May 5th Market Overview

Happy Tuesday

Records again and the chip rally finally broadened past Nvidia today. Intel and Micron both hit all-time highs, which I love to see, that kind of breadth is healthy. The IMF over here scrapping its own growth forecast from three weeks ago because the Iran war's dragging on.

Market is partying while the IMF is yelling be cautious. I'm keeping an eye on which one's right.

Let’s dig in...

Today's Big Picture

The Chip Rally spread Today

Apple is in early talks to have Intel make iPhone chips in America instead of Taiwan, and Intel closed at a record. Micron, the boring memory-chip maker nobody cared about for two years, has added $360 billion in market value since March on AI server demand. The story is no longer just Nvidia selling shovels. The whole chip aisle is open.

The IMF Says Forget Their Last Forecast

Three weeks ago the IMF said the global economy would grow 3.1 this year. Today they said scrap that, it's 2.5, and inflation is going to run hotter than they thought. The reason is the Iran war is now expected to drag on. Their managing director told governments to stop subsidizing consumers because it keeps oil demand high. The IMF does not flip in three weeks. They are telling us this war isn't ending soon.

AI Is Now Eating White-Collar Jobs

PayPal said it's firing one in five workers to redirect that money into AI. Coinbase fired 700 people the same day. Anthropic's CEO told a room of customers that some software companies are going to go bankrupt completely. If you own legacy enterprise software like Workday or Salesforce, the question is no longer whether AI hurts you. It's when.

Market Overview

Index Performance

Stock Spotlight

Cummins $CMI ( ▲ 2.46% )  
raised full-year guidance after Chinese data center demand drove power generation sales up double digits. The CFO said China revenue will grow this year instead of contracting. AI infrastructure capex is now a global story.

Archer-Daniels-Midland $ADM ( ▲ 2.24% )  
raised earnings guidance after Trump's biofuel mandate and war-driven energy tightness pushed soybean oil to multi-year highs. The crop processors are quietly one of the war's biggest winners.

Frontier Group Holdings $ULCC ( ▲ 6.85% )  
said it expects mid-single-digit revenue gains per available seat after Spirit's collapse last weekend. The CEO said the upside could be even higher. Discount carrier consolidation is finally creating real pricing power.

Big Name Updates

Anheuser-Busch InBev $BUD ( ▲ 9.36% )  
posted its first sales-volume growth in three years. Earnings and revenue both beat. Bud is running again after a long stretch of nothing.

Pfizer $PFE ( ▲ 0.48% )  
beat earnings and revenue. The reaction was muted because beats can't outrun the post-Covid revenue cliff.

Marathon Petroleum $MPC ( ▲ 3.33% )  
closed at all-time highs after a Goldman note flagged a refined products shortage. Refining margins are quietly the cleanest energy trade right now.

Other Notable Company News

Sonos $SONO ( ▼ 6.42% )  
closed lower after warning that memory chip cost inflation will pressure margins through fiscal year-end. Every consumer electronics name with a processor is now exposed to the same crunch.

Fidelity National Information Services $FIS ( ▼ 1.12% )  
rose on a partnership with Anthropic to build AI agents that hunt financial crimes inside bank accounts.

Bullish $BLSH ( ▲ 11.08% )  
closed higher on a $4.2 billion deal to acquire transfer agent Equiniti. Crypto exchanges are pivoting from token speculation to regulated infrastructure.

McDonald's $MCD ( ▲ 0.8% )  
hit lows not seen since January. The consumer is finally cracking. Tomorrow's print tells the tape.

Lululemon $LULU ( ▲ 1.12% )  
hit lows not seen since 2019. Premium discretionary is getting compressed across the board.

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Sector Watch

Bond Market

US 10-year held around 4.42 today. The 30-year stayed above 5. The bigger move was overseas: UK 30-year gilts hit 5.77, the highest since 1998, as markets now price almost three Bank of England rate hikes this year. I think the US long end follows.

Policy Watch

SEC

The regulator proposed letting public companies file earnings twice a year instead of quarterly. Sixty-day comment period now open. Trump has wanted this since term one.

I think the buy side will hate it. Less data means more rumor and more reliance on management spin.

AI and Government

Microsoft, Google, and xAI agreed to give the federal government early access to their frontier models for security testing. Anthropic and OpenAI already had similar deals. Every major lab is now plugged into Washington before public release.

Economic Data

• ISM services came in at 53.6, below the 54 estimate. New orders fell hard.

• JOLTS showed openings flat at 6.87 million. Hiring rate hit a two-year high.

• Trade deficit widened to $60.3 billion. Imports of cars and parts led.

• Gas hit $4.48 a gallon avg, the highest since July 2022.

What to Watch

10 AI Stocks to Lead the Next Decade

MarketBeat did an excellent job on this AI infrastructure leaders report

AMD After the Bell

The print drops tonight. If the second-half forecast disappoints, every chip name could give back what it gained today, and Nvidia trades the sympathy tomorrow.

McDonald's Wednesday

The stock just printed multi-month lows. If the Big Mac can't beat earnings, the consumer-cracking story moves to the front page.

Disney, Uber, Snap Wednesday

Three different reads on the consumer in one morning. Disney for parks and streaming. Uber for spending behavior. Snap for ad budgets.

April Nonfarm Payrolls Friday

A soft number gives the Fed cover to stay on hold. A hot number puts a hike back in the conversation. This is the week's big macro print.

Thanks for reading - you are now the more informed 🙂

- John

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