US markets continued moving higher yesterday as investors grew more confident that tensions with Iran may ease. Until recently, most of the buying had been concentrated in AI-related stocks, but this rally broadened significantly across the market.

The main focus remains the Strait of Hormuz. Concerns over disruptions there had pushed oil and commodity prices sharply higher in recent weeks. Now, hopes for a gradual reopening are sending oil prices lower, helping ease inflation expectations and reducing pressure on central banks to keep rates elevated. Bond yields in both the US and Europe moved lower, improving the outlook for borrowing costs and economic growth.

Investors rotated back into risk assets beyond the AI sector. Cyclical stocks led the rebound, especially companies tied to travel, luxury, and industrial activity. LVMH gained 5.1%, while Safran surged 9%. Energy stocks moved lower alongside oil prices, with Equinor down 9%, Repsol down 4.5%, and TotalEnergies down 3.2%.

The rebound reflects growing confidence that tensions in the Persian Gulf could continue cooling. At the same time, investors remain heavily focused on the long-term AI boom while also rotating into other sectors benefiting from improving sentiment.

The White House has recently taken a more optimistic tone on Iran. Reports suggest Donald Trump softened his stance to help move negotiations forward ahead of next week’s meeting in Beijing with Xi Jinping. Talks are expected to cover Taiwan, AI, Iran, and China-Russia relations.

Earnings also remain a major market driver. Wall Street reacted positively to results from Fortinet and DoorDash, while Arm Holdings disappointed investors. AI momentum remains extremely strong, with Super Micro Computer up 24%, Advanced Micro Devices up 18%, and SoftBank Group gaining 18% in Japan.

In Asia, markets rallied strongly overnight, led by Japan where the Nikkei 225 surged 6% after several holidays, helped by semiconductor stocks. South Korea and Hong Kong rose more than 1%, Taiwan gained over 2%, Australia added 0.8%, and India edged up 0.2%.

Today's economic highlights: 

Today’s agenda includes: Challenger job cuts, initial and continuing jobless claims, the 4-week average of jobless claims, unit labor costs and nonfarm productivity in the United States; used car prices and construction spending data; EIA natural gas storage figures; US consumer inflation expectations, 4-week and 8-week bill auctions, as well as 15-year and 30-year mortgage rates. Markets will also monitor speeches from Fed officials Hammack and Williams, alongside US consumer credit data and the Fed balance sheet release. See the full calendar here.

  • Dollar index: 97.86
  • Gold: $4,737
  • Crude Oil (BRENT): $96.75 (WTI) $90.47
  • United States 10 years: 4.35%
  • BITCOIN: $81,057

In corporate news:

  • Arm Holdings forecast first-quarter revenue above expectations, supported by growing demand for AI computing chips. However, concerns around supply constraints and rising costs tied to its in-house chip manufacturing plans pushed the stock down 4.5% in premarket trading.
  • Carlyle reported a 28.2% decline in first-quarter profit, although the investment group continued to attract new capital inflows.
  • Cf Industries reported stronger-than-expected first-quarter earnings as strong nitrogen demand and higher prices helped offset rising natural gas production costs.
  • Citigroup said it is targeting an adjusted return on tangible common equity between 11% and 13% for 2027 and 2028, as CEO Jane Fraser continues the bank’s restructuring efforts. Shares fell 3% in early trading.
  • Doordash forecast second-quarter gross order value above estimates, helped by strong delivery demand and expansion into grocery, retail, and international markets. Shares gained 10% in premarket trading.
  • McDonald's reported weaker-than-expected US same-store sales growth for the first quarter, sending the stock down 4% before the open.
  • Papa John's International reported first-quarter revenue and earnings below expectations as the company struggled to attract customers amid ongoing cost-of-living pressures. Shares fell nearly 4% in premarket trading.
  • Snap said first-quarter advertising revenue was hurt by the Middle East conflict and slowing growth in North America. The company also announced the termination of its partnership agreement with AI startup Perplexity.
  • Tesla reported a 36% year-over-year increase in China-made EV sales in April, marking a sixth straight month of growth as the company continues facing intense competition from lower-cost Chinese rivals.
  • Warner Bros Discovery said its streaming division posted stronger-than-expected quarterly revenue growth, driven by international expansion of HBO Max and stronger subscriber engagement. However, the company’s net loss widened to $2.92 billion in the first quarter.
  • Whirlpool shares plunged 16.6% in premarket trading after the appliance maker reported first-quarter revenue of $3.27 billion, below analyst expectations of $3.45 billion.

Analyst Recommendations:

  • Amazon: CITIC Securities maintained its buy rating and raised the price target from $300 to $346.
  • Apa Corporation: Peters & Co. maintained its sector underperform rating and raised the price target from $30 to $44.
  • Axon Enterprise: Morgan Stanley maintained its overweight rating and lowered the price target from $675 to $600.
  • BorgWarner: Goldman Sachs maintained its buy rating and raised the price target from $72 to $74.
  • Celanese: JP Morgan maintained its neutral rating and raised the price target from $53 to $68.
  • Coherent: Morgan Stanley maintained its equal-weight rating and raised the price target from $290 to $330.
  • DoorDash: Piper Sandler maintained its neutral rating and lowered the price target from $220 to $205.
  • Dutch Bros: Goldman Sachs maintained its buy rating and raised the price target from $75 to $80.
  • Flutter Entertainment: Citizens maintained its market outperform rating and lowered the price target from $188 to $165.
  • Fortinet: Baird maintained its neutral rating and raised the price target from $90 to $115.
  • Houlihan Lokey: UBS maintained its neutral rating and lowered the price target from $163 to $160.
  • ITT Inc.: Citi maintained its buy rating and raised the price target from $252 to $254.
  • Johnson Controls International: Citi maintained its neutral rating and raised the price target from $150 to $155.
  • SN Corp.: Morgan Stanley maintained its equal-weight rating and raised the price target from $127 to $128.
  • Snap Inc.: Stifel maintained its hold rating and raised the price target from $5.25 to $5.75.
  • Uber Technologies: BMO Capital Markets maintained its outperform rating and raised the price target from $106 to $119.
  • The Walt Disney Company: Guggenheim maintained its buy rating and raised the price target from $115 to $120.
  • Zillow Group: Piper Sandler maintained its overweight rating and lowered the price target from $70 to $55.