Stock Surge on Robust Tech Earnings and US-Iran Peace Hopes

The S&P 500 Index ($SPX) (SPY) on Wednesday closed up +1.46%, the Dow Jones Industrial Average ($DOWI) (DIA) closed up +1.24%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +2.08%.  June E-mini S&P futures (ESM26) rose +1.45%, and June E-mini Nasdaq futures (NQM26) rose +2.09%.

Stock indexes rallied sharply on Wednesday, with the S&P 500 and Nasdaq 100 posting new all-time highs and the Dow Jones Industrial Average posting a 2.75-month high.  Stellar earnings results from chipmakers and AI-infrastructure stocks propelled stocks higher on Wednesday and bolstered optimism that the relentless pace of investment in artificial intelligence will continue.  Advanced Micro Devices rose more than +17% after data center spending boosted its full-year sales forecast, and Super Micro Computer surged more than +24% after reporting improved margins and giving a solid profit forecast.   

Stocks extended their gains on Wednesday as crude oil prices plunged, and bond yields tumbled on optimism that the US and Iran are nearing a peace deal.  The US believes it's close to an agreement with Iran to end the war, and President Trump suspended a military initiative to guide stranded ships through the Strait of Hormuz and said, "Great progress has been made toward a complete and final agreement with representatives of Iran."  He added that a US blockade of ships transiting to and from Iranian ports would "remain in full force and effect" until a deal is agreed to.  Crude prices sank to a 2-week low, and the 10-year T-note yield fell to a 1-week low of 4.33%.

Axios reported on Wednesday that the US and Iran are working on a one-page memorandum of understanding that, if Iran accepts it, will lead to the gradual reopening of the Strait of Hormuz and the lifting of the US blockade on Iranian ports.  Nothing has yet been agreed upon, and detailed negotiations on Iran’s nuclear program will come later in the process.  Also, China's top diplomat, Foreign Minister Wang Yi, called for the swift reopening of the Strait of Hormuz during a meeting with his Iranian counterpart, Abbas Arachchi, in Beijing on Wednesday.

Stocks maintained their gains on the Fed-friendly Apr ADP employment report that showed US companies added 109,000 jobs, below expectations of 120,000.

Hawkish comments on Wednesday from St. Louis Fed President Alberto Musalem were negative for stocks and bonds when he said, "Inflation is running meaningfully above our 2% target.  We have risks on the employment side and on the inflation side, and in my understanding, the risks have been shifting towards more risk on the inflation side than the employment side."

WTI crude oil prices (CLM26) plummeted more than -7% on Wednesday to a 2-week low after Axios reported that the US believes it’s close to an agreement with Iran to end the nearly 10-week war. The US sees Iran responding within 48 hours to a one-page memorandum of understanding to end the war, which would include both sides lifting restrictions on the Strait of Hormuz.  The strait remains essentially closed, as about a fifth of the world’s oil and liquefied natural gas transits through the strait.  Goldman Sachs estimates that the current disruption has drawn down nearly 500 million bbl from global crude stockpiles, with the drawdown potentially reaching 1 billion bbl by June.

The markets are discounting a 6% chance of a -25 bp FOMC rate cut at the next FOMC meeting on June 16-17.

Earnings results thus far this reporting season have been supportive of stocks.  As of today, 84% of the 393 S&P 500 companies that reported Q1 earnings have beaten estimates.  Q1 S&P 500 earnings are projected to climb +12% y/y, according to Bloomberg Intelligence.  Stripping out the technology sector, Q1 earnings are projected to increase around +3%, the weakest in two years.

Overseas stock markets settled sharply higher on Wednesday.  The Euro Stoxx 50 climbed to a 2.5-week high and closed up +2.68%.  China's Shanghai Composite rallied to a 2-month high and closed up +1.17%.  Japan's Nikkei Stock Average did not trade, with markets in Japan closed for a National holiday.

Interest Rates

June 10-year T-notes (ZNM6) on Wednesday closed up by +14.5 ticks.  The 10-year T-note yield fell -7.5 bp to 4.349%.  Jun T-notes rallied to a 1-week high on Wednesday, and the 10-year T-note yield fell to a 1-week low of 4.331%.  T-notes moved higher on Wednesday after crude oil prices plunged by more than -7% to a 2-week low, which eased inflation expectations.  The 10-year breakeven inflation rate fell to a 1-week low of 2.417% on Wednesday.  T-notes maintained their gains after the Apr ADP employment change came in below expectations, a dovish factor for Fed policy.

The US Treasury on Wednesday said it will keep its quarterly refunding sales of government debt unchanged from last quarter at $125 billion and said it sees coupon issuance steady "at least the next several quarters.  The May quarterly refunding next week will include the sale of $58 billion of 3-year T-notes, $42 billion of 10-year T-notes, and $25 billion of 30-year T-bonds. 

European government bond yields moved lower on Wednesday.  The 10-year German Bund yield fell to a 2-week low of 2.963% and finished down -6.4 bp to 2.999%.  The 10-year UK gilt yield fell to a 1.5-week low of 4.905% and finished down -12.2 bp to 4.939%.

Eurozone Mar PPI rose +2.1% y/y, stronger than expectations of 1.8% y/y and the fastest pace of increase in a year.

The Eurozone Apr S&P composite PMI was revised upward by +0.2 to 48.8 from the previously reported 48.6. 

Swaps are discounting a 79% chance of a +25 bp ECB rate hike at its next policy meeting on June 11.

US Stock Movers

Advanced Micro Devices (AMD) closed up more than +17% to lead gainers in the Nasdaq 100 and lead chip makers and AI-infrastructure stocks higher after reporting Q1 revenue of $10.25 billion, better than the consensus of $9.89 billion, and forecasting Q2 revenue of $10.90 billion to $11.50 billion, well above the consensus of $10.52 billion.  Super Micro Computer (SMCI) closed up more than +24% to lead gainers in the S&P 500 after forecasting Q4 net sales of $11.0 billion to $12.5 billion, the midpoint well above the consensus of $11.16 billion.  Also, ARM Holdings Plc (ARM) closed up more than +12%, and Lam Research (LRCX) closed up more than +7%.  In addition, ASML Holding NV (ASML) closed up more than +6%, and Nvidia (NVDA) closed up more than +5%.  Finally, Applied Materials (AMAT), KLA Corp (KLAC), Intel (INTC), and Microchip Technology (MCHP) closed up more than +4%, and Micron Technology (MU), NXP Semiconductors NV (NXPI), Western Digital (WDC), and Qualcomm (QCOM) closed up more than +3%.

Airline stocks and cruise line operators rallied sharply on Wednesday as WTI crude oil prices sank more than 7% to a 2-week low, lowering fuel costs and boosting the profitability prospects for the companies.  Royal Caribbean Cruises Ltd (RCL) closed up more than +9%, and United Airlines Holdings (UAL) and Carnival (CCL) closed up more than +6%.  Also, Alaska Air Group (ALK) closed up more than +5%, and American Airlines Group (AAL), Southwest Airlines (LUV), and Norwegian Cruise Line Holdings (NCLH) closed up more than +4%.  In addition, Delta Air Lines (DAL) closed up more than +3%. 

Mining stocks soared on Wednesday after gold, silver, and copper prices rallied sharply.  Coeur Mining (CDE) closed up more than +9%, and Anglogold Ashanti (AU) closed up more than +8%.  Also, Barrick Mining (B) and Southern Copper (SCCO) closed up more than +7%, and Hecla Mining (HL) closed up more than +6%.  In addition, Newmont Corp (NEM) and Freeport McMoRan (FCX) closed up more than +5%. 

Energy producers and service providers retreated on Wednesday after crude oil prices tumbled more than -7% to a 2-week low.  Devon Energy (DVN) closed down more than -8%, and APA Corp (APA) and Occidental Petroleum (OXY) closed down more than -7%.  Also, Valero Energy (VLO) closed down more than -6%, and Marathon Petroleum (MPC) closed down more than -5%.  In addition, Diamondback Energy (FANG) closed down more than -5% to lead losers in the Nasdaq 100, and Phillips 66 (PSX) and Exxon Mobil (XOM) closed down more than -4%.  In addition, Chevron (CVX) closed down more than -3% to lead losers in the Dow Jones Industrials, and ConocoPhillips (COP) and Halliburton (HAL) closed down more than -3%. 

Flex Ltd (FLEX) closed up more than +39% after reporting Q4 net sales of $7.48 billion, better than the consensus of $6.94 billion, and forecasting 2027 revenue of $32.3 billion to $33.8 billion, well above the consensus of $29.15 billion. 

DaVita (DVA) closed up more than +23% after reporting Q1 total revenue of $3.42 billion, better than the consensus of $3.34 billion and forecasting full-year adjusted EPS continuing operations of $14.10 to $15.20, the midpoint well above the consensus of $14.11.

Oscar Health (OSCR) closed up more than +10% after reporting Q1 adjusted Ebitda of $727.1 million, well above the consensus of $435.7 million. 

Uber Technologies (UBER) closed up more than +8% after reporting Q2 gross bookings of $53.72 billion, above the consensus of $52.92 billion. 

Walt Disney (DIS) closed up more than +7% to lead gainers in the Dow Jones Industrials after reporting Q2 revenue of $25.17 billion, above the consensus of $24.87 billion.

CVS Health (CVS) closed up more than +7% after raising its full-year adjusted EPS forecast to $7.30 to $7.50 from a prior forecast of $7.00 to $7.20, stronger than the consensus of $7.12. 

Primoris Services (PRIM) closed down more than -50% after reporting Q1 revenue of $1.56 billion, well below the consensus of $1.73 billion. 

TransMedics Group (TMDX) closed down more than -23% after reporting Q1 adjusted diluted earnings per share of 30 cents, well below the consensus of 59 cents. 

CDW Corp (CDW) closed down more than -20% to lead losers in the S&P 500 after reporting Q1 adjusted EPS of $2.28, weaker than the consensus of $2.30. 

Cencora (COR) closed down more than -17% after reporting Q2 revenue of $78.36 billion, well below the consensus of $81.01 billion.

Coupang (CPNG) closed down more than -13% after reporting a Q1 gross profit margin of 27%, below the consensus of 27.9%. 

Earnings Reports(5/7/2026)

Airbnb Inc (ABNB), Akamai Technologies Inc (AKAM), Becton Dickinson & Co (BDX), Block Inc (XYZ), Charles River Laboratories Int (CRL), Coinbase Global Inc (COIN), Consolidated Edison Inc (ED), Corpay Inc (CPAY), Datadog Inc (DDOG), EPAM Systems Inc (EPAM), Evergy Inc (EVRG), Expedia Group Inc (EXPE), Gen Digital Inc (GEN), Gilead Sciences Inc (GILD), Howmet Aerospace Inc (HWM), Kenvue Inc (KVUE), McDonald's Corp (MCD), McKesson Corp (MCK), Mettler-Toledo International Inc (MTD), Microchip Technology Inc (MCHP), Monster Beverage Corp (MNST), Motorola Solutions Inc (MSI), News Corp (NWSA), Republic Services Inc (RSG), Sempra (SRE), Tapestry Inc (TPR), Targa Resources Corp (TRGP), Trade Desk Inc/The (TTD), Viatris Inc (VTRS), Vistra Corp (VST), WW Grainger Inc (GWW), Wynn Resorts Ltd (WYNN), Zoetis Inc (ZTS).