Morning in New York: Nvidia will be on the bullish side

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

Iran's response to the updated U.S. conditions will be important for participants in the upcoming trades. Washington has tightened the requirements for the framework agreement, including on the nuclear program and the unblocking of the Strait of Hormuz. At the same time, the US Central Command reported new strikes on Iranian radar sites and drone control points in the Gorouk area and on Qeshm Island. The U.S. side explained the attacks as a response to the destruction of its UAVs over international waters and said that the ceasefire regime was being maintained. Iran, for its part, reported an attack on a U.S. facility in Kuwait, but there was no confirmation of a successful base hit. At the same time, Israel is increasing military pressure on Hezbollah.

This Monday will see the final manufacturing PMI data from S&P Global for Ma (consensus: 55.3 points, April: 55.3), and the same index from ISM (consensus: 53.2 points, April: 52.7). Construction spending statistics for April (consensus: +0.3%, March: +0.6%) will also be released. The better-than-average data will support cyclical sectors, although it may limit expectations of a rate cut. Weaker than expected statistics will signal increased risks of economic slowdown.

Former Fed Chairman Jerome Powell will comment on current monetary policy and the outlook for the U.S. economy. Board of Governors member Christopher Waller will talk about inflation, the labor market and the future trajectory of the federal funds rate. Statements from both speakers will influence expectations for monetary policy, especially if the focus is on the sustainability of inflation, expensive oil or signs of cooling employment. Tough rhetoric from Waller and Powell could put pressure on the markets.

Hewlett Packard Enterprise Co (HPE) will release quarterly results after the close of major trading.

Futures on American stock indices demonstrate moderately positive dynamics. We assess the balance of risks for the upcoming session as neutral with moderate volatility.

- Shares of Nvidia (NVDA) are growing by about 3%, and Arm Holdings (ARM) securities are rising by more than 8% after reports about NVIDIA's entry into the personal computer processor market, where Intel (INTC), AMD (AMD), Qualcomm (QCOM) and Apple (AAPL) currently hold key positions. Shares of the latter are moderately declining due to the upcoming intensification of competition in the segment. The new chips will be built on Arm architecture and designed for Windows PCs. Devices based on them are expected to be released by Microsoft (MSFT) - in the Surface line, Dell Technologies (DELL), HP (HPQ), Micro-Star International (MSI, 2377.TW), ASUSTeK Computer (2357.TW) and Lenovo (0992.HK).

- Taylor Morrison Home (TMHC) shares could rise sharply on the back of an agreement to be acquired by Berkshire Hathaway (BRK) for $72.5 per share in cash, which implies a 24% premium to the closing price on May 29. Thus, the developer's equity is valued at about $6.8 billion and the business is worth about $8.5 billion. The deal may support interest in other publicly traded developers as it confirms the strategic buyer's demand for assets in the housing sector.

- Summit Therapeutics (SMMT) is up more than 11% on the back of strong late-stage data from its ivonescimab trial for the treatment of one of the most common types of lung cancer. When combined with chemotherapy, the drug reduced patients' risk of death by 34% compared to an alternative treatment regimen. This is an important result, as the company showed improvement not only in technical clinical indicators, but also in a key criterion for oncology drugs - patient life expectancy.

- SpaceX has been awarded a $4.16 billion U.S. Space Force contract to build a system to detect and track aerial threats from orbit. The agreement strengthens the company's position in defense space programs and confirms the high demand from the government for satellite infrastructure. An additional support factor for SpaceX was the crash of Blue Origin's New Glenn rocket: restoration of the launch site may take at least six months, which will reduce competition in the commercial launch market.

Ma 29 trading on American stock exchanges ended in the plus, but the dynamics was uneven. S&P 500 (+0.22%) and NASDAQ 100 (+0.36%) set new historic highs. The Dow Jones added 0.72%, while the Russell 2000 lost 0.59%. The broad market index closed in positive territory for the ninth week in a row.

The IT (XLK: +2.23%) and financial sector (XLF: +0.6%) were trading in the green zone, while the others corrected. Cyclical consumer goods (XLP: -1.8%) and energy (XLE: -1.16%) were the leaders of the decline.

The market dynamics continued to be driven by the information agenda related to AI infrastructure. Strong results of Dell Technologies (DELL: +32.76%) supported manufacturers of technological equipment and confirmed the steady demand for server capacities. Software stocks recovered, while chipmakers lost some of their previous gains. Large technology companies generally looked weaker than the market, the exception being Microsoft (MSFT: +5.45%).

The price of WTI Mark crude oil fell by 2.4% in Friday trading and has fallen by almost 10% over the week. The geopolitical risk premium is declining on expectations of progress in negotiations between the US and Iran. Pressure on consumer defensive securities was intensified by weak results of individual retailers.

Yields on the short end of the curve fell by about 2 bps.

The macroeconomic background was calm. The Chicago PMI for Ma rose to 62.7 points with the consensus of 50.8 and the previous value of 49.2, reaching the maximum since January 2022. Comments from Fed officials sounded more balanced after the harsh rhetoric of recent days. Speakers reiterated the priority of fighting inflation, but also noted signs of cooling labor market and risks of excessive pressure on the economy.

- NetApp (NTAP: +22.4%) reported its fiscal fourth quarter better than average expectations and gave an outlook for the next three months that was above consensus on most key metrics. The positive market reaction is attributed to sustained demand from the AI space, where the company has closed around 500 deals. Analysts also concede that its guidance may turn out to be conservative. The issuer's gross margin remains in focus due to component cost pressure: in the fourth quarter, the figure was better than expected, while the forecast was weaker.

- SentinelOne (S: -8.2%) reported stronger-than-consensus earnings for the quarter. Analysts praised the strong growth in new ARR (recurring annualized revenue), but noted weak revenue, pressure on gross margin and a shift of some bookings to later periods. Q2 guidance was close to consensus, with annualized revenue and EPS guidance reaffirmed. The company also announced restructuring with a reduction of about 8% of staff.

- Viasat's (VSAT: -7%) earnings per share for the reported quarter exceeded average expectations, but revenue and EBITDA were weaker than consensus. Management expects mid-single-digit revenue growth in FY 2027, with mid-market guidance assuming a 3.6% increase. EBITDA forecast assumes it will remain near current levels or grow slightly. Pressure on the stock is due to investors' uncertainty about the company's ability to grow EPS at the level of its competitors, as well as capacity constraints.

- Clorox (CLX: -6.4%) CEO Linda Rendle plans to step down for health reasons. She asked the Board of Directors to start a comprehensive search process for a new CEO.

- Costco Wholesale's (COST: -3.9%) fiscal third-quarter revenue beat consensus and profit fell short of it, as did margins pressured by a jump in fuel prices. Membership dues were broadly in line with expectations, with club program renewal rates improving. E-commerce remained the stronger area.

- Hub Group (HUBG: -2.4%) announced the resignation of CFO Kevin Bethea, who will be temporarily replaced by Todd Heeter, and the resignation of COO Brian Mints. Once the 2023-2025 reporting revisions are finalized, the updates are scheduled to be filed by September 14.

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