Stocks rebounded as investors tuned out tensions in the Middle East and focused on profits

US stocks rose on Monday as concerns about the repercussions of the Iranian attack on Israel eased, allowing the focus to return to earnings season and inflation risks to hopes of lower interest rates.

The S&P 500 (^GSPC) added nearly 0.5%, while the Dow Jones Industrial Average (^DJI) rose 0.5%, or more than 360 points, after ending the week with sharp losses. The Nasdaq Composite (^IXIC) rose 0.4%.

The focus is shifting as investors shrug off initial fears of an all-out war in the Middle East following Iran's direct missile and drone strike on Israel on Saturday. Efforts by the United States to encourage Israel not to retaliate helped calm nerves, in part because the well-dispatched attack allowed the damage to be contained.

Stocks have been under pressure in recent days with earnings season off to a lackluster start and concerns persisting that inflation will stall short of the Federal Reserve's 2% target. Traders have trimmed their bets on the depth of the Federal Reserve's interest rate cuts this year in the face of disappointing economic data.

Retail sales in March rose 0.7% from the previous month, as consumers continued to spend despite rising interest rates. The monthly reading exceeded economists' expectations for an increase of 0.4%, according to Bloomberg data.

Goldman Sachs (GS) on Monday got off to an upbeat start to this week's earnings, as investors look to corporate results to revive stocks' early 2024 rally. Shares of the Wall Street bank rose more than 5% after first-quarter earnings jumped to beat estimates.

In commodities, oil prices fell more than 1% on Monday after rising ahead of the Iranian air strike. West Texas Intermediate crude futures (CL=F) were trading at around $85 per barrel, while Brent crude futures (BZ=F) approached the $90 level.

Meanwhile, the 10-year Treasury yield (^TNX) added about 10 basis points to trade near 4.61%, rebounding from Friday's sharp decline to look to return to a five-month high last week. Fellow safe haven gold (GC=F) fell after rising as much as 1.2% last week as tensions escalated in the Middle East.

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He lives5 updates

  • Trump Media shares fall 15% as it moves to issue millions of shares

    Shares of Trump Media and Technology Group (DJT) fell as much as 15% after shares of the parent company of Donald Trump's social media platform Truth Social fell. foot To exercise the warrants would mean issuing approximately 21.5 million common shares.

    Monday's decline was an extension of the sell-off seen last week after a decline Updated regulatory filing It showed that the company had suffered huge losses and faced “greater risks” linked to the former president’s ties to the platform.

    Trump Media then went public on the Nasdaq in late March to merge With special purpose acquisition company Digital World Acquisition Corp.

    The stock rose to $66 per share on its first day of trading. On Monday, shares were hovering above $27 per share.

  • The S&P 500 rebounded as investors turned focus to the earnings-packed week

    Stocks rose on Monday as concerns about the fallout from the Iranian attack on Israel over the weekend eased. Investors turned their focus to earnings season as shares of Goldman Sachs (GS) rose more than 5% after the bank's first-quarter earnings jumped to beat estimates.

    The S&P 500 (^GSPC) added nearly 0.8%, while the Dow Jones Industrial Average (^DJI) rose about 0.8% after ending the week with sharp losses. The Nasdaq Composite Index (^NDX) rose 0.9%.

    Oil prices fell about 1% after the Iranian air strike, indicating that fears of any supply disruptions have subsided. West Texas Intermediate crude futures (CL=F) were trading at around $85 per barrel, while Brent crude futures (BZ=F) approached the $90 level.

    Retail sales rose 0.7% in March, higher than the 0.4% monthly increase economists had expected.

  • Salesforce could be looking for deals

    Several reports have emerged that Salesforce (CRM) is nearing a deal to buy data management company Informatica (INFA) for $11 billion or so – Hence both indicators are topping Yahoo Finance's “Trending Ticker” page this morning.

    Salesforce shares fell on the news, as the mood on the Street is that it's unclear whether the business will be a stunning fit (it has lower margins than Salesforce, for example).

    The Street has also been impressed with Salesforce focusing more on growing profit margins in the past year after dealing with a surprise activist investor onslaught (in part due to a series of dilutive acquisitions). This would be Salesforce's first big deal since purchasing Slack in 2021 for $28 billion.

    Informatica stock fell as Salesforce may not offer a premium to the company, according to reports.

    Knowing Salesforce co-founder and CEO Marc Benioff, I'm a little surprised by the potential return to dealmaking. He's told me several times in recent months that Salesforce is still focused on increasing profit margins — in fact, the company disbanded its M&A team last year!

    However, Benioff likes to do big deals and the company has the money to do them. Then why not?

  • Eyes on Nvidia and Intel

    Citigroup is opening “bullish trigger watches” on shares of Nvidia (NVDA) and Intel (INTC) after the chipmakers' shares sank last month.

    On Nvidia:

    “Recent supply chain discussions indicate that demand visibility has extended into the first half of 2025 with calendar year 2024/2025 GPU [chip] The unit forecast is well in line with our base case model of 4.3 million/5.2 million. We expect supply chain comments from key foundry/memory suppliers during earnings and Computex Taiwan on June 2 where Nvidia CEO Jensen Huang will deliver a keynote that could be positive catalysts for the stock.”

    On Intel:

    “Intel stock is down ~29% year to date, and we believe the stock is facing negative sentiment due to foundry losses. Given the positive March notebook data which saw a 44% month-over-month increase, we believe there is an upside to consensus estimates We expect the stock to trade higher as Intel derives approximately 31% of its revenue from laptop CPUs.

    Further Analysis: I took a slightly contrarian view on Nvidia stock price action in my Sunday Morning Summary newsletter. More about this here.

  • Continue to connect the dots regarding the conflict between Iran and Israel

    As markets deal with the weekend news of an Iranian strike on Israel, it is important to continue to connect the dots on these geopolitical risks.

    Specifically regarding oil, which Citi believes could now reach $100 per barrel.

    I liked the link the Deutsche Bank team made on the oil front this morning:

    “More directly, the effects of higher oil prices will be felt globally, and this comes at a time when there are already concerns about persistent inflation in many countries. This is something that could create a dilemma for central banks, as we also found out afterwards.” Russian invasion of Ukraine in 2022. On the one hand, there is a risk that a geopolitical shock could hurt growth, bringing forward the timing of interest rate cuts by June, rising from 24% to 30%, although it has since returned to 24 % This morning. But again, if higher oil prices lead to more inflation and there are second-round effects on other prices, that could mean monetary policy has to stay in restricted territory for longer so the potential effects could work both ways.”

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