Things you need to know
- And the push continues even as the headlines remain conflicted.
- The Strait is still closed, Iran attempts to attack, the US said ‘not so fast’.
- Oil down yesterday, but higher today. Bonds steady, Gold weaker.
- PCE out at 8:30.
- Try the Sausage, Peppers and Onions
Good morning… I am joining The Big Money Show on Fox Business today from 1 – 2 pm. Join us.
And just like that — the market did it again. Another record close for the Dow. Another record close for the S&P. Another record close for the Nasdaq.
On the surface? You’d think it was all good, but underneath it was a bit chaotic. The market continues to trade headline-to-headline…rumor-to-rumor…and yes missile-to-missile. And yesterday we got all of it – headlines, rumors and yes, missiles and drones – in a single session. Stocks started out strong – got whacked, stood up again, then got whacked again and then ended higher as the closing bell rang as investors, traders and algo’s digested the action on the other side of the world.
At the end of the day – here is what it looked like – The Dow added 182 pts, the S&P eked out a 1 pt gain, the Nasdaq added 18 pts, the Russell lost less than 1 pt, the Transports rose by 287 pts or 1.4% -again the clear winner of the day, the Equal Weight S&P lost 4 pts while the Mag 7 gained 332 pts or 0.9%.
And here is how the 11 sectors responded – Consumer Discretionary was the star performer up 1.8% and what is interesting about that is – that sector is now positive on the year, Consumer Staples gained 1.2%, Communications added 0.6% leaving it still negative on the year, Healthcare added 0.2% leaving it negative on the year as well while Basic Materials gained 0.4%.
Industrials closed flat, Utilities lost 0.4%, Tech gave back 0.4%, Financials lost 0.8%, Energy lost 1.5% – and is now down 8% in one week as traders unwound the ‘higher forever’ trade that dominated the conversation just weeks ago, while Real Estate gave back 0.2%.
Airlines, retailers and consumer discretionary names all caught a strong bid as oil prices collapsed.
Semis, cybersecurity and software all took a breather after their monster runs.
And honestly? That’s healthy. Because this market is beginning to trade the math rather than the drama. Here’s what happened…
So, let’s lay it out – At mid-morning, Iranian state TV dropped what sounded like a breakthru – ‘Iran was prepared to restore full shipping through the Strait of Hormuz within 30 days as part of an “unofficial framework” with Washington’.
Oil plummeted (that’s a positive) falling nearly 5%, as markets prepared to open…..Futures were up, Bonds rallied. Yields dropped and we were Off to the Races!
And then — the White House denied the story – calling it a “complete fabrication.” And then the missiles started flying, boats and drone sites got blown up and you can guess what happened next – Oil reversed. Bonds got sold and the algo’s went from buy to sell in a blink of eye…. One minute you’re pricing in $75 crude and global peace. The next minute the US military is confirming new airstrikes in southern Iran while the IRGC claims it fired at an F-35 and multiple drones. Both sides talking out of both ends – yet somehow — through ALL of it — the Dow, S&P and Nasdaq managed to close at another all-time high. I mean you can’t make this up.
Now here’s what actually matters. The market is betting on the math rather than the drama. Follow me here because there are two equations to consider. Both important but one just a little MORE important.
The first is oil –
Two weeks ago, WTI was trading at $105 Yesterday it settled at $89.40. That is a 15% decline in 2 weeks – leaving oil to trade back at levels last seen in late April/Early May. Now the trader types – that bought oil at $105 – are not happy, but the market is celebrating….….Falling oil prices changes EVERYTHING.
Lower oil eases inflation fears. Lower inflation fears push bond prices higher and yields lower. Lower yields continue to support equities.
The second is earnings….and this is the MORE important one….
And that brings me to my friend Ed Yardeni – one of if not the sharpest mind on the street. And while he is not arguing against the oil story he wants investors to focus on what he now calls the ‘FEMO’ Trade….Yes FEMO, not FOMO….
FEMO is the Fabulous Earnings Momentum trade. FEMO is earnings delivering. Companies beating and Guidance strong. It’s the fundamentals doing the real work.
So, let’s be really clear about what just happened in Q1 earnings season. Wall Street walked in expecting 13% earnings growth. That was the bar to beat. What we got was 28.4% – more than DOUBLE the original expectation -the strongest earnings growth since Q4 2021. 84% of S&P 500 companies beat estimates — the highest beat rate since Q2 2021 – and they didn’t just clear the bar, they cleared it by 18% on average, versus the historical norm of roughly 7%.
Revenue growth came in at 9.7% versus the 8.2% expected. And profit margins? They hit 14.8% — the highest level ever recorded. Not the highest in five years. Not the highest since the pandemic. The highest in recorded history.
And this happened – ALL of it – while a war was raging in the Middle East, the Strait of Hormuz was largely closed, oil had spiked, and every economist on the planet was warning about geopolitical headwinds crushing margins.
THIS is why the market is at all-time highs. THIS is what Yardeni means by FEMO — Fabulous Earnings Momentum. This isn’t hype. This isn’t FOMO. This is the fundamental earnings story doing exactly what it’s supposed to do. And with analysts projecting 18% full-year earnings growth for 2026? S&P 8,000 suddenly looks a lot less aggressive. Period.
And to prove that point – after the bell last night we got more good news….SNOW delivered a monster quarter. $1.39 billion in revenue — up 33% year-over-year — while product revenue surged 34%. EPS beat, backlogs exploded 38% to $9.2 billion, and existing customers continued spending more. Then came the real kicker: raised guidance, expanding margins, a massive $6 billion AWS partnership, and another move deeper into agentic AI with the Natoma acquisition.
The message was crystal clear: the AI data-cloud trade is not only alive — it’s accelerating and producing REAL revenue growth. Period. The stock is up 38% in the pre-mkt.
Marvell – another beast….they delivered record revenue, record cash flow and strong forward guidance — with management saying growth should continue accelerating throughout FY2027.
NVDA may still be the heartbeat of the AI universe, but Marvell represents the arteries, veins and nervous system underneath it (we discussed this on Tuesday) — networking, optical connectivity, custom silicon, cloud infrastructure and data-center plumbing. Wednesday night was another reminder that the AI ecosystem trade remains very much intact. MRVL is down 3% in pre-mkt as the trader types take cash off the table.
CRM – This one was nuanced. Great quarter, but lite guidance. Revenue up 13%, EPS up 50%, Agentforce ARR exploding 205%, and management announcing a massive $25 billion buyback — the largest in company history.
But the guidance came in just a touch light. And in this market, “just a touch light” gets punished immediately. The stock sold off as investors continue wrestling with the bigger question: does AI ultimately accelerate Salesforce’s growth…or eventually disrupt the traditional CRM model that built the company?
The numbers said buy. The guidance said ‘maybe’. The stock is down 2% in the pre-mkt.
Now this morning — oil is bouncing back. WTI is up another $1.50 or 1.7% to $90.19 as traders continue trying to handicap the next headline coming out of the Middle East. One minute the market is pricing in a Hormuz reopening and $80 crude… the next minute it’s pricing in renewed clashes, tighter supply and another geopolitical shock. That’s the environment we are trading in right now.
Bond yields are relatively steady after yesterday’s rally. The 2 yr is yielding 4.05%, the 10 yr sits at 4.49% while the long bond is back hovering around that psychological 5% line at 5.01%. Stocks can tolerate yields here — but they do NOT want to see another sharp move higher.
Gold? Gold looks confused. It’s down another $57 this morning on top of yesterday’s $52 decline — now trading at $4,395 and down roughly 17% from the March highs, leaving it essentially flat on the year. Technically, it is now sitting right on top of major trendline support. If that level fails to hold, you could easily see a test of the $4,100 area next.
The selloff suggests traders are unwinding parts of the geopolitical fear trade as oil stabilizes, yields remain elevated and investors rotate back toward risk assets. But make no mistake — the market is still struggling to price the competing narratives of Middle East tensions, sticky inflation and higher-for-longer rates.
And then there’s today’s main event — the PCE report. This is the Fed’s preferred inflation gauge and it hits at 8:30 AM… before the market opens, before Dell and Costco report, and frankly before most people have had their coffee.
Expectations are for headline PCE to rise 0.5% month-over-month and 3.8% year-over-year, while Core PCE is expected at +0.3% m/m and +3.3% y/y — both still running hotter than the Fed would like.
If this number comes in hot, it could quickly reignite the inflation and “higher-for-longer” narrative that the market was briefly trying to ignore yesterday as oil collapsed and yields eased.
We also get Durable Goods, the second read on Q1 GDP expected at +2%, along with New Home Sales and Building Permits — giving investors another look at the strength of both the consumer and the economy.
And after the bell? Dell and Costco.
Two very different companies — but both important reads on the economy. Dell gives us another look into enterprise AI spending, data-center demand and corporate capex trends… while Costco will tell us whether the consumer remains resilient or is finally beginning to crack under the weight of higher prices and elevated borrowing costs.
So, take a shower, grab the coffee and get ready – because between inflation data, oil volatility, geopolitical headlines and another round of major earnings — today could get interesting fast.
European markets are mostly lower.
US Futures are down… Dow futures – 43 pts, S&P’s -12 pts, the Nasdaq -110 while the Russell is -10.
The S&P closed at 7,520 — up just 1 point. And honestly? The market feels a bit tired. Which, by the way, is NOT a bad thing. Everyone needs sleep.
Momentum remains stretched. The RSI is still flashing overbought conditions and the index is now trading roughly 6% above trendline support. That’s not a red light — but it IS a flashing yellow one.
Remember — markets can stay overbought far longer than most people expect. But eventually they need to either pull back, rotate or simply consolidate to digest the move. That’s healthy. That’s normal.
Which is why discipline matters right here. This is NOT the moment to suddenly get emotional, chase extended names or get FOMO’ized because stocks continue making new highs. If you are properly invested based on who YOU are and what your risk tolerance is — then stay disciplined and let the process work.
And if you’re unsure whether the risk in your portfolio actually matches your goals, your timeline or your tolerance for volatility — give me a call at 561-931-0190. Happy to do a complimentary portfolio review and risk assessment.
Take good care,
Kp
[email protected]
Source: Bloomberg, CNBC, Reuters, Wall Street Journal
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Sweet Sausage w/Peppers and Onions
This is a classic and easy dish to make and goes along way with your weekend guests.
For this you need: Italian Sweet Sausages, Onions, Red, Green and Yellow Bell Peppers, Garlic, s&p, and fresh Italian rolls (subs).
Preheat grill to high.
Start by heating up some olive oil on med hi heat in a large sauté pan. Add in a couple of smashed garlic cloves and sauté. Do not burn.
Now add in the sliced onions – allow to soften just a bit….next add in the sliced peppers – now make sure you have a pan big enough to accommodate. Season with s&p and Cover and reduce heat to med.
Now – place the sausages on the grill and cook…do not let the flames burn the sausages…. Once you have browned the sausages remove from the grill and set aside.
Now – in a large aluminum pan – you can do it a couple of ways – place the whole sausages in the pan and then cover with the peppers/onions – cover with foil and keep warm in the oven until you are ready.
Or – you can slice the sausages into bite size pieces and then place in the aluminum pan and cover with the peppers and onions. It really depends on how you are going to use it…Will you make submarine sandwiches or will you eat them appetizer style?
Buon Appetito