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Wednesday, May 21

Noteworthy macro moves today: US 10Y Treasury Bond -0.3%. Noteworthy US mega-cap moves today: UnitedHealth Group Inc (UNH) -4.3%. Walmart Inc (WMT) -0.9%. JPMorgan Chase & Co (JPM) -0.8%.

Recent market movements are significantly influenced by the unexpected rise in UK inflation, which accelerated to 3.5% year-on-year for April, surpassing forecasts of 3.3%. This increase has led to a reassessment of interest rate expectations from the Bank of England, with markets now anticipating only one potential cut this year instead of multiple cuts previously expected.

In addition to inflation concerns in the UK, U.S. Treasury yields have risen sharply amid ongoing fiscal discussions surrounding President Trump's proposed tax bill that could add $3 trillion to $5 trillion more debt over time. The uncertainty regarding these policies and their implications on federal deficits is contributing negatively toward investor sentiment across equity markets as evidenced by declines in major indices like the S&P 500 and Nasdaq.

Furthermore, geopolitical tensions remain high following reports suggesting Israel may be preparing military action against Iran's nuclear facilities; such developments tend to heighten risk aversion among investors leading them toward safe-haven assets like gold and currencies such as JPY while exerting downward pressure on USD values amidst broader economic uncertainties linked with trade policy shifts under Trump’s administration.

iShares 7-10 Year Treasury Bond ETF (IEF) [-0.4%, -103.6M]
The iShares 7-10 Year Treasury Bond ETF (IEF) has declined by 0.3% as of the pre-market session on Wednesday. This movement coincides with a notable drop in the US 10Y Treasury Note, attributed to Moody's downgrade of the U.S. credit rating from Aaa to Aa1. This downgrade has raised concerns regarding fiscal sustainability and contributed to increased Treasury yields, which are now approximately 4.477%. Additionally, geopolitical tensions surrounding potential Israeli military actions against Iranian nuclear facilities and ongoing discussions about President Trump's tax bill are influencing market dynamics. The US 2Y Treasury Bond has also decreased, reflecting broader market sentiment that may be impacting IEF's performance.

SPDR S&P 500 ETF Trust (SPY) [-0.5%]
The SPDR S&P 500 ETF Trust (SPY) is currently experiencing a pre-market decline of approximately 0.5%. This movement aligns with broader market trends, as the S&P 500 Index is down due to escalating geopolitical tensions, particularly regarding potential Israeli strikes on Iranian nuclear facilities, which raise concerns about oil supply disruptions. Additionally, Moody's downgrade of the U.S. credit rating from Aaa to Aa1 has contributed to negative sentiment surrounding U.S. equities. Social media discussions reflect this sentiment, with users noting SPY's recent performance and speculating on a potential correction after a significant gain since May 20, 2023. Among SPY's holdings, UnitedHealth Group (UNH) is facing scrutiny and a downgrade from HSBC, leading to a notable decline in its stock price during pre-market trading. Other major contributors to the ETF's performance have also posted losses.

KEYS | +5.6% | +1.7B
Keysight Technologies Inc | Electronic Equipment & Instruments
Keysight Technologies Inc. reported its second-quarter 2025 results, with an adjusted EPS of 1.70, surpassing the consensus estimate of 1.65. Revenue reached 1.31 billion, exceeding expectations of 1.28 billion and marking an 8.2% increase from the previous year. The company also announced guidance for third-quarter adjusted EPS between 1.63 and 1.69, slightly below the analyst estimate of 1.69, while projecting revenue between 1.305 billion and 1.325 billion, compared to a consensus of 1.30 billion. Net income rose to 257 million, up from 126 million a year ago. This positive performance is attributed to growth in both the communications solutions group and electronic industrial solutions segments, contributing to a notable increase in Keysight's stock price following the earnings announcement.

TGT | -4.8% | -2.1B
Target Corp | Consumer Staples Merchandise Retail
Target Corporation reported first-quarter earnings that fell short of expectations, with an adjusted EPS of 1.30 compared to the consensus estimate of 1.64. Revenue also disappointed, totaling 23.85 billion against an expected 24.32 billion. Comparable sales decreased by 3.8%, significantly worse than the anticipated decline of 1.94%. Store sales dropped 5.7%, although digital sales grew by 4.7%. The company revised its full-year adjusted EPS guidance down to a range of 7.00 to 9.00, from a previous estimate of 8.80 to 9.80, citing a challenging environment. EBITDA was reported at 2.29 billion, surpassing the estimate of 1.84 billion. Conversations on social media reflect surprise at the stock's movement despite these financial misses, with discussions highlighting Target's reliance on discretionary spending and external factors impacting its outlook.

PANW | -5.2% | -3.1B
Palo Alto Networks Inc | Systems Software
Palo Alto Networks Inc. reported its fiscal third-quarter financial results on May 20, 2025, with revenue reaching $2.29 billion, slightly above the consensus estimate of $2.28 billion, reflecting a 15% year-over-year increase. Despite this revenue growth, net income declined to $262.1 million, or $0.37 per share, down from $278.8 million, or $0.39 per share, in the previous year. The company adjusted its full-year 2025 earnings guidance to between $3.26 and $3.28 per share and narrowed its revenue outlook to $9.17 billion to $9.19 billion. Following the earnings report, shares experienced a decline of approximately 5%. Additionally, Palo Alto Networks announced a next-generation security annual recurring revenue of $5.1 billion, up 34% year-over-year, alongside a remaining performance obligation of $13.5 billion, reflecting a 19% increase.

XPEV | +5.5% | +2.2B
Xpeng Inc | Automobile Manufacturers
Xpeng Inc. reported its first quarter 2025 unaudited financial results, showcasing a notable year-over-year increase in vehicle deliveries, which rose significantly to 94,008 units. The adjusted earnings per share came in at negative 0.06, outperforming expectations. Total revenues reached RMB 15.81 billion, marking a substantial increase from the previous year, while vehicle sales revenues amounted to RMB 14.37 billion, reflecting a robust growth. The company anticipates vehicle deliveries for the second quarter to be between 102,000 and 108,000 units, with projected revenues ranging from RMB 17.5 billion to RMB 18.7 billion. Social media discussions highlighted these impressive figures, emphasizing the company's ongoing growth trajectory and upcoming product launches, such as the MONA M03 MAX.

UNH | -3.0% | -8.7B
UnitedHealth Group Inc | Managed Health Care
UnitedHealth Group's shares are under significant pressure following a Guardian report alleging the company paid nursing homes to minimize hospital transfers, potentially compromising patient care. Concurrently, HSBC downgraded UnitedHealth's stock rating from "Hold" to "Reduce," with a price target cut from 490 to 270. This downgrade reflects concerns over rising medical costs and the recent departure of CEO Andrew Witty. Analysts from Wolfe Research have also adjusted their target for UnitedHealth from 501 to 390. Social media discussions highlight the ethical implications of the company's practices, with claims of delayed medical attention leading to severe patient outcomes. As a result of these developments, UnitedHealth's stock has dropped sharply in premarket trading.

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