May 8th Market Overview

Happy Friday

New all-time highs on the S&P and Nasdaq today, sixth straight winning week. Intel landed a deal to make chips for Apple and semis added over $400 billion in a single session.

Consumer sentiment hit its lowest reading ever at the same time. That ol’ gap between Wall Street and Main Street keeps getting wider.

Let’s dig in...

Today's Big Picture

1. Labor Market Finds the Sweet Spot

115,000 jobs added in April. Street expected 55,000. Unemployment held at 4.3 with retail and healthcare leading. The Fed has no reason to move and this number doesn't change that.

2. Hormuz Conflict Heats Up

US jets disabled two Iran-flagged oil tankers trying to break the naval blockade today. Rubio told reporters the US "should know something today" on Iran's response to the proposed peace framework. A senior Iranian official called the plan "unrealistic" and demanded reparations.

3. Chip Rally Broadens Out

Tech hit fresh records after the WSJ reported Intel $INTC landed a deal to make chips for Apple $AAPL. Micron $MU crossed $700 for the first time. AMD $AMD broke through a $700 billion market cap. Top chip names added over $400 billion in value on the day.

Market Overview

Index Performance

Stock Spotlight

Micron $MU ( ▼ 3.62% )  
crossed $700 after its highest-capacity solid-state drive started shipping. Seventh straight record. The company has added $437 billion in market cap since March 20 and is now the fourth-largest chip stock.

CoreWeave $CRWV ( ▼ 6.06% )  
guided second-quarter revenue below expectations and reported a wider loss. CEO Mike Intrator pointed to rising memory and storage component costs across the sector.

Rocket Lab $RKLB ( ▲ 0.18% )  
hit its first record since January after beating on revenue and announcing its biggest launch deal ever covering missions through 2029. Also landed a $30 million Anduril contract for hypersonic test flights.

Big Name Updates

AMD $AMD ( ▼ 2.29% )  
crossed a $700 billion market cap after beating on earnings and revenue earlier this week. Up roughly 20 percent on the week and 90 percent over the past month.

Toyota $TM ( ▼ 1.16% )  
estimated a $4.27 billion drag on annual operating profit from the Iran war. Shares fell despite solid earnings.

Coinbase $COIN ( ▼ 4.14% )  
posted a $394 million loss in Q1, its second straight quarterly loss. Revenue fell 31 percent as the crypto market stayed cold.

Monster Beverage $MNST ( ▼ 0.63% )  
rallied after international sales climbed nearly 45 percent for the quarter, helped by a weaker dollar.

Other Notable Company News

Fluence Energy $FLNC ( ▼ 15.66% )  
received upgrades from both HSBC and Roth Capital after a strong earnings beat. Second straight day of big gains.

Block $XYZ ( ▼ 1.44% )  
raised its annual earnings outlook after strong results from CashApp and Square.

Airbnb $ABNB ( ▼ 1.15% )  
raised its full-year outlook as global travel demand helped offset Iran war cancellations.

Shake Shack $SHAK ( ▲ 2.37% )  
caught an upgrade to buy from Stifel after falling 28 percent Thursday on an earnings miss. Rising beef costs were the main drag.

Expedia $EXPE ( ▲ 0.01% )  
fell after Q2 revenue guidance came in roughly in line but disappointed investors looking for upside.

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Sector Watch

Bond Market

Treasury yields barely moved after the jobs report. The 10-year held around 4.37 and the 2-year settled near 3.90. Traders have stopped worrying about the labor market and shifted focus to energy prices and Iran diplomacy.

• Wolfe Research says even if a deal happens, yields only come down 10 to 15 basis points, not back to pre-war levels

• Expect rates to trade in a 4.15 to 4.40 range going forward

Policy Watch

Fed 
The strong jobs number gives the central bank zero reason to cut. Inflation data is drifting in the wrong direction. The next move depends entirely on CPI.

Fiscal & Trade 
The Bank of Canada warned that a lack of port capacity at marine terminals is threatening its trade diversification plans. New bottleneck to watch.

International
resident Trump announced a three-day ceasefire between Russia and Ukraine starting tomorrow through May 11, including a 1,000-prisoner swap from each side. Both Putin and Zelensky agreed. First mutual pause since the war began.

European airlines received approval to use American-standard Jet A fuel to avoid a summer shortage. Before the war, Europe sourced roughly a quarter of its jet fuel from Gulf refiners. British Airways' parent said its fuel bill could reach $10.55 billion this year.

What to Watch

10 AI Stocks to Lead the Next Decade

MarketBeat did an excellent job on this AI infrastructure leaders report

Strait of Hormuz Timeline

A Goldman Sachs poll of 837 institutional clients found most don't expect shipping traffic to normalize until after July. Four in ten said even later than that. Freight costs and insurance premiums keep climbing.

Peace Talks

The US and Iran are reviewing a one-page framework to end the conflict. If both sides accept, negotiations could begin in Pakistan next week. Rubio said the US should hear back today. Binary outcome heading into the weekend.

Consumer Sentiment

Gas prices dragged consumer sentiment to a new all-time low of 48.2 in the May reading. One-third of respondents mentioned gas prices without being asked. Year-ahead inflation expectations sit at 4.5. Watch how retail spending holds up as consumers absorb these costs at the pump.

Thanks for reading - you are now the more informed 🙂

- John

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