May 14th Market Overview

Happy Thursday
Dow back over 50,000 today, first time since February. Cisco did most of the heavy lifting after crushing earnings and announcing 4,000 layoffs to fund AI buildout. Meta's running the same playbook on May 20 with 8,000 cuts. Feels like every big tech CEO got the same memo this week.

Cerebras also had its IPO debut, opened at $350 against a $185 price. Biggest deal of the year so far. If OpenAI and SpaceX are watching, this is the green light to file.

Let’s dig in...

Today's Big Picture

1. Cerebras Lands The Biggest IPO Of The Year

The AI chipmaker priced at $185 last night and opened at $350, trading around $317 in the afternoon. That puts the valuation near $70 billion on a company taking direct aim at Nvidia. It's the largest US tech IPO since Uber in 2019, and it cracks the door open for OpenAI, Anthropic, and SpaceX later this year.

2. The Bond Market Is Sending A Warning

For every $100 you have in the S&P 500, the underlying companies are earning about $3.40 in annual profit. A 10-year Treasury bond pays you $4.47, risk-free. So right now, boring government bonds pay you more than stocks actually earn, and that gap is the widest it's been since 2003. I think this is the chart that matters today, not the Dow milestone.

The point being: investors are taking on stock risk for less return than they could lock in with Treasuries. That math has only been this lopsided a handful of times, and it usually doesn't end well for stocks.

3. Trump And Xi Day One Was Mostly Photo Ops

The two sides agreed the Strait of Hormuz stays open and Iran can't toll the waterway. Trump told Fox News that Xi committed to 200 Boeing jets. Analysts were modeling up to 500, so the stock sold off. Friday's working lunch is where actual trade deliverables would land.

Market Overview

Index Performance

Stock Spotlight

Cisco $CSCO ( ▲ 13.53% )  
had its biggest single day in over two decades. Management raised FY26 AI order guidance from $5 billion to $9 billion, and AI revenue from $3 billion to $4 billion. The 4,000 job cuts fund silicon and optics. The CEO called it a networking supercycle.

Nvidia $NVDA ( ▲ 4.25% )  
hit a record $5.7 trillion market cap. Commerce cleared roughly ten Chinese firms, including Alibaba and Tencent, to buy the H200. Zero chips have shipped yet because Beijing scrutiny is stalling the actual orders.

Boeing $BA ( ▼ 3.95% )  
dropped after Trump confirmed Xi committed to only 200 jets. Jefferies and others were modeling up to 500. Friday is the last shot at a bigger announcement.

Honda $HMC ( ▲ 5.89% )  
posted its first annual loss as a public company after walking away from US EV plans. The stock still climbed because hybrid-focused guidance came in stronger than feared.

Coinbase $COIN ( ▲ 7.39% )  
ran on news that the Senate Banking Committee passed the Clarity Act. First real crypto market structure bill to clear a major Senate hurdle. Strategy and Robinhood moved with it.

Big Name Updates

Meta $META ( ▲ 0.09% )  
is cutting close to 8,000 people on May 20 and moving 1,000 top engineers into a new Applied AI Engineering unit. Same playbook Cisco just ran.

Microsoft $MSFT ( ▲ 1.07% )  
is hunting AI startup acquisitions to reduce OpenAI dependency. The company looked at Cursor but walked away over regulatory concerns tied to GitHub Copilot.

Tesla $TSLA ( ▲ 0.07% )  
Elon Musk left his Beijing meeting with Xi in good spirits. Market access for foreign carmakers was a central theme on day one.

Other Notable Company News

Klarna $KLAR ( ▲ 18.34% )  
swung to a $1 million Q1 profit from a $99 million loss a year ago, with revenue up 44 year over year. (as some of you know, I hate this company)

Doximity $DOCS ( ▼ 25.35% )  
got crushed on a weak full year guide as healthcare digital ad spend rolls over.

Starbucks $SBUX ( ▲ 0.62% )  
climbed after TD Cowen upgraded it to Buy with a $120 price target.

Ford $F ( ▲ 6.56% )  
got another lift after Barclays said Ford Energy could be a $3 billion incremental revenue line.

Akamai $AKAM ( ▼ 3.9% )  
announced a $205 million deal for LayerX to expand its AI security business.

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Sector Watch

Bond Market

The 10-year yield slipped to 4.47 after rising three straight sessions on inflation worries. April import prices hit 4.2 year over year, the highest since October 2022, with petroleum up 19 on the month. Bessent told CNBC to expect one or two more hot prints before disinflation kicks in.

Policy Watch

Fed

Stephen Miran resigned today. Kevin Warsh is sworn in tomorrow as the new Fed chair, walking into a job where import prices just hit a multi-year high and PPI is running at 6.

Crypto

The Senate Banking Committee passed the Clarity Act, the first real crypto market structure bill to clear a major Senate hurdle. Coinbase helped shape it.

Fiscal & Trade

• Retail sales rose 0.5 in April, in line with estimates, but most of the gain came from higher gas prices.

• Initial jobless claims hit 211,000, above the 205,000 estimate.

International

• Trump invited Xi to the White House in September.

• China indicated it may reduce Iranian oil purchases and buy more US energy. Alaska LNG is the floated destination.

• Samsung's union is threatening an 18-day strike starting May 21. South Korea's finance minister called it a major risk to growth and exports.
  

What to Watch

The AI company quietly automating every Walmart distribution center already has 23 billion in orders on the book

It's just one of seven names in this free MarketBeat report.

Trump-Xi Day Two

Friday's working lunch is where real deliverables would show up. Watch grain futures, Boeing, and rare earth names into the open.

Warsh Takes The Fed Chair

Tomorrow. New chair, hot inflation, geopolitical pressure on oil. His first comments will matter.

Meta Layoffs May 20

Eight thousand cuts to fund the new AI engineering unit. Worth watching whether the market keeps rewarding these AI restructurings when it's Meta's turn.

Thanks for reading - you are now the more informed 🙂

- John

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