Morning in New York: waiting for de-escalation of the conflict with Iran

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

US President Donald Trump has postponed the resumption of a military operation against Iran after receiving a new peace proposal from Tehran. At the same time, Washington reserves the possibility of new attacks in case the talks fail. In turn, Iran has warned of its readiness to launch retaliatory strikes. Despite the current ceasefire, tensions in the region remain high, and the risks of disruptions in oil supplies through the Strait of Hormuz continue to support WTI quotes near $107 per barrel.

The main macro releases this Tuesday will be ADP new job openings data (previous value: 33k), as well as Pending Home Sales in Ma (consensus: +1% mom, March: +1.5%). The latter indicator is considered as a leading indicator of activity in the housing sector. It may indicate that the demand for real estate remains stable, despite high interest rates on loans.

The comments of Fed Governor Christopher Waller will be of interest for the participants of the upcoming session. In the context of persisting geopolitical uncertainty and high oil prices, any signals regarding inflation prospects and the course of monetary policy are important for investors. Freedom Broker puts one Fed rate cut at the very end of 2026 in its baseline forecast, as the resilience of macroeconomic indicators and persistent inflationary pressures limit the room for monetary policy easing.

The Home Depot (HD), Amer Sports (AS), Hesai Group (HSAI) and Bilibili (BILI) will report before the opening of the main session. After the close of trading, CAVA Group (CAVA), James Hardie Industries (JHX), Toll Brothers (TOL) and Keysight Technologies (KEYS) will report quarterly results.

Futures on American stock indices demonstrate about zero dynamics. We assess the balance of risks for the upcoming session as neutral with an average level of volatility.

- Shares of Agilysys (AGYS) are reacting to the release of its financials with a rise of about 15%. Its revenue for the fourth quarter of fiscal 2026 reached a record $82.9 million, up 11.7% YoY. The results were supported by increased subscription revenue and strong demand for hospitality software solutions.

- Shares of XP (XP) are down about 5% following the release of mixed quarterly results and the announcement of a CFO change. Current CFO Victor Mansour will step down on May 31 after more than 14 years with the company and will be replaced by Gustavo Alejo Viviani in early August.

- The announcement of plans to issue $2.6 billion in convertible bonds caused shares of Akamai Technologies (AKAM) to fall about 2%. The company intends to place two tranches of bonds maturing in 2030 and 2032, which investors traditionally perceive as a potential factor of dilution of shares of existing holders of securities, and also consider as a reason for strengthening the debt burden.

- Quotes of Wave Life Sciences (WVE) add about 5% after the publication of positive data from clinical trials. The company reported improvements in key efficacy and safety indicators of experimental drugs for the treatment of genetic diseases. This contributes to optimistic expectations for the portfolio's further development in the biotechnology sector.

- Penguin Solutions (PENG) shares are up about 4% after David Herd, formerly president of Nokia's network infrastructure division, was appointed to the board of directors. Investors positively perceived the strengthening of the management team against the background of the market's continued interest in AI projects.

Ma 18 trading on American stock exchanges ended mostly in the negative. S&P 500 decreased by 0.07%, Nasdaq 100 lost 0.45%, Russell 2000 dropped by 0.65%, but Dow Jones added 0.32%. The equal-weighted S&P 500 outperformed the "classic" S&P 500 by about 70 bps, indicating that the broad market is more resilient than the largest technology companies.

Pressure on quotations was exerted by the continuing uncertainty surrounding the conflict between the U.S. and Iran, increased volatility in high-tech stocks and concerns about further increases in government bond yields of the world's leading economies.

The energy sector (XLE: +1.87%) was the leader of growth. Shares of oil and gas companies were supported by the growth of WTI quotations by more than 3% after reports about a possible aggravation of the situation around Iran and continued blocking of supplies through the Strait of Hormuz.

The technology sector (XLK: -1.08%) was the outsider, with semiconductor manufacturers, including memory chips, and major "growth" companies remaining under pressure. Investors continued to take profits in the artificial intelligence segment after the rally of recent months.

Most shares of the "Magnificent Seven" traded in negative territory. The most pronounced correction was in the securities of Nvidia (NVDA: -1.33%) and Tesla (TSLA: -2.9%).

Donald Trump's statement that the leaders of Qatar, UAE and Saudi Arabia asked Washington to refrain from striking Iran increased intraday volatility. The market continues to closely monitor the situation, assessing the risks of further growth in energy prices and acceleration of inflationary pressures.

Macroeconomic statistics turned out to be moderately positive. The NAHB housing market index in May unexpectedly increased after April's decline to lows since September last year, which supported positivity in the construction sector. At the same time, investors continued to closely monitor the dynamics of the global debt market due to the increased likelihood that persistently high inflation will force major central banks to maintain tight monetary policy longer than previously expected.

- France's Publicis Groupe is buying LiveRamp (RAMP: +27.3%). The deal will be paid in cash at a company valuation of $2.2 bln, or $38.5 per share, which implies a premium of about 30% to the previous closing price.

- Brady (BRC: +19%) reported revenue and earnings above consensus for the latest quarter, driven by solid organic growth across all key geographies. The company's management noted the positive impact of strong demand from data center construction projects and raised its revenue guidance for fiscal 2026.

- Cognizant Technology Solutions (CTSH: +9.8%) will increase its buyback program by $2 billion and expects to complete the buyback of about $1 billion in the current quarter. Investors took this as a signal of management's confidence in cash flow sustainability and business prospects.

- Regeneron (REGN: -9.8%) reported results from a Phase III study of fianlimab in combination with Libtayo, which failed to meet its primary goal of improving disease progression-free survival in patients with melanoma. This increased investors' concerns about the prospects of the company's oncology portfolio.

- The investment community is concerned that an expected rebound in spending by NAND memory makers could prove less favorable for Applied Materials (AMAT: -5.3%) than its competitors.

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