Good Morning Investors,
Markets took a breather on Wednesday following a string of strong sessions, but the momentum in tech, particularly AI, continues to steal the spotlight. The S&P 500 edged up 0.1%, the Dow slipped 0.2%, and the Nasdaq climbed 0.7% as semiconductors and big-cap tech remained firm. Today’s focus shifts to the consumer: we’ll get April’s retail sales report, Walmart earnings, and a fresh PPI inflation print. Add in a scheduled speech from Fed Chair Jerome Powell, and the day is loaded with signals for both the economic outlook and monetary policy trajectory.
Premarket Action – Before the Bell
Futures are soft this morning as traders await key economic data and digest Wednesday’s modest gains. S&P 500 futures are down 0.4%, Nasdaq-100 futures fell 0.7%, and Dow futures dipped 0.3%. Oil is sharply lower following comments from President Trump suggesting a potential Iran nuclear deal, while gold is slightly weaker. European markets are in the red, weighed down by energy stocks, and Asia saw a mixed session with Japan’s Nikkei down and Chinese stocks edging higher. The dollar has softened as traders begin to price in a longer pause on rate moves.
Inflation in Focus, Retail Data Incoming
April’s CPI print offered investors some breathing room, showing headline inflation rising just 2.3% YoY. Today, attention turns to wholesale prices with the Producer Price Index (PPI) expected to rise 0.3% MoM. We also get April’s retail sales, where expectations are flat following a 1.4% surge in March as consumers front-loaded purchases ahead of tariffs. The big question: did spending slow because of caution — or simply because people already bought? Walmart’s results will help answer that.
Nvidia: Back in the $3 Trillion Club
Nvidia is back in the $3 trillion club and back green on the year. Shares jumped another 4.2% Wednesday, powered by two major catalysts. First, the U.S. Department of Commerce officially rescinded the AI Diffusion interim rule, which had threatened to introduce stricter chip export controls starting May 15. This rollback removes a cloud that had loomed over Nvidia’s international GPU sales, particularly to Tier 2 countries like Saudi Arabia and India. Second, Nvidia announced significant AI infrastructure deals in the Middle East, including the deployment of thousands of Grace Blackwell supercomputers through its partnership with Saudi AI firm Humain. These systems, valued at several million dollars each, could generate upwards of $60 billion in forward revenue, reaffirming CEO Jensen Huang’s Sovereign AI strategy as a viable growth engine.
With the AI export headwinds now reversed and sovereign demand ramping globally, I see Nvidia retesting $152 soon and maintain my long-standing $180 price target. AI is going nowhere — and Nvidia continues to lead.
Walmart Beats, Warns on Tariffs
Walmart beat expectations on EPS, coming in at $0.61 vs. $0.58 expected. Comparable U.S. sales rose 4.5%, but total revenue slightly missed estimates at $165.61 billion. Management warned that even with the tariff truce, cost pressures remain — and prices may rise for consumers starting later this month. Still, the retailer reaffirmed its full-year sales and earnings outlook, and highlighted its first profitable quarter for global e-commerce.
My View
We’ve now seen the bounce I called for in April play out in force. The squeeze has worked. While we could get a further push depending on how many shorts are left, I still expect a pullback soon to retest the breakout above key moving averages. But my roadmap from March remains intact: tariffs rolled back, AI strength continuing, and a bullish setup into year-end. I remain confident that this is a growth scare, not a recession — though risks remain if China or EU trade talks stall.
Let’s not lose sight of the bigger win here: retail took advantage of the dip. From a portfolio standpoint, we’ve benefited from being overweight tech and using tax loss harvesting in April. Stay long. Stay rational.
Stocks to Watch
• Nvidia: Rejoins $3T club, back green YTD. Price target held at $180.
• Walmart: Beats on EPS, warns on tariff-driven price hikes.
• Cisco: Raises FY outlook on AI demand, CFO to retire.
• CoreWeave: Bullish outlook, capex outpaces revenue.
• Alibaba: Misses on revenue, cautious outlook amid trade uncertainty.
Analyst Recommendations
• Cisco Systems Inc: Barclays raises target to $66 from $61 after strong Q3.
• CoreWeave Inc: Barclays boosts target to $70 from $60 after beating Q1 revenue estimates.
• Cytomx Therapeutics Inc: Piper Sandler lifts target to $5 from $2.50 on positive trial data.
• Popular Inc: Piper Sandler raises target to $123 from $110 on repricing tailwinds.
• UnitedHealth Group Inc: Morgan Stanley cuts target to $374 from $563 amid DOJ probe.
Final Word
We’re entering a new phase in this market. The tariff panic is receding, inflation is cooling, and leadership from tech is reasserting itself. But we’re not in the clear — not yet. Data is still choppy. Trade deals are still tentative. And sentiment can swing quickly. I remain constructive, but patient. Let’s focus on execution, fundamentals, and avoiding the temptation to overtrade this move.
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.