General Market News

U.S. tech stocks are offering their best valuations in years after strong earnings allowed companies to grow into elevated stock prices, with Morningstar finding the AI theme trading at its largest discount since 2019. The 'magnificent seven' tech companies have increased combined 2026 capital expenditure to approximately $725 billion from $670 billion following April earnings reports. However, some analysts question whether hyperscalers can sustain current spending levels and supranormal returns indefinitely.

• The forward P/E ratio for the S&P 500 Information Technology sector peaked above 30x in October 2025 but has since declined as earnings growth lowered valuation multiples, creating what Morningstar calls a 'fantastic entry point'
• The magnificent seven's combined 2026 capex now tracks around $725 billion versus previous expectations of roughly $670 billion, reflecting continued heavy investment in AI infrastructure
• Physical constraints like token availability (basic units of AI processing) may pose challenges to growth as tech firms increasingly ration usage due to supply limitations

Asian stock markets declined on Friday despite a week of strong AI-driven gains, as renewed military exchanges between the US and Iran pushed Brent crude above $101 per barrel. Investors monitored escalating geopolitical risks while awaiting US jobs data and UK election results that could impact global markets.

• Brent crude rose 1.3% to $101.60/barrel after US-Iran military clashes threatened their month-long ceasefire, though both nations later signaled desire to avoid further escalation
• Japan's Nikkei fell 0.4% pressured by SoftBank losses after Arm Holdings warned of potential supply challenges for its new AI chip, despite the index gaining 4.5% for the week
• US April payrolls expected at 62,000 (down from 178,000 in March); Japan suspected of deploying nearly $70 billion in currency intervention as yen weakened to 156.9 per dollar

The upcoming May 14-15 summit between U.S. President Trump and Chinese President Xi Jinping is expected to focus primarily on the Iran war, potentially delaying progress on trade issues like tariffs and rare earth supplies. The U.S. business delegation will be notably smaller than those from other countries visiting China recently, with the White House declining China's invitation for industry-specific CEO meetings. This contrasts with Trump's 2017 China visit when nearly 30 CEOs accompanied him and signed deals worth over $250 billion.

• Boeing and Apple CEOs are among those expected to attend, with Boeing anticipated to seal its first large order from China in nearly a decade during the summit
• Both countries are moderating their confrontational stance on tariffs and rare earths, while China was the first major country to retaliate against Trump administration tariffs announced in April 2025
• An end to the Iran war would provide 'great relief to global business' and be considered a major success for the summit, though recent attacks have complicated peace efforts

Odyssey Therapeutics, a biopharmaceutical company, successfully raised $279 million through an upsized U.S. initial public offering announced on May 7, 2026. The IPO was larger than initially planned, indicating strong investor demand for the biotech firm's shares.

• The IPO was 'upsized,' meaning the company increased the offering size beyond its original plans due to investor interest
• The $279 million raise provides Odyssey Therapeutics with significant capital to fund its biopharmaceutical development programs
• The successful offering comes amid continued investor appetite for biotech companies in the public markets

U.S. revolving debt, primarily credit cards, surged at a 9.1% annualized rate in March 2026, marking the fastest growth since 2022. Total consumer credit reached $5.14 trillion as Americans increasingly rely on credit cards to cover everyday expenses despite interest rates averaging 21%. The acceleration reflects consumers using credit for routine spending and cash-flow management rather than discretionary purchases.

• Total consumer credit grew at 5.8% annualized rate in March, up from 2.1% in February, with revolving balances reaching $1.34 trillion and nonrevolving debt at $3.8 trillion
• Credit card APRs remained elevated at 21% during Q1 2026, with subprime consumers primarily using credit for essential purchases rather than discretionary spending
• Financial confidence varies significantly by income, with households earning over $150,000 showing stronger outlooks than those under $50,000, while 32% of consumers increased spending after adopting mobile card apps

AI memory and storage stocks, including Micron, SanDisk, and Western Digital, have experienced exceptional returns in 2026, driven by tight supply in DRAM and NAND memory critical for AI infrastructure. Strong earnings results and guidance, along with heavy institutional buying, have propelled these companies to massive gains, with some stocks up over 3,000% year-over-year.

• Micron (MU) has grown to nearly $800 billion market cap with 706% gains over the past year, supported by rising earnings expectations and significant institutional investment.
• SanDisk (SNDK), a recent spinoff, has surged 3,391% in the past year and 493% year-to-date, with Q4 revenue guidance of $8 billion versus analyst expectations of $6.62 billion.
• Western Digital (WDC), which spun off SanDisk, maintains a $195 billion market cap with net income projected to reach $3.7 billion this year and potentially $9 billion by 2028.

Despite economic headwinds including the Iran war and high prices, corporate earnings are surging with analysts projecting over 21% growth in 2026, described as 'one of the best earnings seasons in 20 years' by Deutsche Bank. The profit boom is broad-based across manufacturing, retail, and healthcare sectors, attributed partly to Trump's tax and regulatory policies, and is expected to lead to significant job creation once global conditions stabilize.

• Corporate earnings projected to grow more than 21% in 2026, with the profit surge spanning multiple sectors beyond just technology companies
• Trump's One Big Beautiful Bill Act has sparked investment in plants and equipment through tax advantages and reduced regulatory hurdles, while extended tax cuts support consumer spending
• Market strategists expect the earnings boom to translate into substantial hiring once the Iran conflict ends and oil prices drop, with AI infrastructure buildout already creating jobs

French cybercrime authorities have escalated their investigation of Elon Musk and social network X to a criminal probe, focusing on alleged algorithmic manipulation to interfere in French politics and the spread of AI deepfake content. Both Musk and former X CEO Linda Yaccarino were summoned for April 20 questioning but declined to appear. The U.S. Justice Department has accused France of interfering with an American business and reportedly said it wouldn't assist the investigation.

• The probe examines whether X's algorithms manipulated French politics and whether Grok AI knowingly enabled creation of Holocaust denials and nonconsensual sexually explicit deepfakes including child sexual abuse materials
• Multiple jurisdictions including California's attorney general are investigating X and Grok for allegedly allowing deliberate creation and spread of deepfake explicit images of nonconsenting individuals
• The investigation began in early 2025 at the request of French Member of Parliament Éric Bothorel, with French authorities raiding X's Paris office in February

Goldman Sachs' 2025 Retirement Survey reveals significant challenges facing retirement savers, with the cost of retiring rising to 29% of income compared to 21% in 2000. Financial pressures span all income levels, with even high earners reporting living paycheck to paycheck. The report identifies 'financial grit' as the most impactful factor in achieving retirement goals.

• Homeownership costs have surged to 51% of income versus 33% in 2000, while healthcare expenses increased to 16% from 10%, significantly impacting retirement savings across all demographics
• 40% of earners making over $300,000 report living paycheck to paycheck, suggesting lifestyle creep affects high-income households, with the $200,000-$300,000 range showing the lowest paycheck-to-paycheck rates
• 'Financial grit' (optimism and perseverance) showed a 49% improvement in retirement outcomes, outpacing access to 401(k) plans and personalized financial advice as the top factor for meeting goals

Billionaire hedge fund manager Paul Tudor Jones is buying more AI stocks despite calling current market conditions 'crazy times' reminiscent of the dot-com bubble era. He invested in a basket of AI stocks, comparing the current AI boom to the 1981 launch of MS-DOS, but warns the rally likely has only another year or two before a 'breathtaking correction' occurs.

• Jones bought a diversified basket of AI stocks rather than picking individual winners, as investor appetite for AI-related companies has driven the S&P 500 and Nasdaq to recent highs
• He compared the current AI moment to Microsoft's 1981 MS-DOS launch for IBM PCs, citing the start of 'productivity miracles' following Anthropic's Claude Code tool debut in January
• Jones predicts the AI trade has 'another year or two to run' before investors see 'one of those breathtaking corrections,' drawing on his experience profiting from shorting the 1987 market crash

The U.S. Department of Justice's acting antitrust chief warned companies against using artificial intelligence disruption as an unsubstantiated defense in merger reviews. Acting Assistant Attorney General Omeed Assefi stated that claims about AI replacing industries must be backed by actual evidence, not just assertions. The warning signals increased scrutiny of how companies invoke AI-related arguments during antitrust reviews.

• Assefi cautioned that the DOJ 'knows when you are trying to mislead us' and hears frequent claims that AI is disrupting merging parties' industries
• For the DOJ to take AI-related competitive arguments seriously in merger reviews, companies must provide actual evidence rather than speculative claims
• The warning comes as companies increasingly cite AI disruption and technological change as justifications for consolidation in antitrust proceedings

The Bureau of Labor Statistics is expected to report a gain of just 55,000 jobs for April when data releases Friday at 8:30 a.m. ET, with unemployment projected to hold steady at 4.3%. While modest compared to recent years, economists view this as sufficient to maintain labor market stability, though significant disparities exist beneath the surface regarding wage growth and hiring patterns.

• The 12-month average job gain stands at only 22,000, and excluding health care, the economy has seen a net loss of jobs
• Wage growth shows stark inequality: the top one-third of earners saw 6% after-tax wage gains in April while the bottom third gained only 1.5%, representing a real income loss given inflation
• The Federal Reserve faces conflicting signals between stable 'hard data' like jobless claims and softer indicators suggesting continued labor market cooling, with investors betting the Fed will remain on hold through the year

Consumer inflation expectations rose in April 2026, with the New York Fed reporting one-year-ahead expectations increased to 3.6%, up 0.2 percentage points from March. The University of Michigan survey showed an even sharper jump, with year-ahead inflation expectations surging 0.9 percentage points to 4.7%. These elevated readings reflect growing household anxiety about inflation and remain well above pre-pandemic levels.

• One-year-ahead inflation expectations climbed to 3.6% in April while three-year and five-year expectations held steady at 3.1% and 3%, respectively, according to the New York Fed
• The University of Michigan's survey recorded a larger increase, with year-ahead expectations jumping from 3.8% to 4.7%, and long-run expectations hitting 3.5%, the highest since October 2025
• Small businesses are also feeling the pressure, with 58% citing inflation as a top financial challenge in 2025, contributing to broader economic uncertainty

Bitcoin surpassed $80,000, a key resistance level representing institutional cost bases, driven by nearly $5 billion in spot ETF inflows since April and easing inflation concerns. Despite the breakout, analysts caution that regulatory progress primarily benefits other crypto assets while Bitcoin's trajectory remains tied to macro liquidity and institutional flows.

• Spot Bitcoin ETFs absorbed approximately $2.9 billion in April and $2 billion in May, though sentiment indicators remain muted and derivatives positioning is defensively skewed
• Stablecoin yield legislation compromise advanced with Senate passage expected in June and final House vote targeted for late July before August recess, though banking lobbying poses delay risks
• Key downside risks include no Fed rate cuts priced over the next year, rebuilt crypto derivatives leverage that could amplify reversals, and potential Iran escalation or regulatory delays

European Central Bank board member Isabel Schnabel warned that inflation risks in the euro zone have increased due to surging oil prices and supply disruptions stemming from the Iran war. She indicated that the ECB may need to raise interest rates to counter second-round effects, as companies plan price increases and households raise inflation expectations despite subdued demand.

• Investors are pricing in three to four ECB rate hikes over the next 12 months, which would lift the deposit rate from 2% currently to 2.75%-3%
• Schnabel noted that fuel price increases may feed through the economy faster than during 2021-22 because 'memories of that painful inflation episode are still fresh'
• She urged governments to maintain fiscal discipline and preserve prudential rules, warning that fiscal dominance could erode central bank independence and lead to higher inflation and lower growth

Traders on prediction platform Kalshi now see a 58% chance the U.S. and Iran will reach a nuclear deal by 2027, with odds rising following an Axios report that the countries are close to an agreement to end the Middle East war. However, these odds remain below mid-April levels when optimism peaked at over 70% for a deal by June.

• Kalshi traders place 47% odds on a deal by September 2026, while Polymarket traders are more optimistic at 65% for a deal before 2027
• The Axios report indicated countries are nearing a framework for nuclear negotiations, potentially including a moratorium on Iranian nuclear enrichment as part of a broader war-ending agreement
• Market sentiment has fluctuated significantly, with current odds higher than pre-Axios levels but lower than the April 17 peak when deal optimism was strongest

Artificial intelligence is revealing critical vulnerabilities in the U.S. military supply chain, exposing deep dependencies on Chinese-controlled materials and suppliers. The Trump administration is intensifying efforts to address these weaknesses as AI technology traces the origin of defense components and identifies security risks tied to China's decades-long targeting of American manufacturing capacity.

• The number of U.S. manufacturers supporting defense-critical areas like iron castings, magnesium castings, and forgings has dropped from over 360 to below 120 in the past decade
• Exiger CEO Brandon Daniels characterizes China's strategy as 'economic warfare' that has systematically hollowed out America's manufacturing base through forced labor and state subsidies
• The administration is pushing autonomous workflows, automation, and robotics as a path to restore domestic manufacturing capacity for critical defense systems

EDP Renewables, the world's fourth-largest wind power producer, remains optimistic about the U.S. market despite Trump administration rollbacks on renewable energy incentives. The company has secured 1.4 gigawatts of new U.S. capacity since July and plans to invest 4.5 billion euros (60% of total spending) in the U.S. over the next three years. The U.S. represents approximately 50% of EDPR's 20.5 GW total installed capacity.

• EDPR secured 1.4 GW of new U.S. capacity since Washington accelerated phase-out of renewable tax credits in July, with significant growth expected in coming months
• Company forecasts U.S. renewable generation to grow at 8% compound annual rate between 2025-2030, with renewables surpassing natural gas for first time in March (over one-third of electricity generation)
• U.S. contract prices continue rising and are 'well above previous cycles,' supporting strong returns; company is upgrading old wind farms and positioning for data center power demand

Credit Karma announced on May 7, 2026, that it will allow individuals without credit scores to open accounts for the first time, providing access to credit-building tools for 17 million American adults who are credit invisible. The platform will offer resources to help these users establish credit history and improve financial literacy.

• 17 million American adults have no credit file or insufficient credit history to generate a score, and can now access Credit Karma's platform
• Tools include Credit Karma Report, Credit Builder (converting utility/phone payments into credit history), and secured cards to establish credit
• PYMNTS research shows many credit-insecure consumers face financial strains from unforeseen expenses and lack understanding of how to improve credit scores

A Federal Reserve Bank of New York study found that surging gas prices in March 2026, driven by the Iran war and closure of the Strait of Hormuz, disproportionately impacted low-income households. While high-income households maintained consumption levels despite higher costs, low-income households cut real gasoline consumption by 7% but still faced sharp nominal spending increases, creating a K-shaped consumption pattern.

• Nominal gasoline spending rose over 15% in March 2026, with prices hitting a four-year high after the Strait of Hormuz closure disrupted about 20% of global oil supply
• Low-income households cut real gas consumption by 7% while increasing nominal spending by only 12%, compared to high-income households which reduced consumption by just 1% but increased spending by 19%
• The K-shaped consumption pattern was more pronounced than during the 2022 Russia-Ukraine war price spike, with lower-income households likely carpooling or switching to public transit