The major indices closed at or near session highs due to a surge of buying activity in the last 20 minutes of trading, likely driven by short-covering and month-end positioning. Some mega cap names that recovered from losses had a significant impact on index performance, though many stocks participated in the late climb.
Notable recoveries included Apple (AAPL 192.25, +0.96, +0.5%), Microsoft (MSFT 415.13, +0.46, +0.1%), and Alphabet (GOOG 173.96, +0.40, +0.2%), all of which rebounded from earlier losses.
The session maintained an underlying positive bias, which intensified in the final moments of trading. The Invesco S&P 500 Equal Weight ETF (RSP) gained 1.3%, and ten of the 11 S&P 500 sectors closed higher, with eight sectors logging gains greater than 1.0%.
The upside bias followed the release of the April Personal Income and Spending Report, which was better than feared but did not show any improvement in inflation. Treasury yields moved lower in response, supporting the stock market.
The 10-year note yield dropped four basis points today, and 18 basis points in May, to 4.51%. The 2-year note yield settled four basis points lower today, and 16 basis points in May, at 4.89%.
Growth stocks struggled today after Dell's (DELL 139.56, -30.36, -17.9%) disappointing earnings report.
- Nasdaq Composite: +11.5% YTD
- S&P 500: +10.6% YTD
- S&P Midcap 400: +7.2% YTD
- Dow Jones Industrial Average: +2.6% YTD
- Russell 2000: +2.1% YTD
Reviewing today's economic data:
- April Personal Income: 0.3% (consensus 0.3%); Prior 0.5%
- April Personal Spending: 0.2% (consensus 0.3%); Prior revised to 0.7% from 0.8%
- April PCE Prices: 0.3% (consensus 0.3%); Prior 0.3%
- April PCE Prices - Core: 0.2% (consensus 0.3%); Prior 0.3%
- The key takeaway is that year-over-year PCE inflation rates did not worsen or improve, making it unlikely that the Fed would find new confidence that inflation is moving toward its 2% target.
- May Chicago PMI: 35.4 (consensus 41.0); Prior 37.9
Looking ahead, market participants will receive the following economic data on Monday:
Today's News
Activist investor Carl Icahn (Trades, Portfolio) has taken a significant stake in Caesars Entertainment (CZR). While the exact size of the stake and Icahn's intentions remain unclear, the news sent Caesars' shares soaring by 12%. Icahn, known for his aggressive investment strategies, stated that he likes Caesars and owns some stock but would not engage in activism with the company. This development has also positively impacted other casino stocks such as Las Vegas Sands (LVS), MGM Resorts (MGM), and Wynn Resorts (WYNN).
Google (GOOG, GOOGL) has laid off an estimated 100 employees from its cloud computing unit, primarily affecting the "Go To Market" group in the Asia-Pacific region. The layoffs also impacted other units, including consulting, partner engineering, and sustainability. This move follows multiple rounds of layoffs by Google this year as the company continues to evolve its business to meet customer priorities and long-term success.
President Joe Biden announced that Israel has proposed a three-part plan to achieve a cease-fire in Gaza and release all hostages. The plan, communicated to Hamas via Qatar, includes a six-week cease-fire and the release of women and children hostages, followed by negotiations for a permanent cease-fire and Israeli withdrawal. The final phase involves initiating a reconstruction program in Gaza. No immediate response from Israel has been reported.
Amedisys (AMED) saw a 5.2% drop in its stock price after a potential buyer in its planned sale to UnitedHealth (UNH) dropped out. The private equity-backed company had agreed to buy over 100 locations but exited the process, complicating efforts to appease antitrust regulators. UnitedHealth is now seeking another single buyer for these locations.
U.S. crude oil refiners, including Marathon Petroleum (MPC), expect to operate above 90% of their combined processing capacity for the rest of Q2 after completing planned overhauls. This follows an average of 86% capacity utilization in January and February. Analysts predict a profitable summer for refiners, with Marathon aiming for 94% capacity utilization in Q2.
Vistra (VST) outlined plans to increase its natural gas capacity in Texas by 2 GW, leading to a 5.6% drop in its stock price. Despite investor concerns about potential oversupply, Vistra's shares have performed exceptionally well, hitting an all-time high earlier in the week and quadrupling over the past year. The company's mix of gas and nuclear power plants makes it a unique player in the market.
Keurig Dr Pepper (KDP) announced an agreement to acquire all production, sales, and distribution assets of independent bottler Kalil Bottling. This acquisition will enhance KDP's direct-store-delivery operations in Arizona, adding approximately 425 employees and new bottling and distribution rights in the state.
Paramount Global (PARA) is considering an offer from Skydance Media to acquire parts of its business. Paramount's controlling holder, Shari Redstone, is evaluating this offer alongside other potential deals to sell National Amusements. Interest from other parties, including Hollywood producer Steven Paul, suggests multiple avenues for Paramount's future direction.
Boston Beer (SAM) surged 30% amid reports of acquisition talks with Japanese whiskey-maker Suntory. While discussions are still in early stages, the potential deal has fueled significant market speculation. Boston Beer, known for brands like Sam Adams and Truly Hard Seltzer, has a market cap of around $3 billion.
Bitcoin (BTC-USD) is set to close May in the green for the first time since 2020, despite a weekly decline of 1.8%. The cryptocurrency has traded within a narrow range around the $68K mark, briefly touching $70K earlier in the week. The April Core PCE Price Index data, which matched consensus estimates, also influenced Bitcoin's performance.
MongoDB (MDB) experienced a 25% drop following its Q1 results, which showed a macro-induced consumption slowdown and slower growth on newer workloads. Despite these challenges, investment firms recommend buying the dip, citing MongoDB's potential for sustained 20%+ revenue growth driven by core and emerging AI growth drivers.
GuruFocus Stock Analysis
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