Chip Stock Strength Lifts the Broader Market

The S&P 500 Index ($SPX) (SPY) today is up +0.18%, the Dow Jones Industrial Average ($DOWI) (DIA) is down -0.58%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.60%.  June E-mini S&P futures (ESM26) are up +0.12%, and June E-mini Nasdaq futures (NQM26) are up +0.55%.

Stock indexes are mixed today.  Gains in processor and memory chipmakers, the key drivers of the recent rally in the artificial intelligence trade, are leading today's stock gainers. Nvidia is up more than +1% after co-founder Jensen Huang joined President Trump on his visit to China, bolstering optimism that this week’s summit between Mr. Trump and China’s Xi Jinping could lead to a series of trade deals, especially around semiconductors. 

However, stock indexes fell from early highs and are trading mixed as today’s stronger-than-expected US Apr PPI report showed a resurgence in inflation that is pushing bond yields higher and may prompt the Fed to keep interest rates higher for longer.  Also, rising crude oil prices have boosted inflation expectations and bond yields as WTI climbed to a 1-week high today.  The 10-year T-note yield rose to a 10-month high today at 4.49%.

US Apr PPI final demand rose +1.4% m/m and +6.0% y/y, stronger than expectations of +0.5% m/m and +4.8% y/y, with the +6.0% y/y jump being the largest in 3.25 years.  Also, Apr PPI ex-food and energy rose +0.6% m/m and +5.2% y/y, stronger than expectations of +0.3% m/m and +4.3% y/y, with the +5.2% y/y gain being the largest in 3.25 years.

US MBA mortgage applications rose +1.7% in the week ended May 8, with the purchase mortgage sub-index up +3.9% and the refinancing mortgage sub-index down -0.8%.  The average 30-year fixed rate mortgage rose +1 bp to 6.46% from 6.45% in the prior week.

WTI crude oil prices (CLM26) are up more than +1% at a 1-week high.  The International Energy Agency (IEA) said in a monthly report today that global oil inventories declined at a rate of about 4 million bpd in March and April, and the market will remain “severely undersupplied” until October even if the conflict ends next month.  The Strait of Hormuz 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 2% chance of a -25 bp FOMC rate cut at the next FOMC meeting on June 16-17.

Earnings reports thus far in this reporting season have been supportive of stocks.  As of today, 83% of the 454 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 are mixed today.  The Euro Stoxx 50 recovered from a 1-week low and is up +0.53%.  China's Shanghai Composite rallied to a nearly 11-year high and closed up +0.67%. Japan's Nikkei Stock Average closed up +0.84%.

Interest Rates

June 10-year T-notes (ZNM6) today are down -4 ticks.  The 10-year T-note yield is up +1.8 bp to 4.481%.  Jun T-notes fell to a 1.5-month low today, and the 10-year T-note yield jumped to a 10-month high of 4.489%.  T-notes are sliding today after US April producer prices rose more than expected, a hawkish factor for Fed policy.  Also, rising inflation expectations are bearish for T-notes as the 10-year breakeven inflation rate rose to a 1-week high of 2.513% today.  In addition, supply pressures are weighing on T-notes as the Treasury will auction $25 billion of 30-year T-bonds later today to conclude this week’s quarterly refunding.

European government bond yields are mixed today.  The 10-year German Bund yield rose to a 1.5-week high of 3.116% and is up by +0.3 bp to 3.104%.  The 10-year UK gilt yield is down -3.0 bp to 5.071%.

Eurozone Mar industrial production rose +0.2% m/m, weaker than expectations of +0.3% m/m.

ECB Governing Council member Olli Rehn warned that recent data are starting to point to stagflation as a result of the Iran war and rising energy prices, saying, "The first signs were already visible in the statistics, when growth in the Eurozone in the first quarter was only slightly positive, and inflation accelerated to 3%."

Swaps are discounting an 83% chance of a +25 bp ECB rate hike at its next policy meeting on June 11.

US Stock Movers

Chipmakers are climbing today on hopes that this week’s summit between President Trump and China’s Xi Jinping could lead to a series of trade deals, especially around semiconductors.  ON Semiconductor (ON) is up more than +9% to lead gainers in the S&P 500, and Marvell Technology (MRVL) is up more than +9% to lead gainers in the Nasdaq 100.  Also, Micron Technology (MU) and ARM Holdings Plc are up more than +5%, and Texas Instruments (TXN) and Analog Devices (ADI) are up more than +3%.  In addition, Nvidia (NVDA), Qualcomm (QCOM), and NXP Semiconductors NV (NXPI) are up more than +1%.

Nebius Group NV (NBIS) is up more than +15% after reporting Q1 revenue of $399.0 million, stronger than the consensus of $391.6 million. 

Corcept Therapeutics (CORT) is up more than +7% after UBS upgraded the stock to buy from neutral with a price target of $72. 

Sensata Technologies Holding Plc (ST) is up more than +7% after Truist Securities upgraded the stock to buy from hold with a price target of $58. 

Akamai Technologies (AKAM) is up more than +6% after Bank of America Global Research upgraded the stock to buy from neutral with a price target of $175.

Mosaic (MOS) is up more than +4% after RBC Capital Markets upgraded the stock to outperform from sector perform with a price target of $27.

Wix.com (WIX) is down more than -29% after reporting Q1 adjusted gross margin of 66%, below the consensus of 67.8%.

Birkenstock Holdings Plc (BIRK) is down more than -13% after reporting Q2 operating profit of 155.5 million euros, below the consensus of 168.1 million euros. 

Dynatrace (DT) is down more than -12% after forecasting Q1 adjusted EPS of 44 cents to 45 cents, weaker than the consensus of 45 cents.   

MercadoLibre (MELI) is down more than -4% after Citigroup downgraded the stock to neutral from buy.

American Electric Power (AEP) is down more than -3% after announcing the commencement of a registered underwritten offering of $2.6 billion of shares of its common stock. 

Earnings Reports(5/13/2026)

Amdocs Ltd (DOX), Birkenstock Holding Plc (BIRK), Cisco Systems Inc (CSCO), Doximity Inc (DOCS), Dynatrace Inc (DT).