May 21st Market Overview

Happy Thursday

Markets shook off a rough morning to finish mostly green. A potential ceasefire between the US and Iran flipped oil prices in real time and gave stocks enough reason to rally.

Nvidia beat on everything and the stock still went red. I dont think a company could post more beautiful earnings then that.

Let’s dig in...

Today's Big Picture

1. Iran Peace Deal Flips Markets Midday 

The morning started ugly. Iran's supreme leader ordered that near-weapons-grade uranium must stay in the country, a direct challenge to Trump's stated red line. Oil ripped above $108. Then Iranian media reported a Pakistan-mediated deal that includes a ceasefire and free navigation through the Strait of Hormuz. Secretary of State Rubio confirmed "some good signs." Oil reversed hard and dropped below $97 on WTI.

2. Nvidia Posted Record Numbers and the Stock Still Flopped

Revenue came in at $81.6 billion. Data center revenue alone hit $75.2 billion, a record. The company mapped out a brand new $200 billion CPU market through its Vera chip and expects $20 billion in standalone CPU revenue this year. None of it was enough. Investors want more from this name and I'm not sure what "more" looks like at this point.

3. US Government Bets $2 Billion on Quantum Computing 

The Trump administration is granting $2 billion to nine domestic quantum companies and taking equity stakes in return. IBM $IBM gets $1 billion of the total. GlobalFoundries $GFS gets $375 million. D-Wave Quantum $QBTS, Rigetti Computing $RGTI, and Infleqtion $INFQ each get $100 million. This moves quantum from the research lab into the core of US industrial policy.

Market Overview

Index Performance

Stock Spotlight

Walmart $WMT ( ▼ 6.63% )  
beat on sales and e-commerce grew 26 percent. But the stock got hit hard after the company left full-year guidance unchanged and issued a slightly light Q2 outlook. The CFO noted consumers may feel the pinch now that tax refund season is over. On pace for its worst day since 2023.

Deere $DE ( ▼ 5.64% )  
posted solid quarterly numbers but left its full-year profit forecast unchanged. Low crop prices and high input costs are keeping farmers from buying new equipment. Construction equipment was a bright spot.

Spotify $SPOT ( ▲ 12.37% )  
rolled out an AI tool for making song covers with Universal Music artists. Management laid out an aggressive plan to reach one billion subscribers and $100 billion in revenue by the end of the decade.

Intuit $INTU ( ▼ 20.29% )  
is laying off 17 percent of its workforce, roughly 3,000 people. Revenue also missed. The CFO pushed back on the idea that AI was replacing these jobs, calling it "an overused narrative." Stock fell roughly 20 percent.

Big Name Updates

Stellantis $STLA ( ▲ 0.33% )  
is focusing its $70 billion turnaround on Jeep, Ram, Peugeot, and Fiat. Chrysler and Dodge get pulled back. The company targets 10 percent returns in North America by 2030, up from 2.5 percent last quarter.

Eli Lilly $LLY ( ▲ 2.43% )  
shared data showing patients on the highest dose of retatrutide lost up to 28 percent of body weight at 80 weeks. JPMorgan called it best-in-class for high-BMI patients. This is the next-gen follow-up to Zepbound.

Arm Holdings $ARM ( ▲ 12.08% )  
is getting called the prime beneficiary of Nvidia's Vera CPU push. Jefferies put a $290 price target on it and called the company's $15 billion 2031 revenue guide conservative.

Other Notable Company News

Kroger $KR ( ▼ 2.29% )  
is planning its biggest price cuts in years under new CEO Greg Foran to win back share from Walmart, Costco $COST, and Amazon $AMZN.

Ford $F ( ▲ 3.37% )  
assumed a $3.8 billion DOE loan tied to its Kentucky battery plant after exiting its BlueOval SK joint venture. The loan carries a 4.814 percent rate and matures in 2040.

Advanced Micro Devices $AMD ( ▼ 0.63% )  
launched a $3,999 local AI PC to compete directly with Nvidia's DGX Spark. Also planning more than $10 billion in semiconductor investment in Taiwan.

Critical Metals $CRML ( ▲ 3.95% )  
signed a 15-year rare earth offtake deal for concentrate from its Tanbreez project in Greenland.

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Sector Watch

Bond Market

Yields were volatile all day, rising early on the Iran uranium news then pulling back after peace deal reports. The 10-year settled around 4.58 percent.

• The 2-year yield is trading well above the Fed's target range, which tells you the bond market thinks rates need to go higher

• 30-year mortgage rates hit 6.51 percent this week, a nine-month high

• Roughly 60 percent of traders now see rates ending the year higher than current levels

Tomorrow brings the University of Michigan's final consumer sentiment reading for May.

Policy Watch

Fed 
Richmond Fed President Tom Barkin said the central bank can afford to be patient for now, but asked the right question out loud: if supply shocks keep coming, can the Fed keep waiting?

• Barkin noted that raising rates doesn't fix supply-driven inflation. It doesn't reopen trade routes or restart factories.

• But he acknowledged the US may be entering an era of more frequent supply shocks from geopolitics, trade breakdowns, and rising government debt

Iran and Oil T
his is the single biggest variable in markets right now. Oil swung more than $10 per barrel intraday on the back-and-forth. Even if a deal gets announced tonight, Abu Dhabi National Oil's CEO said Middle East oil flows won't fully recover until well into 2027. The Strait of Hormuz closure has been the most severe supply disruption on record.

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.

OpenAI IPO Filing 
Could come as early as Friday. SoftBank, which has $44 billion invested, rallied nearly 20 percent in Tokyo on the news. This will be the other massive listing alongside SpaceX this summer.

Consumer Sentiment 
University of Michigan releases its final May reading tomorrow. Worth watching how everyday consumers are processing $4+ gas prices.

Samsung Labor Vote
Unionized workers vote Friday through May 27 on the tentative deal that averted a strike at the world's largest memory chip maker.

Thanks for reading - you are now the more informed 🙂

- John

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