Morning in New York: market focus on Labor Ministry report and IT sector

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

The main macroeconomic event of the day is the publication of official statistics on the US labor market for Ma. Consensus on the number of new jobs outside agriculture: 88 thousand after 115 thousand a month earlier. The unemployment benchmark is expected to remain at 4.3%. This is in line with the expectations of Freedom analysts, who, however, do not rule out the indicator approaching 4.4%. At the same time, we predict the emergence of only 45 thousand new jobs in the non-agricultural sector. The optimal scenario would be a moderately weak, but not alarming report. Too strong data will encourage Treasury yields to rise and reduce our assessment of the likelihood of the Fed easing monetary conditions. Too weak a release would increase fears of a slowdown in the US economy and a decline in corporate profits.

A sentiment pressure factor in the AI segment was Anthropic's statements that leading labs should consider slowing down the development of frontier models. The company points to the risk that AI systems may gain the ability to improve without human input. Against this backdrop, there are growing concerns about future regulation, the pace of AI adoption and the sustainability of current multiples of companies that remain key beneficiaries of the trend toward increased investment in this area.

Nvidia (NVDA) CEO Jensen Huang begins a four-day visit to South Korea today. Amid growing interest in global supply chain sustainability, the company is looking to strengthen ties with the country's key technology groups. In an important development for the markets, Nvidia has certified Samsung Electronics, SK Hynix and Micron Technology (MU) as suppliers of HBM4 for its AI gas pedals. These chips are already in production and will be used for the Vera Rubin platform. According to media reports, Nvidia's CEO has scheduled meetings with executives from SK Group, LG Group and Naver. Investors will be on the lookout for statements regarding the future of AI infrastructure and Nvidia's expanded cooperation with South Korean companies.

In the focus of attention was the situation around SpaceX, which actually closed the way to accelerated inclusion in the S&P 500 index after the IPO. S&P Dow Jones Indices confirmed that the current criteria for selecting companies to the index, including the requirement for business profitability, remain in place. The decision means that even the largest offering in history will not be able to provide the issuer with a rapid influx of funds from index funds.

Futures on American stock indices are declining. We assess the balance of risks for the upcoming session as negative with a high level of volatility. Pressure on investor sentiment is exerted by profit taking in the technology sector after a prolonged rally. Due to concentration of funds in shares of the largest companies, market participants prefer to act with caution. The correction scenario may not materialize if the S&P 500 returns to above 7595 points.

- Shares of Lululemon Athletica (LULU) fell more than 11% after downwardly revising down its fiscal year (FY) 2026 outlook. The company cited continued weakness in U.S. consumer demand, as well as the negative impact of import tariffs and rising costs.

- Guidewire Software (GWRE) shares are losing about 13%, although its quarterly report beat expectations. The company's revenue grew 27% YoY. Guidewire's guidance for the current FY was raised. However, disappointment was caused by the annualized recurring revenue (ARR) forecast, which was slightly below consensus.

- DocuSign (DOCU) is down about 5% as its FY 2027 guidance only reaffirmed the market's average guidance. Meanwhile, the company's quarterly revenue rose 9% YoY to $830 million, and adjusted EPS reached $1.09 with a consensus of $0.99.

- Merlin (MRLN) shares soared more than 35% on news that the company has successfully completed a key phase of development of an autonomous control system for C-130J military transport aircraft under the U.S. Special Operations Command program. The company was able to move into the equipment integration phase and subsequent flight testing.

- ServiceTitan (TTAN) shares are up more than 14% after strong quarterly results and a higher outlook for the current fiscal year. The company's revenue increased by 25% YoY to $268.8 mln, and adjusted EPS exceeded analysts' expectations. Also supporting the quotes was the upward revision of the full-year revenue forecast to $1.13-1.14 bln and a solid guidance for the current quarter.

- Shares of Argan (AGX) are up more than 13% on the back of the release of its first quarter 2027 FY report. The main positive driver remains the energy segment with a share in revenue of almost 78%. The purchase of the issuer's securities was stimulated by reports on large EPC contracts for the construction of energy facilities, which strengthen the company's order book and increase the predictability of its financial results.

Trades on June 4 on American stock exchanges ended mixed. S&P 500 added 0.41%, Dow Jones rose by 1.73%, having updated the historical maximum, Russell 2000 rose by 1.45%, and Nasdaq 100 fell by 0.53%. The growth of quotations was stimulated by the decrease in yields of trejeris, weakening of fears about increase of FRS rates, as well as some stabilization of the situation in the Middle East. Demand shifted towards cyclical and protective sectors, buyers' activity in the technology segment weakened somewhat.

The healthcare sector (XLV: +3.07%) emerged as the leader of growth supported by pharmaceutical, biotechnology and medical companies. The technology sector (XLK: -1.56%) was the outsider. It was pressured by the correction in the semiconductor industry after the publication of Broadcom (AVGO: -12.59%). Although the company's results and forecasts were perceived mostly positively, they failed to justify the inflated investor expectations formed around the AI sector.

In the shares of the "Magnificent Seven" the dynamics was mixed. Alphabet (GOOGL: +3.68%) and Nvidia (NVDA: +1.82%) looked better than the market, while some of the largest technology companies corrected after the chipmakers. Investors continued to take profits in some stocks after a strong rally in recent months, but interest in AI remains high.

Macroeconomic statistics was mixed. The number of initial applications for unemployment benefits for the week rose to the maximum since February 225 thousand against the consensus of 213 thousand. The final estimate of labor productivity growth in the first quarter was revised from 0.8% to 0.3%. The increase in unit labor costs slowed to 1.8%. Despite the mixed data, investors are forecasting a less tight monetary policy course from the Fed.

- Blackstone (BX: +7.5%) updated on the BCRED direct lending fund. Withdrawal restrictions remain in place, but capital outflows have slowed. Management says there is steady demand for the company's other products for high net worth investors.

- Bloomberg reported that individual members of the Glazer family are considering selling part of their stake in the Manchester United club (MANU: +7.2%).

- Brown-Forman (BF.B: +2.8%) reported better-than-expected revenue for its fiscal fourth quarter. The company reported strong demand for new products, positive effects from the reorganization of its distribution network in the US and the implementation of a cost-cutting program. However, management forecasts zero organic sales growth in fiscal 2027 amid continued pressure on consumer demand.

- Media reported that Sleep Number (SNBR: -67.1%) is preparing for possible bankruptcy proceedings. According to sources, the manufacturer of mattresses and sleep products is considering options for financial restructuring, including the sale of the business. The main pressure factors remain high debt load and deteriorating financial performance of the company.

- Ciena (CIEN: -13.7%) reported better-than-expected quarterly results and raised its revenue forecast for the current fiscal year, noting strong demand for optical networking and data center equipment. However, investors preferred to lock in profits as CIEN stock has added more than 160% since the beginning of the year, so the strong results were already largely priced in.

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