Stocks Supported by Middle East Peace Hopes and AI Spending

The S&P 500 Index ($SPX) (SPY) today is up +0.21%, the Dow Jones Industrial Average ($DOWI) (DIA) is up +0.65%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.25%.  June E-mini S&P futures (ESM26) are up +0.20%, and June E-mini Nasdaq futures (NQM26) are up +0.27%.

Stock indexes are moving higher today, with the S&P 500, Dow Jones Industrials, and the Nasdaq 100 climbing to new all-time highs. Stocks are supported by prospects for a peace deal in the Middle East, which are easing pressure on crude oil prices and reducing inflation concerns.  Also, evidence of relentless demand for AI-infrastructure upgrades is pushing technology stocks higher, with Dell Technologies up more than +30% after giving a sales outlook that far surpassed analysts’ estimates. 

The markets are awaiting President Trump’s approval of a preliminary deal between the US and Iran to extend a ceasefire by 60 days and reopen the Strait of Hormuz.  Vice President Vance said late Thursday that the parties are “going back and forth on a couple of language points,” including issues relating to Iran’s nuclear capabilities.

Today’s US economic news shows strength in the economy that is positive for stocks.  The May MNI Chicago PMI rose +13.5 to 62.7, stronger than expectations of 50.3 and the strongest pace of expansion in 4.25 years.

Fed comments today were mixed for stocks and bonds.  On the positive side, San Francisco Fed President Mary Daly said Fed interest rate policy is in a good place and that she's "cautiously optimistic" about the US economy, noting that "there's no urgency to make an adjustment" to interest rates.  Also, Minneapolis Fed President Neel Kashkari said, "I think it's premature for me to conclude we need to be raising rates right away and that we need to keep watching the data and watching how the conflict in the Middle East unfolds before I want to make any adjustments."

On the negative side, Kansas City Fed President Jeff Schmid said, "With inflation running above the Fed's 2% definition of price stability or over five years, now is not the time to let down our guard, and we must continue to signal our commitment to price stability and our willingness to take the actions necessary to achieve our mandate."

Crude oil prices are down more than -1% today at a 5-week low as the US and Iran tentatively agreed to extend a ceasefire by 60 days, fueling optimism that the Strait of Hormuz may soon reopen.  Even if a truce extension is agreed, several hurdles remain before crude flows can resume.  Among them, mines in the Hormuz waterway must be removed, shut-in oil fields may take months to restart, and damage to energy infrastructure from drone and missile strikes needs to be repaired.

The markets are discounting a 3% chance of a -25 bp FOMC rate cut at the next FOMC meeting on June 16-17.

The generally favorable Q1 earnings season is winding down.  As of today, 84% of the 485 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 is up +0.17%.  China's Shanghai Composite closed down -0.73%.  Japan's Nikkei Stock Average rallied to a new record high and closed up +2.53%.

Interest Rates

June 10-year T-notes (ZNM6) today are up +2 ticks.  The 10-year T-note yield is down -0.6 bp to 4.441%.  Today’s decline in WTI crude oil prices to a 5-week low is easing inflation expectations and supporting modest gains in T-notes.  Also, bond dealer short covering is supportive of T-note prices as dealers cover their short positions placed against T-notes to hedge against the Treasury’s $215 billion T-note auctions this past week. 

Gains in T-notes are limited after the May MNI Chicago PMI rose more than expected at the strongest pace in 4.25 years.  Also, today’s rally in the S&P 500 to a new record high has reduced safe-haven demand for T-notes.

European government bond yields are moving lower today.  The 10-year German Bund yield is down -1.9 bp to 2.942%.  The 10-year UK gilt yield is down -1.0 bp to 4.804%.

German May CPI (EU harmonized) fell -0.1% m/m and rose +2.7% y/y, weaker than expectations of unchanged m/m and +2.8% y/y.

The German May unemployment change unexpectedly fell by -12,000, showing a stronger labor market than expectations of a +10,000 increase. The May unemployment rate unexpectedly fell -0.1 to 6.3%, showing a stronger labor market than expectations of no change at 6.4%.

ECB Governing Council member Fabio Panetta signaled his support for an ECB rate hike, saying, "The forward-looking picture system seems to call for a recalibration of the monetary policy stance to counter the risk of persistent inflationary tensions."

ECB Governing Council member Gediminas Simkus said he's likely to support an ECB rate hike in June and "a second rate hike is more likely than not."

Swaps are discounting a 92% chance of a +25 bp ECB rate hike at its next policy meeting on June 11.

US Stock Movers

Software stocks are rallying today, with ServiceNow (NOW) up more than +13% and Palantir Technologies (PLTR) up more than +9% to lead gainers in the Nasdaq 100.  Also, International Business Machines (IBM) is up more than +9% to lead gainers in the Dow Jones Industrials, and Atlassian Corp (TEAM) is up more than +9%.  In addition, Oracle (ORCL), Workday (WDAY), and Salesforce (CRM) are up more than +8%, and Datadog (DDOG) is up more than +6%.  Finally, Microsoft (MSFT), Intuit (INTU), and Adobe Systems (ADBE) are up more than +4%.

Okta (OKTA) is up more than +24% to lead cybersecurity stocks higher after reporting Q1 adjusted EPS of 91 cents, above the consensus of 85 cents, and raising its 2027 adjusted EPS forecast to $3.79 to $3.87 from a previous estimate of $3.74 to $3.82, better than the consensus of $3.78.  Also, CrowdStrike Holdings (CRWD) is up more than +6%, and Palo Alto Networks (PANW) is up more than +6%. In addition, Cloudflare (NET), Fortinet (FTNT), and Zscaler (ZS) are up more than +3%.

Chipmakers and AI-infrastructure stocks are stronger today, providing support to the broader market. Micron Technology (MU) is up more than +4%, and Qualcomm (QCOM), ARM Holdings Plc (ARM), and Broadcom (AVGO) are up more than +2%.  Also, Seagate Technology Holdings Plc (STX) and Sandisk (SNDK) are up more than +1%.

Dell Technologies (DELL) is up more than +31% to lead gainers in the S&P 500 after reporting Q1 total revenue of $43.84 billion, well above the consensus of $35.52 billion and raising its 2027 revenue forecast to $165 billion to $169 billion from a previous estimate of $138 billion to $142 billion, stronger than the consensus of $142.12 billion. 

NetApp (NTAP) is up more than +27% after reporting Q4 net revenue of $1.95 billion, better than the consensus of $1.87 billion, and forecasting 2027 revenue of $7.33 billion to $7.58 billion, well above the consensus of $7.20 billion.   

Nextpower (NXT) is up more than +13% after agreeing to buy Prevalon Energy for up to $365 million in cash and stock. 

The Gap (GAP) is down more than -17% after reporting Q1 comparable sales rose +2.00%, weaker than the consensus of +2.93%, and cutting its 2027 net sales estimate to +1% to +2% from a previous forecast of +2% to +3%.

American Eagle Outfitters (AEO) is down more than -12% after reporting Q1 total comparable sales rose +8.00%, below the consensus of +8.48%. 

SentinelOne (S) is down more than -11% after reporting Q1 revenue of $276.7 million, below the consensus of $277.3 million, and forecasting Q2 revenue of $289 million to $291 million, weaker than the consensus of $292.1 million. 

Viasat (VSAT) is down more than -6% after reporting Q4 revenue of $1.17 billion, weaker than the consensus of $1.19 billion. 

Costco Wholesale (COST) is down more than -4% to lead losers in the Nasdaq 100 despite reporting better-than-expected Q3 earnings after several analysts flagged moderating membership growth as a concern going forward.

Autodesk (ADSK) is down more than -4% after several analysts said the company’s $3.6 billion purchase of MaintainX was deemed too expensive. 

Earnings Reports(5/29/2026)

American Woodmark Corp (AMWD), Atlantic International Corp (ATLN), Buckle Inc/The (BKE), Critical Metals Corp (CRML), Genesco Inc (GCO), Liberty Live Holdings Inc (LLYVA), Navan Inc (NAVN), Pioneer Bancorp Inc/NY (PBFS), Richtech Robotics Inc (RR), Whitestone REIT (WSR).