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Briefing.com Summary:
*The AI momentum trade has more momentum this morning on a series of positive catalysts.
*The Trump-Xi summit has produced mostly friendly overtures.
*The retail sales and initial jobless claims data were both reasonably solid.
Not that the AI trade needed its ego inflated even more, but there is some additional fawning over it this morning thanks to an assortment of factors that have kept the good times rolling.
- Cisco (CSCO) posted stronger-than-expected fiscal Q3 results, issued fiscal Q4 guidance well above consensus estimates, and increased its FY26 order expectations for AI infrastructure and hyperscalers from $5 billion to $9 billion.
- Cerebras Systems (CBRS) priced its 30.0 million share IPO at $185.00 per share, well above the $150-160 expected range.
- Taiwan Semiconductor Manufacturing (TSM) said it expects the global chip market to reach $1.5 trillion by 2030, up from its prior forecast of $1.0 trillion.
- The U.S. reportedly approved the sale of NVIDIA's (NVDA) H200 chips to ten Chinese companies; and UBS raised its price target for NVDA to $275 from $245, according to CNBC.
Currently, the S&P 500 futures are up 20 points and are trading 0.3% above fair value, the Nasdaq 100 futures are up 11 points and are trading fractionally above fair value, and the Dow Jones Industrial Average futures are up 442 points and are trading 0.9% above fair value.
This positive bias is rooted in the positive disposition of many tech stocks, namely Cisco, which is up 15% in pre-market trading—a move that is responsible for the outperformance of the Dow Jones Industrial Average futures.
Beyond that, however, market participants are feeding off the positive vibes emanating from the Trump-Xi summit, where there has been a lot of lip service paid to the need for cooperation, striking a healthy competitive balance, and open communication.
There has been flattery and gestures of goodwill, but none of that stifled President Xi's warning that a U.S. mishandling of Taiwan could lead to an extremely dangerous situation.
That warning, although stark in its timing, is not a surprise. The overarching point for the market is that the summit has been a predominantly friendly affair.
The same can be said for some—not all—of this morning's economic data. The retail sales and jobless claims reports were friendly for the market. The import-export price index, not so much.
Total retail sales increased 0.5% month-over-month in April (Briefing.com consensus: 0.4%) following a downwardly revised 1.6% increase (from 1.7%) in March. Excluding autos, retail sales rose 0.7% month-over-month (Briefing.com consensus: 0.4%) after increasing 1.9% in March.
The key takeaway from the report is that solid spending activity was seen across most retail categories in April, which is when consumers were digesting the gas price shock from the Iran war. Excluding auto and gasoline station sales, retail sales were up 0.5% month-over-month.
Initial jobless claims for the week ending May 9 increased by 12,000 to 211,000 (Briefing.com consensus: 208,000). Continuing jobless claims for the week ending May 2 increased by 24,000 to 1.782 million.
The key takeaway from the report is that, even though initial and continuing jobless claims were up in the latest week, neither has risen to a level that would ring alarm bells about a serious deterioration in the labor market.
There were some inflation alarm bells ringing in the import-export price index, however.
Import prices were up 1.9% month-over-month, leaving them up 4.2% year-over-year. Excluding fuel, import prices rose 0.8% month-over-month and were up 2.9% year-over-year. Export prices jumped 3.3% month-over-month, leaving them up 8.8% year-over-year. Excluding agricultural products, export prices advanced 3.4% month-over-month and were up 9.3% year-over-year.
The Treasury market has kept a calm disposition in the wake of the data. The 2-yr note yield is down three basis points to 3.96%, and the 10-yr note yield is down four basis points to 4.44%.
Given that, the stock market has kept calm and is ready to carry on at the open.
