May 7th Market Overview

Happy Thursday

Weird split in the market today. AI and semiconductor names keep printing new records while Whirlpool is comparing demand to the 2008 financial crisis and Planet Fitness says their members can't handle a price hike. Two completely different economies showing up in the same session and I believe this will be a theme here into next year.

Oil briefly cracked below $100 on Iran deal hopes then bounced right back, which about sums up the mood. Everyone wants to believe a deal is close and the marekt can smell it.

Let’s dig in...

Today's Big Picture

Oil Swings on Iran Deal Hopes 
Brent crude dipped almost -7% off Iran deal hope this AM but its back above green by this afternoon. Iran is reviewing a US peace framework but a senior official said they won't reopen the Strait of Hormuz without major concessions and reparations. Saudi Arabia and Kuwait reopened their airspace and bases to the US military, clearing the way for ship escort operations to restart.

The AI Rally Is Reaching Historic Territory 
The semiconductor index ($SOX) is now trading further above its 200-day moving average than any point since March 2000. Apple hit an all-time high. The Nikkei blew past 62,000 for the first time as SoftBank posted its best day since the pandemic. Paul Tudor Jones said this feels like 1999 and warned the eventual correction could be "breathtaking." Roughly two-thirds of S&P 500 stocks near 52-week highs are tied to the AI buildout.

Multiple Consumer Stress Signals Flashing at Once 
Whirlpool said appliance demand hit 2008 lows and suspended its dividend. Planet Fitness paused price hikes because members are too cash-strapped. Shake Shack posted an operating loss as foot traffic dried up. The NY Fed survey showed inflation expectations rising and household finances deteriorating. Mortgage rates climbed back toward 6.5. These are different companies in different industries all saying the same thing.

Market Overview

Index Performance

Stock Spotlight

Arm Holdings $ARM ( ▼ 2.22% )  
fell after warning it cannot find enough chip supply. The company sees $2 billion in demand for its new data center products through 2028 but simply cannot meet it.

HawkEye 360 $HAWK ( ▲ 4.43% )  
had a strong debut on the NYSE after pricing its IPO at $26 and trading around $33.50 by midday. Defense and space names are getting a warm reception ahead of SpaceX's expected listing.

Planet Fitness $PLNT ( ▲ 2.25% )  
dropped after pausing price hikes on its Black Card membership. Management lowered their earnings outlook and said consumers are feeling stretched.

Big Name Updates

Apple $AAPL ( ▲ 0.72% )  
touched a new all-time intraday high of $290.33, its first since early December. The stock has outperformed the broader market over the past month and year.

Broadcom $AVGO ( ▼ 2.13% )  
dropped on a report that it will need to finance the first $18 billion phase of a chip venture with OpenAI. The deal hinges on Microsoft agreeing to buy a large portion of the initial output.

Qualcomm $QCOM ( ▼ 11.46% )  
came within striking distance of its all-time record close before pulling back. Executives are expected to join President Trump on his upcoming China trip alongside leaders from Nvidia and Apple.

SoftBank $SFTBY ( ▼ 1.02% )  
gained in Tokyo, its biggest single-day move since the pandemic. The company is effectively a direct bet on AI at this point given its massive positions in Arm and OpenAI.

Other Notable Company News

McDonald's $MCD ( ▲ 0.09% )  
beat on earnings and revenue. Value meals are keeping cash-strapped diners coming through the door.

Shake Shack $SHAK ( ▲ 2.37% )  
posted an operating loss and weak sales. Tourist-heavy locations are seeing fewer visitors as America loses appeal as a global destination.

DoorDash $DASH ( ▼ 1.36% )  
guided for strong order growth next quarter on better grocery and retail pickup.

Peloton $PTON ( ▲ 1.51% )  
beat revenue expectations on stronger equipment sales and subscriptions.

Tapestry $TPR ( ▼ 1.21% )  
reported Coach brand sales grew well above estimates. The stock still sold off because Wall Street already had a blowout priced in.

Snap $SNAP ( ▼ 3.48% )  
slipped after killing a deal with Perplexity to integrate AI search into Snapchat.

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Sector Watch

Bond Market

Yields ticked higher after falling the past two sessions. The 10-year breakeven inflation rate hit its highest since 2023, a sign traders are losing faith the Fed can keep prices in check.

The dollar fully erased its wartime gains and is now below where it was when the Iran conflict started. Strange for a currency that's supposed to be a safe haven.

Policy Watch

Fed 
The New York Fed consumer survey showed short-term inflation expectations crept higher in April as households feel the direct weight of elevated energy prices. Long-term expectations held steady, which is a small positive for the Fed.

Labor 
Initial jobless claims came in at 200,000 for the week, below what economists expected. The labor market looks stable despite all the geopolitical noise.

Fiscal 
The Trump administration has taken direct investment stakes in at least ten companies including an equity stake in Intel and a "golden share" in US Steel. Large companies are getting nervous about Washington expanding its reach into private boardrooms.

International

• Gulf nations agreed to reopen airspace and military bases to the US, clearing the way for Project Freedom to resume guiding commercial ships through the Strait of Hormuz.
  

• The dollar has now erased all of its wartime gains, falling below where it stood when the Iran conflict started in late February.
  

What to Watch

10 AI Stocks to Lead the Next Decade

MarketBeat did an excellent job on this AI infrastructure leaders report

April Jobs Report 
Nonfarm payrolls drop tomorrow morning at 8:30 AM. This is the most important data point of the week. After today's mixed labor signals, the market wants confirmation that hiring is holding up.

Airbnb and Coinbase Earnings 
Both report after the bell tonight. Airbnb will give a read on travel demand. Coinbase will show whether the crypto trading recovery actually has legs.

Semiconductor Stretch 
The semiconductor index is trading further above its long-term moving average than at any point since 2000. I am not calling a top but the rally is historically extended and worth watching closely.

Thanks for reading - you are now the more informed 🙂

- John

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