May 20th Market Overview

Happy Wednesday

Oil dropped below $100 for the first time in weeks after three tankers actually crossed through Hormuz last night.

Whole market exhaled today into green on another potential Iran deal. Nvidia earnings after the bell.

Let’s dig in...

Today's Big Picture

Oil Falls hard on Iran Deal Hopes and Hormuz Traffic

Three supertankers crossed the Strait of Hormuz today, the most oil traffic since the war kicked off in late February. Trump told reporters the US is in the "final stages" with Iran, and WTI closed below $100 for the first time in weeks. I think the market is getting ahead of itself, but the tanker crossings are a real signal that some countries are willing to test the waters. Literally.

Bond Market Gets a Breather After the Danger Zone

The 30-year yield hit its highest level since 2007 yesterday before pulling back today. HSBC called Treasurys "firmly in the danger zone," and Deutsche Bank warned yields could revisit Liberation Day panic if the ceasefire breaks down. Fed minutes showed most officials leaning toward rate hikes if inflation stays above two percent. Oil coming down would fix a lot of this, which is why the Hormuz crossings mattered so much.

Nvidia Earnings Tonight

The most valuable public company reports after the close. Wall Street expects $73.1 billion in data center revenue, up from $62.3 billion last quarter. Nvidia has dropped the day after its last three earnings reports, even when it beat estimates. Chips now make up about 19 percent of the S&P 500, a record, so tonight matters for the whole index.

Market Overview

Index Performance

Stock Spotlight

TJX Companies $TJX ( ▲ 5.87% )  
posted strong results with sales up nine percent for the quarter. Fuel hedges protected the company from rising gas prices tied to the Iran war, and they raised full-year guidance.

Cava $CAVA ( ▲ 3.52% )  
beat on earnings and revenue, then raised its full-year EBITDA forecast. The company earned 20 cents per share on $438 million in revenue against estimates of 18 cents and $411 million.

Target $TG ( ▲ 4.54% )  
T had a weird day. Beat estimates on both lines with its biggest sales gain in years, then executives got cautious on the conference call. They warned that tax refunds may have inflated early-year spending and that the macro outlook is uncertain. Stock reversed hard.

Big Name Updates

Nvidia $NVDA ( ▲ 1.17% )  
traded higher heading into tonight's report. Key watch items: CPU rack revenues, progress on the Groq acquisition, and China sales after customs banned the RTX 5090D V2 chip during Jensen Huang's Beijing visit.

GameStop $GME ( ▲ 2.62% )  
increased its eBay $EBAY stake to 6.55 percent from about five percent. eBay already rejected the $56 billion takeover bid, calling it "neither credible nor attractive." Ryan Cohen says he's not done.

Samsung
is bracing for an 18-day strike starting tomorrow after wage talks broke down. 47,000 employees are set to walk out over how AI-driven profits should be shared. South Korea's government warned it could invoke emergency powers.

Other Notable Company News

AMC Entertainment $AMC ( ▲ 13.6% )  
rallied after CEO Adam Aron disclosed he bought 250,000 shares and posted on X that he has "enormous confidence" in the company.

Hasbro $HAS ( ▼ 9.57% )  
was the worst performer on the S&P 500 today. A cybersecurity breach disclosed in April hasn't been fully resolved and costs may hit second-quarter results.

Intuit $INTU ( ▼ 3.51% )  
is cutting about 17 percent of its workforce, roughly 3,000 employees.

Lowe's $LOW ( ▲ 0.75% )  
beat estimates but the stock fell. CEO Marvin Ellison called this "the most difficult housing market I've faced since the financial crisis."

Alibaba $BABA ( ▼ 0.78% )  
integrated its Qwen AI with Taobao for conversational shopping.

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Sector Watch

Bond Market

The global bond selloff finally took a breather today. The 10-year yield dropped to around 4.564, and the 30-year pulled back from 5.197, its highest since July 2007.

• Both moves came on optimism around Iran and the Hormuz tanker crossings

• The New York Fed's recession probability model puts the odds of a recession next April at roughly 18 percent, the lowest reading since 2023

• Worth noting: that model only looks at the yield curve, not oil shocks

Policy Watch

The EU reached an agreement to eliminate tariffs on US industrial goods after Trump pressured them for failing to follow through on last year's trade deal.

• The legislation includes a sunset clause and the ability to suspend concessions if the US violates terms

• Still needs European Parliament approval

International

Iran and the US are in a stalemate, with Tehran blockading the Strait of Hormuz and Washington blockading Iranian ports. Trump said he called off strikes planned for Tuesday at the request of Gulf state leaders who assured him a deal was close. Iran's Revolutionary Guard warned of "crushing blows in places you do not expect" if military action resumes.

Citi warned Tuesday that the market is underpricing the risk of a long disruption and expects Brent near $120 in the near term.

• Trump has repeatedly made optimistic statements about a deal, only for tensions to escalate again

• Three supertankers did cross Hormuz today, but Iran and the US remain far apart

What to Watch

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Nvidia Earnings

The single most important earnings report this quarter. Beyond the top-line beat or miss, watch gross margin guidance and any commentary on how China restrictions are affecting the business. The stock has dropped the day after earnings three straight quarters. That pattern either continues or breaks tonight.

SpaceX IPO Filing

The prospectus could drop as early as today. This would be the largest IPO in history and will give us the first real look at SpaceX's financials and investor structure. Jeff Bezos also said today that Blue Origin is considering outside investment for the first time.

Thanks for reading - you are now the more informed 🙂

- John

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