond traders are repricing for a more hawkish Fed.

The bigger move was in London. The 30-year UK gilt yield closed at the highest level since 1998 as Starmer's political crisis deepened. UK banks got hit hard.

Tomorrow brings producer prices at 8:30 am and the start of Trump's Beijing trip.

Policy Watch

Trade and Tariffs

• A federal appeals court paused the trade court ruling that invalidated Trump's baseline global tariff

• The administration keeps collecting while the appeal plays out

• A decision on extending the pause through the full appeal is expected by Friday

Iran

• Trump called Iran's latest counterproposal "garbage" and said the ceasefire is on "life support"

• Polymarket odds for Hormuz reopening by end of June fell to 34 today from near 90 a month ago

• Adnoc Gas warned of a $400 to $600 million second quarter hit if shipping doesn't normalize

International

• UK PM Keir Starmer is facing growing calls to resign from his own Labour Party after local election losses

• A successor likely tilts the party further left, meaning more spending and stickier inflation

• The Bank of England may be forced to keep rates higher as a result
  

What to Watch

10 AI Stocks to Lead the Next Decade

MarketBeat did an excellent job on this AI infrastructure leaders report

Producer Prices (Tmmrw) 
Wholesale inflation drops at 8:30 am. If it runs hot, the rate hike conversation gets louder, not quieter.

Trump in Beijing (Wednesday-Friday)
The President meets Xi with 16 executives in tow including Musk and Cook. Concrete deals on tariffs or chip exports matter more than photo ops.

Thanks for reading - you are now the more informed 🙂

- John

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