Morning in New York: China summit at the center of the agenda

Daily review and forecast of events on the U.S. stock market from Mikhail Denislamov, Deputy Director of Freedom Capital Markets Research.

This Wednesday, May 13, US President Donald Trump is traveling to China for talks with President Xi Jinping on May 14-15. The two sides will discuss the trade truce, supplies of American agricultural products and airplanes to China, as well as further relations between the world's two largest economies. Nvidia (NVDA) CEO Jensen Huang's participation in the visit reinforces expectations of easing restrictions on shipments of the H200 AI chip designed specifically for Chinese partners. It also contributes to hopes of increased technological cooperation between the two nations. NVDA stock saw increased volatility the day before as there was no certainty about Huang's inclusion in the delegation. Today, the White House confirmed that Nvidia CEO will join the talks after all. NVDA stock reacts to this news by rising more than 2% on the premarket.

The main macro publication of the day will be the Producer Price Index (PPI) for April. Consensus for the overall indicator: +0.7% mom after 0.5% in March, benchmark for the core indicator (excluding food and energy prices): +0.3% after 0.1% a month earlier. It will be important for market participants to assess the impact of the jump in hydrocarbon prices on the PMI dynamics.

Additional attention will be drawn to the reaction of long-term treasuries to macro data. The yield of 30-year securities again exceeded the psychologically significant 5% mark. We believe that growth above 5.1% will be an unfavorable factor for the shares.

Alibaba (BABA) released its quarterly results , with Nebius Group (NBIS), Tower Semiconductor (TSEM), Dynatrace (DT), Eos Energy (EOSE), Wix.com (WIX) and Vishay Intertechnology (VSH) also reporting results before the opening of main trading.

Cisco Systems (CSCO), USA Rare Earth (USAR), Doximity (DOCS), Manulife Financial (MFC), Copa Holdings (CPA), Spire Global (SPIR) and Aeluma (ALMU ) will report after the session.

S&P 500 futures are showing a sharp V-shaped recovery from yesterday's intraday low. We assess the balance of risks for the upcoming trades as positive with moderate volatility. Expectations from the negotiations between the leaders of the USA and China support demand for high-yield instruments, but it can be restrained by inflation risks and related dynamics of treasuries.

- Nextpower (NXT) shares are up about 14% after reporting strong earnings and raising guidance for FY 2027. The company expects revenue in the range of $3.8-4.1 billion with adjusted EBITDA in the range of $825-900 million, and forecasts non-tracker business, whose share of revenue should approach 15%, to grow by 40%. An additional positive driver was the announcement of plans to invest about $130 mln in the expansion of the power conversion business.

- Shares of Velo3D (VELO) are gaining about 23% on the back of the release of the preliminary report for the first quarter. According to the filing, the company's revenue grew 48% YoY and gross margin climbed to 17.2% from last year's 7.5%. The company reiterated its revenue guidance for 2026 in the range of $60-70 mln, expecting to achieve gross margins above 30% and reach positive EBITDA in the second half of the year.

- TransAct Technologies (TACT) is up about 2% after raising its 2026 profitability guidance. The company reiterated revenue expectations of $55-57 million and revised its Adjusted EBITDA guidance from $0.8-1.5 million to $1-1.75 million. The launch of BOHA! software platform has been postponed to the end of the second or beginning of the third quarter.

- Karman Holdings (KRMN) shares are down about 7% after reporting and order updates. Management raised revenue and adjusted EBITDA forecasts for 2026 to $720-735 million and $208.5-219.5 million, respectively, saying the company's demand commitments span a four- to seven-year horizon and the current backlog provides predictability of about 90% of revenues. However, investors are locking in profits due to the intense rally in the stock prior to the release.

- The securities of Red Cat Holdings (RCAT) are falling within 12% after the company announced plans to issue $200 mln of additional shares and give underwriters a 30-day option to purchase another $30 mln of securities. The raised funds are planned to be used for acquisitions, business expansion, R&D, capex and working capital. The market traditionally reacts negatively to the risk of dilution of shareholders' share.

- Intuitive Machines (LUNR) has been selected by the U.S. Space Force to participate in the Andromeda IDIQ contract program. This qualifies the company for orders in space control, including systems to detect, track and classify objects in geostationary orbit. The news supports LUNR's investment appeal by potentially expanding its contract portfolio.

Ma 12 trading on the U.S. stock exchanges ended mostly in the negative. S&P 500 lost 0.16%, Nasdaq 100 fell by 0.87%, Russell 2000 fell by 0.97%, only Dow Jones added 0.11%. The market was pressured by profit taking in the AI segment, rising yields of treasuries and a new jump in WTI oil above $100 per barrel.

The dynamics of the "Magnificent Seven" stocks was mostly negative due to the sell-off in the securities of semiconductor manufacturers and software developers. The healthcare sector (XLV: +1.96%) became the leaders of growth in the broad market. The IT sector (XLK: -1.51%) was the outsider due to the correction in the quotations of chipmakers and companies related to AI infrastructure.

Macrostatistics also contributed to a decline in risk appetite. The consensus CPI for Ma rose by 0.6% mom after 0.9% in Ma. At the same time, core CPI growth accelerated to 0.4% mom with average guidance of 0.3%. The acceleration in inflation was primarily driven by higher energy and housing prices. The NFIB Small Business Optimism Index was almost unchanged, but pointed to persistent inflationary pressures. Weekly ADP data showed an average increase in employment by 33 thousand.

Geopolitics and the energy market remained key sources of uncertainty. Iran intensified its blockade of the Strait of Hormuz, and supplies from Kharq Island were almost halted. Maersk suspended transit through the region. Against this backdrop, US Treasury bond yields rose by 4-5 bps, and the market revised downward forecasts of the likelihood of monetary policy easing. The rhetoric of the Fed's management representatives increased concerns about the sustainability of inflation.

- Sea Limited (SE: +13.1% at the close of trading on May 12) reported first quarter revenue and adjusted EBITDA above expectations. Gross merchandise volume (GMV), orders and revenue growth of the company's subsidiary Shopee reached record highs. Management reiterated its forecast for Shopee's GMV growth of approximately 25% in 2026 with stable adjusted EBITDA.

- Venture Global (VG: +14.2%) reported strong quarterly results and significantly improved its EBITDA guideline for the current year. The adjusted first quarter figure exceeded expectations due to strong results from the Calcasieu Pass and Plaquemines projects. Management narrowed the forecast range of liquefied natural gas supplies due to more active conclusion of long-term contracts.

- The FT reported on Trian Partners' search for external investors for a possible buyout of Wendy's (WEN: +16.9%). The news reinforced expectations of strategic changes and revaluation of the business.

- Zebra Technologies (ZBRA: +11.4%) reported above average market guidance and improved its full-year outlook. Management noted strengthening demand from e-commerce, automation and the direction of Physical AI (Physical AI), as well as solid growth in orders in the industrial segment.

- ZoomInfo (GTM: -32.8%) reported better than market-wide forecasts, but investors were alerted by slowing growth, lower annualized guideposts and the announcement of a 20% staff reduction amid uncertainty surrounding the impact of AI on demand in the software developer segment.

This article was AI-translated and verified by a human editor