May 29th Market Overview

Happy Friday

Stocks closed out May at record highs, with tech doing the heavy lifting again. Dell's blowout earnings sure helped, and oil keeps sliding on hopes Washington and Iran reopen the Strait of Hormuz soon.

The market is leaning hard on that deal getting done, so I'm watching the headlines closely. Usually the money is right but sometimes it can be wrong ofc.

Let’s dig in...

Today's Big Picture

Dell's Blowout Says AI Spending Is Real 

Dell had a monster quarter. It raised full-year revenue guidance to $167 billion from $140 billion, and $60 billion of that is AI servers alone. That tells you companies are actually spending big on AI gear right now, not just talking about it. The report pulled the whole computer hardware group up with it and helped cap the Nasdaq's best two-month stretch since 2009.

Oil Heads For Its Worst Month Since 2020

Oil dropped hard in May, its worst month since the pandemic hit in 2020. The reason is simple. Traders think the US and Iran are about to reopen the Strait of Hormuz, the shipping lane where a fifth of the world's oil used to pass. Trump says he is making the final call today. Iran keeps sending mixed signals though, so this is not a done deal yet.

Warm Inflation Meets a New Fed Chair 

Inflation in April came in at its hottest since 2023, right as Kevin Warsh takes over the Fed. Jamie Dimon called this market exuberant at a conference today, and he has seen this kind of run before. Record highs and rising inflation are always an awkward mix for the fed. Warsh's first move on interest rates is the thing I am watching now.

Market Overview

Index Performance

Stock Spotlight

Dell $DELL ( ▲ 31.39% )  
had one of its best days ever. Beyond the AI server demand, it confirmed a $9.7 billion contract with the US military. One wrinkle worth knowing: the stock already ran up after disclosures that President Trump's money managers bought in.

Hewlett Packard Enterprise $HPE ( ▲ 12.94% )  
rode the Dell read-through higher and reports its own earnings Monday after the close.

Palantir $PLTR ( ▲ 9.24% )  
climbed after Dell's outlook validated their on-premise AI partnership from earlier this month.

Okta $OKTA ( ▲ 29.07% )  
lifted its full-year outlook and posted a higher profit, one of the day's bigger winners outside hardware.

Super Micro $SMCI ( ▲ 11.28% )  
caught the same AI hardware bid as buyers chased anything tied to server demand.

Big Name Updates

Apple $AAPL ( ▼ 0.29% )  
notched another record high. It has set new highs on most trading days this month. Tim Cook hands over the CEO job on September 1.

Amazon $AMZN ( ▼ 1.03% )  
got a price target bump from Truist, which sees its cloud business growing faster and for longer than Wall Street expects.

Alphabet $GOOGL ( ▼ 1.95% )  
is putting its automotive operating system into new in-car screens built by LG, a deal LG says cuts costs for automakers.

Eli Lilly $LLY ( ▼ 2.0% )  
rose after CVS Caremark agreed to cover its obesity drug Zepbound. Lilly cut the price to win the deal, betting volume more than makes up the difference.

Other Notable Company News

Gap $GAP ( ▼ 15.72% )  
cut its full-year sales outlook after weak dress sales at Old Navy, even as the namesake Gap brand had a strong quarter.

American Eagle $AEO ( ▼ 12.89% )  
fell after its core teen brand came in soft and second-quarter guidance disappointed.

Autodesk $ADSK ( ▼ 3.34% )  
dropped on worries it overpaid in its $3.6 billion deal for MaintainX.

Coinbase $COIN ( ▲ 3.68% )  
rose after the CFTC cleared bitcoin perpetual futures for US traders.

AST SpaceMobile $ASTS ( ▼ 17.23% )  
led space stocks lower after a Blue Origin rocket exploded during a ground test at Cape Canaveral last night.

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Sector Watch

Bond Market

The 10-year Treasury yield barely moved today and held near where it sat all week. The dollar slipped a touch. With inflation still running warm, money keeps flowing into ultra-short bond funds that pay a decent yield without much price swing.

Policy Watch

The Fed 

April inflation ran at its hottest since 2023, which has revived the case for tighter policy just as Kevin Warsh takes the chair.

• Former administration economists are publicly pushing for rate hikes this year.

• Warsh now has to choose between cutting, holding, or hiking as his opening move.

Trade 

Costco $COST said it will return the value of its tariff refunds to members through lower prices. The Supreme Court struck down those emergency tariffs back in February, and importers have since paid roughly $166 billion on penalties now ruled invalid. That money is starting to flow back.

Iran and Oman 

Trump says he is in the Situation Room making a final call on a 60-day ceasefire that would reopen the Strait of Hormuz.

• The holdups are real. Iran wants a say over the strait and access to frozen funds, while Washington wants its enriched uranium gone.

• Trump also warned Oman, a longtime mediator, against helping Iran toll the strait, which raises the stakes on already touchy diplomacy.

What to Watch

Does Trump Sign the Iran Deal 

The ceasefire still needs his signature and both sides keep contradicting each other. A yes reopens Hormuz and likely pulls oil lower. A no puts us back at square one.

Oil Could Snap Back

Exxon and Chevron executives warned this week that global inventories are near record lows. Even if the strait reopens, refilling those reserves could add over a billion barrels of demand and push prices back up into summer.

Hewlett Packard Earnings Monday

HPE reports after Monday's close. After Dell's number, the bar just got a lot higher.

Thanks for reading - you are now the more informed 🙂

- John

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