MARKET WRAP

Stocks ended higher Wednesday after the Federal Reserve held interest rates steady, as widely expected, and acknowledged risks to both economic growth and inflation. Equities saw late day volatility but nothing extreme. We’ll see the full reaction tomorrow as market participants have the night to digest the news. On the day: SPX +0.4%, QQQ +0.4% and IWM +0.3%. Yields were lower on the Fed statement but again, nothing extreme. The 10Y yield is now 4.28%. Gold backed up a tad, as did Oil.

Alphabet (GOOGL) was down sharply on talk from Apple about AI replacing search. More on that on today’s MRKT Call. Nvidia (NVDA) saw a late day surge on a report that chip restrictions may be eased, the timing of that may have given some false signals on the market reaction to the Fed.

After hours: On the earnings front, CVNA is down -7%, and Applovin (APP) is higher by +15%.

• MRKT Call: Danny Moses is back with Dan to talk the Apple/Google AI vs search news, stocks above their 200d average, the FOMC and more.

• RiskReversal Pod: Dan Nathan and ⁠Gene Munster⁠, managing partner at Deepwater Asset Management, dive deep into the performance and future prospects of major tech companies.

MRKT MATRIX: TODAY’S TOP STORIES

• S&P 500 gyrates as investors digest Fed decision, trade outlook and earnings (CNBC)

• Trump to Rescind Global Chip Curbs Amid AI Restrictions Debate (Bloomberg)

• U.S. and Chinese Officials to Meet for Trade Talks (WSJ)

• Dollar Faces $2.5 Trillion ‘Avalanche’ of Asian Sales, Jen Says (Bloomberg)

• US companies plot $500bn share buyback spree (Financial Times)

• Apple Eyes Move to AI Search, Ending Era Defined by Google (Bloomberg)

• IBM CEO Says AI Has Replaced Hundreds of Workers but Created New Programming, Sales Jobs (WSJ)

• OpenAI Plans to Slash Revenue Share to Microsoft After Restructuring (The Information)

• EV Sales Streak Grinds to a Sudden Halt (WSJ)

• AMD delivered earnings that topped expectations, leading to a Bank of America upgrade (CNBC)

• Disney Raises Profit Forecast on Strong Parks, Streaming (Bloomberg)

• Uber misses revenue expectations with trips up 18% over last year (CNBC)

WHAT’S NEXT?

While the FOMC statement highlighted inflation risks, the initial reaction to the tone was interpreted as possibly dovish at the margin.

From Peter Boockvar: In the Fed's statement, they made a point to start that ex the distortions to the Q1 trade data "recent indicators suggest that economic activity has continued to expand at a solid pace." We can all quibble with that optimistic assessment. The commentary on the labor market and inflation remained the same as in the previous statement.

What was added was the obvious acknowledgement of the higher level of unknowns. "Uncertainty about the economic outlook has increased further. The Committee is attentive to the risks to both sides of its dual mandate and judges that the risks of higher unemployment and higher inflation have risen."

Bottom line, that stagflationary risk highlighted by the FOMC is a handcuff type acknowledgement that freezes them for now until they get more details on what the tariff regime globally will look like in coming months/quarters.

The response in the Treasury market was lower yields across the curve I guess on the belief that at the end of the day, that heightened 'uncertainty' will favor a focus more on the unemployment rate than the inflation one. To be clear though, today's statement did NOT lean in any one direction in terms of priorities.

We’ll see tomorrow if the initial reaction carries over. For the rest of the week we have initial jobless claims in the morning, then into Friday some suddenly important import/export numbers from China, and Fed governor speak.

The expected move for the rest of the week is about 1.3% in SPX which corresponds to about 5550-5700.

Thursday May 7th:

• Earnings Pre-Market: PTON 15%, SHOP 10%

• 8:30am - Initial Jobless Claims

• Earnings After-hours: COIN 7%, TTD 13%, MARA 9%, MELI 7%, DKNG 9%

Bonus points to any indie music nerds that get today’s email title.

TODAY’S EPISODES

Watch MRKT Call’s newest episode: Stocks Stall Ahead of Fed Meeting

• Analysis: SPX, QQQ, AAPL,GOOGL, IWM, DASH, UBER, T, MRVL, AMD, XLE, XOM, VIX, US10YY, Gold

• Call of the Day: BoA upgrades energy. 

• Call of the Day 2: Bill Miller vs Paul Tudor Jones

• Chart of the Day: Inventories

Learn more about our sponsor, CME Group.

Watch RiskReversal Podcast’s newest episode: Gene Munster's Mag7 Review: AI Enthusiasm & Tariff Impacts

They begin with a nostalgic look at Apple's early ventures into audio products before moving into a comprehensive review of Apple's recent earnings call, highlighting China's impact on its performance and future AI integrations. The discussion then shifts to Microsoft's mixed results despite its early investments in generative AI, particularly through its partnership with OpenAI, and possible future partnerships with lesser-known AI companies like Anthropic. They also touch on Google's challenges with AI improvements and ad revenue, and how Gemini stacks up against OpenAI. The episode concludes with a critical view of Tesla's current market performance, Elon Musk's leadership, and potential future strategies, including a possible merger with his other ventures like X and XAI.

Timecodes

• 0:00 - MSFT

• 15:40 - GOOGL

• 28:15 - META

• 37:00 - AAPL

• 47:00 - TSLA

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