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Wednesday, May 06

Noteworthy macro moves today: Oil (WTI) -8.2%. US 10Y Treasury Bond Index +0.5%. US 2Y Treasury Bond Index +0.1%. Noteworthy US mega-cap moves today: Exxon Mobil Corp (XOM) -3.7%. NVIDIA Corp (NVDA) +2.0%. Alphabet Inc (GOOGL) +1.9%.

Global equity markets are trading higher following positive sentiment driven by a significant rebound in U.S. private sector employment data and easing geopolitical tensions related to the U.S.-Iran situation. The ADP Employment Change report released this morning indicated that private businesses added a net 109,000 jobs in April, surpassing expectations of 99,000 and signaling resilience in the labor market.

In the energy sector, oil prices have plummeted sharply by over 8%, influenced by a substantial drawdown of crude oil stocks reported by the American Petroleum Institute (API), which showed an unexpected decrease of 8.1 million barrels for the week ending May 1st. This decline in oil prices has contributed to a more favorable market environment as concerns about supply disruptions ease amid ongoing diplomatic efforts.

Additionally, European equity indices are experiencing strong gains, with notable increases in major markets such as Germany's DAX and France's CAC 40, buoyed by optimism surrounding potential peace negotiations between the U.S. and Iran and robust corporate earnings reports from various sectors. This positive momentum is reflected across global markets as investors respond favorably to these developments amidst broader economic uncertainties.

VanEck Gold Miners ETF (GDX) [+6.0%]
In pre-market trading, the VanEck Gold Miners ETF is experiencing a significant increase, attributed in part to a rise in gold prices, which have moved higher. The ETF's top contributors include major holdings such as Newmont and Agnico Eagle, both reporting impressive financial results, including record earnings and free cash flow, despite broader market declines. This backdrop indicates a disconnect between market perceptions and the underlying financial health of gold mining companies. Additionally, the sector is perceived as oversold, with potential investment opportunities arising from stronger balance sheets and improved capital discipline compared to previous rallies. As the ETF continues to trade higher since Tuesday's close, it remains positioned around the middle of its one-month range and below its 20-day moving average.

United States Oil Fund LP (USO) [-8.4%]
The United States Oil Fund LP is experiencing a significant decline, down sharply as crude oil prices plummet following reports that the U.S. and Iran are nearing a resolution to their ongoing conflict. This development has eased supply concerns, particularly in the Strait of Hormuz, contributing to a notable drop in West Texas Intermediate (WTI) crude prices. The suspension of military operations by the U.S., as announced by President Trump, further underscores the shifting geopolitical landscape impacting oil supply expectations. Consequently, the fund's performance reflects these negative market conditions, with a substantial decline observed since Tuesday's close.

FLEX | +22.6% | +10.7B
Flex Ltd | Electronic Manufacturing Services
Flex Ltd has announced its intention to spin off its Cloud and Power Infrastructure Segment into a new independent publicly traded company, a move that follows the release of its fourth-quarter earnings. The company reported an adjusted EPS of $0.93, exceeding the consensus estimate of $0.87, alongside revenue of $7.48 billion, which surpassed expectations of $6.97 billion. For fiscal year 2027, Flex projects adjusted EPS between $4.21 and $4.51, significantly above the consensus of $3.67. The spin-off aims to create two companies with distinct growth strategies, with SpinCo expected to achieve revenue growth of approximately 65% to 75% in fiscal 2027. This strategic decision is anticipated to optimize operational focus and enhance shareholder value. In pre-market trading, shares are significantly higher since Tuesday's close, reflecting the positive reception of these developments.

CPNG | -10.5% | -3.5B
Coupang Inc | Broadline Retail
Coupang Inc is facing a significant decline in market performance, influenced by several negative financial disclosures. Citi has downgraded the stock to neutral, setting a price target of 22.20. The company reported disappointing first-quarter earnings, with an earnings per share of -0.15, missing estimates by 0.12, and revenues of 8.50 billion, falling short of the expected 8.62 billion. Additionally, adjusted EBITDA was reported at 29 million, significantly below the anticipated 113.5 million. The net income for the quarter was -266 million, contributing to a gross margin of 27%. This disappointing performance, exacerbated by a data breach affecting customer spending and resulting in an operating loss of 242 million, has likely driven today's substantial price drop.

GLW |+17.3% |+28.2B
Corning Inc | Electronic Components
Corning Inc has announced a multiyear partnership with NVIDIA to enhance U.S.-based manufacturing of optical connectivity solutions for AI infrastructure. This collaboration is set to increase Corning's optical connectivity manufacturing capacity tenfold and fiber production by over 50%. The initiative includes the construction of three new manufacturing facilities in North Carolina and Texas, expected to create more than 3,000 jobs. Additionally, NVIDIA has acquired $500 million in warrants allowing it to purchase up to 15 million shares of Corning at a price of $180 each. Following this announcement, Corning's stock is trading significantly higher in pre-market hours, reflecting a positive market reaction. Financial analysts have also responded favorably, with Mizuho raising its price target for Corning from $155 to $160, citing an improved outlook for interconnect chemicals and materials.

IFF |+7.5% |+1.5B
International Flavors & Fragrances Inc | Specialty Chemicals
International Flavors & Fragrances Inc reported a net income of $169 million for the first quarter, a notable recovery from a loss of $1.02 billion in the same period last year. The company achieved an earnings per share (EPS) of $0.66, compared to a loss of $3.98 per share a year ago. Net sales for the quarter were $2.74 billion, slightly down from $2.84 billion last year, yet both adjusted EPS of $1.25 and revenue exceeded consensus estimates. The company reaffirmed its full-year revenue guidance, projecting sales between $10.5 billion and $10.8 billion. In pre-market trading, shares are significantly higher, marking a notable increase since Tuesday's close, following these positive earnings results.

GE |+5.7% |+18.9B
General Electric Co | Industrial Conglomerates
No specific company news or development was identified for General Electric Co. In pre-market trading, the stock is showing a significant increase, having risen from an earlier low, reflecting strong upward momentum. It is currently positioned above its 20-day moving average. This movement occurs amidst broader economic trends where CFOs are increasingly prioritizing revenue growth and mergers and acquisitions, although near-term economic sentiment has cooled slightly.

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