Morning in New York: time to take profits

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

Global markets will be focused on the outcome of the talks between US and Chinese leaders Donald Trump and Xi Jinping. The two sides declared their intention to maintain "strategic stability" in relations for the next three years, and Trump invited Xi to visit the White House in September, which was perceived by the investment community as a signal of continued dialog between the U.S. and China.

Nevertheless, fixation of positions is observed in shares. The results of the American president's visit to Beijing are seen as insufficiently positive. Behind Trump's statements about "fantastic trade deals" there is still a limited set of specific agreements. The US expects China to commit to multi-billion dollar purchases of US agricultural products, but the details of the agreement have not been disclosed. Additional sentiment pressure came from the reaction of Boeing (BA) quotes to the news. According to Trump, the PRC is ready to buy only 200 airplanes, while the investment community expected a contract for 500 planes. The geopolitical block of the talks also did not give an unambiguous positive. Trump said that the Chinese leader offered assistance in resolving the conflict with Iran. However, Beijing did not directly confirm this, limiting itself to calling for the restoration of free navigation through the Strait of Hormuz. All this does not provide sufficient grounds for further increase in the share of risk instruments in investment portfolios.

This Friday, Kevin Warsh will officially take office as Chairman of the Federal Reserve, succeeding Jerome Powell. The new head of the regulator will immediately face the problem of rising inflation expectations, unfavorably affecting the market of U.S. treasuries. The problem is exacerbated by the fact that the yield on 30-year Japanese government bonds at current trading exceeded 4%, adding 34 bps over the week. This is a rare sell-off for a developed market. In turn, 30-year JGBs are approaching multi-year highs in yields today, trading around 5.09%. We believe that further upward movement of this indicator will trigger a negative reaction from the equity market.

The main macroeconomic publication today will be the Empire Manufacturing Index for May (consensus: 7.2 points, April: 11 points). The decline in the index will signal a more restrained dynamics of the US industrial sector. Also today will be released data on industrial production dynamics for April (consensus: +0.3%, March: -0.5%) and capacity utilization rate (consensus: 75.8%, March: 75.7%).

The speeches of Michael Barr, a member of the Fed's Board of Governors, and John Williams, President of the Federal Reserve Bank of New York, will be of interest to traders. Against the background of persistent inflation risks, investors will continue to look for signals regarding the further trajectory of the Fed's monetary policy.

Alaska Air Group (ALK), RBC Bearings (RBC), H World Group (HTHT) and Datavault AI (DVLT) will report before the main session opens.

Futures on U.S. stock indices show negative dynamics after a strong growth the day before. Nasdaq 100 is losing more than 1%. We assess the balance of risks for the upcoming session as negative with average volatility. The correction looks quite logical and long overdue, given the degree of overheating of the main stock indices. If the S&P 500 returns above 7500, the negative scenario will not be realized.

- Figma (FIG) shares reacted with a rise of about 11% on the release of strong quarterly results and an increase in full-year revenue guidance from $1.36-1.37 billion to $1.42-1.43 billion. The company's results continue to be supported by strong demand for design tools and products with artificial intelligence integration.

- Shares of Dexcom (DXCM) added about 4% after announcing corporate changes ahead of investor day and the start of a partnership with Elliott Investment Management. The market perceived the participation of this activist investor as a potential catalyst to improve the company's operational efficiency and strategy after the weak performance of the stock in recent quarters.

- Strong quarterly results drove Boot Barn Holdings (BOOT) stock price up about 4%. The company's revenue increased 19% YoY to $539 mln and EPS reached $1.45, beating average market expectations. An additional positive for investors was the improved outlook for fiscal 2026.

- Applied Optoelectronics (AAOI) fell about 6% following the announcement of an additional issue of up to $600 million. Despite continued strong investor interest in AI infrastructure and data center companies, the market took a negative view of the potential dilution of shareholder stakes after the stock's sharp rise since the beginning of the year.

Ma 14 trading on the U.S. stock exchanges ended in the plus. S&P 500 and Nasdaq 100 rose by 0.77% and 0.73% respectively, setting new historic highs. Dow Jones rose by 0.75%, Russell 2000 - by 0.67%.

Most sectors demonstrated positive dynamics. The technology sector (XLK: +1.50%) became the leader of growth due to active purchases in the securities of semiconductor manufacturers and developers of AI infrastructure. An additional positive driver was strong reporting from Cisco Systems (CSCO), which raised its guidance for the volume of AI-related orders for fiscal year 2026.

Materials producers (XLB: -0.75%) were outsiders due to the decrease in quotations of metallurgical and chemical companies.

The shares of the "Magnificent Seven" ended the trading mixed. Nvidia (NVDA: +4.39%) and Microsoft (MSFT: +1.04%) looked better than the market amid reports about possible easing of restrictions on AI chip supplies to China, as well as high demand for infrastructure solutions for artificial intelligence.

Macroeconomic statistics did not have a significant impact on investor sentiment. Retail sales in the U.S. in April increased by 0.5% m/m, matching market expectations, while the number of initial jobless claims amounted to 211 thousand against a consensus of 205 thousand. At the same time, investors continue to take into account the likelihood of maintaining the Fed's tough rhetoric on the back of stronger inflationary signals.

- Fiserv (FISV: +2.1%) held an investor day where it presented updated medium-term guidance. It forecasts accelerated revenue growth through 2029, announced a partnership with OpenAI and a joint venture with Bridgeport Partners to develop in the ATM and cash processing services segment.

- Due to a leak from Best Buy, rumors of an imminent launch of Take-Two Interactive's (TTWO: +6.8%) Grand Theft Auto (GTA) VI pre-orders have surfaced. However, there has been no official confirmation from the company or Rockstar Games. For investors, the release of GTA VI remains a key driver of expectations for its developer's financial results for 2027.

- The US President announced China's order of 200 Boeing airplanes (BA: -4.7%), although earlier it was discussed about 500 airliners. Additional uncertainty is created by the lack of details of the deal and the ongoing tensions between the US and China.

- YETI Holdings (YETI: +6.2%) reported first quarter revenue and earnings above average forecasts. This was supported by higher wholesale sales and strong demand for the beverage category. In addition, the company improved its revenue guidance for 2026 and approved a $500 million share repurchase program.

- Viking Holdings' (VIK: +5.5%) revenue growth in the first quarter exceeded market-wide guidance. There was a high level of bookings for 2026-2027. The market positively perceived the announcement of the appointment of the new CEO of the company.

- Oklo (OKLO: -3.5%) announced an additional share issue of up to $1 billion shortly after the release of its quarterly financials, which reported a loss above market expectations. Investors took a negative view of the potential dilution of shareholder stakes, even though the funds raised could be used to accelerate the development of small modular nuclear reactors.

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