Good Morning Investors,
Markets are wrapping up the week with cautious optimism. The S&P 500 gained another 0.4% Thursday, while the Dow added 0.7% and the Nasdaq snapped its six-day win streak. Futures point higher this morning as traders digest soft inflation readings, tariff-related commentary from Walmart, and the next steps on the Trump administration’s sweeping tax and trade agenda.
We’ve now seen five straight days of broad market gains as sentiment stabilizes post-CPI and the US-China tariff truce. But caution remains warranted — rising corporate warnings about price pressures, slower consumer activity, and geopolitical friction suggest we’re not out of the woods yet. Still, the base case remains intact: a soft landing is more likely than a full-blown recession, and we see tactical opportunities emerging for selective buyers.
Before the Bell
Futures are slightly higher heading into Friday’s session. S&P 500 futures are up 0.2%, Dow futures add 0.3%, and Nasdaq 100 futures are up 0.2%, rebounding after a brief pause in tech momentum. Treasury yields are lower across the curve as investors weigh the latest inflation and housing data. Oil prices edged up slightly, while gold continues to retreat amid improved risk sentiment.
Globally, European equities are poised to end the week on a strong note, helped by earnings and easing trade concerns. In Asia, Japanese shares finished flat after trimming early losses, while Hong Kong and Shanghai fell again on renewed tech sector worries and mixed economic signals. Chinese officials suggested the 90-day tariff pause may be too short, pushing for longer-term clarity.
Nvidia: Back in the Trillionaire Club
Nvidia (NVDA) is back above a $3 trillion market cap and officially green on the year. The rally has been fueled by two major catalysts: the rescinding of the Biden-era AI chip export controls and a string of sovereign AI deals across the Gulf, including a massive rollout of Grace Blackwell supercomputers in Saudi Arabia.
The end of the AI Diffusion interim rule allows Nvidia to re-engage globally on its own terms, with Sovereign AI infrastructure sales estimated at over $10B. Add to that the company’s moves to expand in China — including a new R&D hub in Shanghai — and it’s clear Nvidia is playing a long game, even as regulatory scrutiny shifts.
With that in mind, I maintain my $180 price target on Nvidia and expect shares to trade back to $152 in the near term. AI demand is not slowing, and Nvidia remains the market’s best pure-play exposure to that trend.
Macro View: Recession Avoided, But Cuts Still Needed
The Fed will have enough soft data in hand to justify a cut later this year but I don’t think they’ll rush. June feels too soon, but September is a live possibility.
We are not heading into a deep recession, in my view, but slowing growth and a weakening labor market will demand action to support reacceleration. The real concern right now is stagflation — that uneasy combination of high prices and low growth. April's CPI and PPI were reassuring, but wage pressures and demand softness remain in the backdrop.
For markets to sustain this rally — and more importantly, to justify January’s 25x forward earnings multiples — we’ll need clearer signs of growth. The current bounce has been healthy, but it needs fundamental support soon.
AMD: More Than Just a Runner-Up
The recent Dubai deal and broader AI infrastructure push make me more constructive on AMD (AMD). I now increase my price target to $140 with potential for further upside as demand for competitive GPU alternatives accelerates. Nvidia may lead, but AMD is rapidly becoming a credible second supplier in hyperscale deployments.
Today’s Watchlist
Charter Communications (CHTR) and Cox Communications to merge in a $34.5B mega-deal that reshapes US broadband.
Walmart (WMT) warned of tariff-induced price hikes in Q2, even as it beat on earnings. Expect ripple effects across retail.
UnitedHealth (UNH) bounced back 3% in premarket trading after yesterday’s DOJ probe-driven plunge.
Applied Materials (AMAT) fell 6% after missing Q2 revenue expectations amid China export challenges.
Take-Two (TTWO) slipped on soft FY26 bookings outlook as GTA VI delays weigh on sentiment.
Closing Thoughts
Relief is real but so is resistance. We’ve seen a broad bounce driven by macro relief and AI momentum, but there’s more work to be done before a true breakout is confirmed. Growth needs to reassert itself. Right now, markets are rallying on the back of soft inflation data, geopolitical relief, and liquidity, but valuations are still stretched. Without a stronger earnings revision cycle or a clear Fed pivot, upside may be capped.
That said, tactical opportunities are everywhere. The rotation back into large-cap tech is a signal of confidence, and the AI capex cycle is far from over. There’s a quiet grind happening beneath the surface. So while risks remain, they are increasingly known quantities.
Stay disciplined, stay invested, and keep looking for quality in a market that’s starting to reward it again.
Dan Sheehan
This newsletter is for informational purposes only and should not be considered as investment advice. Please consult with your financial advisor about your specific situation.