Morning in New York: quotes require new drivers

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

Geopolitical agenda remains one of the key factors determining the dynamics of stock exchange trading. Expectations of a ceasefire between the US and Iran support increased interest in risk instruments. Washington's talks with Tehran seem to be centered around unfreezing Iranian assets, while the framework agreement under discussion involves unblocking the Strait of Hormuz. Tehran insists on the right to levy fees on ships passing through. At the same time, the latest incident involving the U.S. Air Force and Israel was considered by the Iranian authorities as a violation of the ceasefire. Part of the Republicans oppose concluding an agreement with Tehran as soon as possible if the terms are too soft. Israel's intentions to continue operations against Hezbollah in Lebanon remain an additional factor of tension.

Macroeconomic statistics are likely to take a back seat to foreign policy news and reports from technology companies. Today, the Ma mortgage applications data for the week to May 27 (previous reading: -2.3%) will be released. The FRB Richmond will release May business activity indices for manufacturing (consensus: 2 points, April: 3 points) and business conditions (April: -6 points). FRB Dallas will present the index of business activity in the services sector for May (April: -9.9 points).

Following strong manufacturing business activity index (PMI) data, investors will be primarily concerned with price components and employment signals, as recent metrics have pointed to continued inflationary pressures and cooling hiring in the service sector. Also this Wednesday, ADP's new job openings statistics for Ma. 9 will be released.

There will be speeches by Lisa Cook of the Fed's Board of Governors and Laurie Logan, President of the Federal Reserve Bank of Dallas. Their comments will be important in terms of assessment of inflation risks and the Fed's readiness to maintain a pause in rate revision.

Statistics from China, which recorded a 24.7% y/y rise in profits of industrial companies in April, the highest since the end of 2023, will support quotations of commodity, industrial and semiconductor companies.

PDD Holdings (PDD), Dick's Sporting Goods (DKS), Dycom Industries (DY), Scotiabank (BNS), Bank of Montreal (BMO), Bath & Body Works (BBWI) and Abercrombie & Fitch (ANF) will report quarterly results before the main session opens. Marvell Technology (MRVL), Salesforce (CRM), Snowflake (SNOW), Synopsys (SNPS), HP (HPQ), Agilent Technologies (A) and HEICO (HEI) will report after the close of 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.

- Digital Turbine (APPS) shares are adding more than 12% after strong reporting and confident guideposts for fiscal year (FY) 2027. The issuer's fourth-quarter FY 2026 revenue increased 20% YoY to $142.5 mln, while adjusted EBITDA rose 53% to $31.4 mln. For FY 2027, management forecasts revenue in the range of $630-650 mln with a consensus of $619 mln. The company's guidance for adjusted EBITDA assumes an increase from $122.5 mln in FY 2026 to $135-145 mln.

- Semtech (SMTC) shares are up about 8% on the back of the company's Q1 FY 2027 earnings release, in which revenue reached a record $291 million (+16% YoY), adjusted EPS was $0.51 with a consensus of $0.45, and adjusted operating margin climbed to 20.4% (YoY: 19%) from 18.2% in the prior-year quarter. The company's Haydens for the current quarter expects revenue in the range of $328 million and EPS of $0.61 with consensus of $300.7 million and $0.52, respectively. The main growth driver is strong demand for data center solutions.

- Verra Mobility (VRRM) shares are down more than 40% after Avis Budget Group notified that it will terminate its contract effective September 2026. Against this backdrop, the company lowered its 2026 revenue and adjusted EBITDA guidance from $1.02-1.03 billion and $405-415 million to $985-995 million and $380-385 million, respectively, from $1.02-1.03 billion and $405-415 million.

- Zscaler (ZS) fell about 21%, although its third-quarter FY 2026 revenue rose 25% YoY to $850.5 million versus consensus of $835.6 million, and adjusted EPS was $1.08 with average expectations of $1.01. The stock was pressured by the fact that the Q4 revenue guidance fell slightly short of consensus and the free cash flow margin guidance for FY 2026 was revised from 26.5-27% to 22.8-23.3%.

- The securities of Forgent Power Solutions (FPS) corrected within 4% after the announcement of an additional issue of 35 million Class A shares. From this volume 23.7 mln units are sold by existing shareholders, and 11.3 mln are placed by the company itself. Negative dynamics is explained by the risk of dilution of stakes of holders of these securities and withdrawal of existing shareholders from the capital.

- Insulet (PODD) is losing about 5% following the recall of select batches of Omnipod 5, Omnipod DASH and Omnipod Eros due to a defect that could cause the device to leak insulin. The company said there have been no fatalities in this regard, but there have been cases of hospitalization of users.

Ma 26 trading on the U.S. stock exchanges ended predominantly with growth. S&P 500 (+0.61%), Nasdaq 100 (+1.76%) and Russell 2000 (1.79%) updated historical highs. At the same time, the Dow Jones fell by 0.23%.

High-tech sector (XLK: +2.63%), industrial companies (XLI: +1.47%), as well as suppliers of raw materials (XLB: +1.39%) were the leaders of growth. The energy sector (XLE: -2.76%) topped the list of outsiders on the back of lower oil prices.

Within the "Magnificent Seven" the dynamics were multidirectional, with Tesla (TSLA: +1.78%) and Alphabet (GOOGL: +1.54%) attracting the most buying activity.

Micron 's (MU: +19.29%) market capitalization crossed the $1 trillion mark for the first time thanks to the maximum intraday growth of quotations since 2011. SK Hynix valuation reached the same bar, supported by Korean media reports about investment offers from major US technology corporations. Samsung Electronics agreed new wage terms with the labor union. Almost all chipmakers rallied, the exception being Nvidia (NVDA: -0.22%).

Investors' appetite for risk was supported by signals of reduced tension between the US and Iran. The market's restrained reaction to the US military strikes a day earlier and the discussion of a memorandum on the resumption of navigation through the Strait of Hormuz reduced the geopolitical premium in oil prices. WTI prices fell by 2.8%, to a low of more than a month, which was positively received by the broad market. Treasury bond prices went up, which was reflected in a 4-8 bps decline in yields on the long end of the curve.

The Consumer Confidence Index for Ma fell from April's 93.8 points to 93.1 with a consensus of 91.9. The FHFA home price index for Ma was virtually unchanged from the previous month, while the Case-Shiller index declined another 0.2% mom after 0.1% in February.

- Modine Manufacturing (MOD: +13.4%) announced a $4 billion long-term agreement with a strategic customer in the data center segment. The company will supply Airedale by Modine cooling systems for them. The contract runs through the end of 2029. Modine received an upfront payment of $165 million.

- Viasat (VSAT: +9.2%) is included in an agreement with the U.S. Air Force of approximately $438 million to provide spacecraft for the Protected Tactical Satellite-Global program.

- Bloomberg reported that activist Ancora is pushing for H.B. Fuller (FUL: +4.8%) to abandon the AMS.GB deal and conduct a strategic review of the business.

- Pony.ai (PONY: +4.7%) reported better-than-expected revenue and earnings per share for the first quarter. Management raised its full-year forecast for the pace of robotaxi fleet expansion from 3,000 to 3,500 vehicles. Haydens in terms of revenue in this area assumes growth of more than 3.5 times by the result for 2025.

- AutoZone (AZO: -9%) generated earnings above expectations in its fiscal third quarter, although revenue came in below consensus. Comparable sales were generally above guidance, although domestic results fell short of average guidance. Analysts note the stronger performance of the company's competitors and higher operating expenses. Some recovery in key business metrics is expected in the fourth quarter.

- Ferrari (RACE: -5.2%) unveiled the Luce all-electric car design, disappointing the investment community.

- BP' s (BP: -3.9%) board of directors voted unanimously in favor of the immediate removal of Chairman Albert Manifold. The company cited serious concerns about corporate governance standards, oversight and behavior. Manifold was only appointed to the position in July last year.

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