Happy Wednesday.

Al’righty; the S&P 500 is back in positive territory for 2025. Tech stocks are still on top. China lifted export controls on 28 U.S. entities.

Market breadth is still weak. Decliners outnumber advancers on both major exchanges.

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Let's dig in...

Executive Summary

• Market sentiment shifting: The S&P 500’s 21% rebound from April lows signals investor confidence returning despite today’s consolidation and weak market breadth.

• Geopolitical landscape improving: Both U.S.-China relations and Middle East engagement show concrete positive developments rather than just rhetoric.
  

• Tech sector positioning for new growth cycle: AI investments and policy changes create catalysts for semiconductor and server manufacturers beyond the initial tariff relief rally.
  

• Rotation potential building: Significant sideline cash coupled with heavily shorted small and mid-caps creates conditions for broadening market participation beyond mega-caps..

Market Overview

Key Market Drivers

1. U.S.-China Concrete Actions: U.S. slashed tariffs to 30% from 145%, while China dropped to 10%. “De minimis” small package tariffs cut to 54% from 120%. Critical development: China suspended export controls against 28 U.S. entities that had restricted items with potential military applications.
   

2. Saudi-U.S. Investment Details: $600B commitment spans multiple sectors. Treasury Secretary Bessent revealed “more than 25 deals on the table” with more announcements coming upon Trump’s return. DataVolt-SMCI $20B+ partnership represents first major tech implementation.
   

3. Central Bank Pressure Builds: Trump directly challenging Fed with statement “THE FED must lower the RATE, like Europe and China have done.” Goolsbee pushes back: “Right now is a time for the Fed to wait for more information, try to get past the noise in the data.”
   

4. Institutional Positioning Insights: JPM and Citi research shows traders “under-positioned with a lot of money” ready for deployment. Technical conditions favoring previously lagging sectors especially small-caps through potential short squeezes.
   

Stock Spotlight

Super Micro Computer $SMCI ( ▲ 15.61% ) : Server maker extends momentum after announcing $20B+ partnership with Saudi data center firm DataVolt during Saudi-U.S. Investment Forum. Raymond James recently initiated coverage with an Outperform rating, citing AI projects as "a long-term secular driver."

Advanced Micro Devices $AMD ( ▲ 4.28% ) : Board approves $6B share buyback program. CEO Lisa Su: This "reflects the Board's confidence in AMD's strategic direction, growth prospects, and ability to consistently generate strong free cash flow." BofA Securities identifies AMD as a beneficiary of Saudi AI infrastructure projects.

eToro Group $ETOR ( ▲ 30.14% ): Trading platform makes strong Nasdaq debut after pricing IPO at $52 per share. Had previously shelved IPO plans amid tariff uncertainty.

Boeing $BA ( ▲ 0.5% ): Secures what White House called its "largest-ever" order with Qatar Airways. The $96B deal includes up to 210 aircraft (787 Dreamliners and 777X models).

Big Name Updates

Nvidia $NVDA ( ▲ 3.94% ): Set to supply Saudi Arabia with 18,000 top AI chips. Benefits from U.S. scrapping Biden-era "AI Diffusion" rule that limited AI technology spread.

Tesla $TSLA ( ▲ 4.09% ): Board weighing new pay package for Musk per FT. Special two-member committee formed to review compensation options if $56B 2018 package isn't reinstated.

Alphabet $GOOGL ( ▲ 3.64% ): Waymo recalling 1,200+ self-driving vehicles after collisions with roadway barriers due to software fault. Separately, Google announces major Android redesign with "Material 3 Expressive" update featuring larger text and higher contrast for improved usability.

Amazon $AMZN ( ▼ 0.61% ): Citi reiterates Buy rating and $225 PT. Views reduced tariffs as "incrementally positive for Amazon's retail business, back-to-school prospects, and operating income."

UnitedHealth Group $UNH ( ▼ 0.29% ): Stabilizes after Tuesday's plunge following CEO Andrew Witty's resignation and 2025 outlook suspension. Former CEO Stephen Hemsley returning to role. Raymond James downgrades to Market Perform from Strong Buy.

Other Notable Company News

Novo Nordisk $NVO ( ▼ 1.68% ) : Signs $2.2B deal with Septerna for oral obesity drugs. Deal includes $200M+ upfront plus milestones.

First Solar $FSLR ( ▲ 0.79% ): UBS raises PT to $255 from $235, maintains Buy. "First Solar remains our top pick" with "increasing conviction that 45X domestic tax credits will survive in Republican budget."

Baidu $BIDU ( ▲ 1.5% ): Plans robotaxi launch in Europe and Turkey.

Burberry: Cutting 1,700 jobs amid luxury market slowdown.

Sony Group $SONY ( ▲ 1.26% ): Announces ¥250B share buyback. Projects lower profit partly due to tariff impact, estimating $678M operating profit hit from U.S. tariffs.

Target $TGT ( ▼ 3.08% ): Analysts note "weakening traffic trends/share loss evident" with "concern over operational execution, strategic direction."

Rivian $RIVN ( ▼ 0.4% ): Jefferies downgrades to Hold from Buy, PT $16, citing "downbeat demand outlook this year."

Sector Watch

Bond Market

The 10-year Treasury yield sits at 4.54%, up from Tuesday’s 4.498% settle.

Policy Watch

U.S.-China relations show tangible improvement with mutual tariff reductions.

Notable developments:

• China suspended export controls against 28 U.S. entities for 90 days - key reciprocal step
• U.S. slashed “de minimis” tariffs on small shipments to 54% from 120%, benefiting e-commerce platforms like Temu

Interesting snips
 
• U.S. scrapped Biden-era “AI Diffusion” rule, boosting AI chip stocks
• House Speaker Johnson backs ban on congressional stock trading
• Trump declares U.S. is “leading China in crypto”
• Treasury Secretary Bessent indicates multiple deals with Saudi Arabia

What to Watch

1. Fed Speakers Today: Governor Waller and Vice Chair Jefferson scheduled to speak.
   • Watch for alignment or divergence from Goolsbee’s “wait and see” stance
   • Comments could provide clues on timing of potential rate moves
   

2. Cisco Earnings After Bell:
   • Will provide insight into enterprise tech spending
   • Supply chain commentary could reveal tariff impact
   

3. Saudi-U.S. Deal Flow:
   • Additional announcements expected upon Trump’s return
   • Focus on implementation timelines for recently announced partnerships
   

4. Trade Deal Durability:
   • Watch for signals whether 90-day truce could extend or evolve into permanent agreement
   • Monitor shipping volumes as indicator of business confidence

   
   
   Thanks for reading 🙂
   
   - John
   

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