Stocks Rising into Final Hour on Mideast War Resolution Hopes, Plunging Long-Term Rates, Earnings Outlook Optimism, Transport/Alt Energy Sector Strength

Economic/Market Gauges:

• North American Investment Grade CDS Index 53.2 -2.5%
• BofA Private Credit Proxy Index 71.9 +1.1% 
• Bloomberg US Securitized MBS/ABS/CMBS Avg. OAS .32 +3.0 basis points
• BofA Global Financial Stress Indicator -.12 -2.0 basis points
• European Financial Sector CDS Index 59.0 -3.2%
• Emerging Market CDS Index 159.4 -1.6%
• Israel Sovereign CDS 62.0 -2.1% 
• Bloomberg Global Trade Policy Uncertainty Index .7 unch.
• US Morning Consult Daily Consume Sentiment Index 88.9 -.5

• Citi US Economic Surprise Index 47.6 +2.3

• Citi Eurozone Economic Surprise Index -52.7 -.5

• Citi Emerging Markets Economic Surprise Index 35.2 +3.1
• S&P 500 Current Quarter EPS Growth Rate YoY(460 of 500 reporting) +24.9% unch.
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 356.0 +.36:  Growth Rate +28.5% +.2 percentage point, P/E 20.9 +.2
• S&P 500 Current Year Estimated Profit Margin 15.39% +1.0 basis point
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(8 of 10 reporting) +62.1% unch.
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 869.06 +3.25: Growth Rate +119.5% +.8 percentage point, P/E 19.7 +.1 
• Bloomberg US Financial Conditions Index 1.00 +2.0 basis points
• US Yield Curve 53.0 basis points (2s/10s) -1.75 basis points
• Bloomberg Industrial Metal Index 184.1 +1.3%
• Dutch TTF Nat Gas(European benchmark) 48.9 euros/megawatt-hour -5.7%
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 11.2% -.8 percentage point
• US Atlanta Fed GDPNow Q2 Forecast +4.0% unch.
• US 10-Year T-Note Yield 4.56% -10.0 basis points
• 1-Year TIPS Spread 2.93 -14.0 basis points

• Highest target rate probability for July 29th FOMC meeting: 86.8% (+2.4 percentage points) chance of 3.5%-3.75%. Highest target rate probability for Sept. 16th meeting: 74.4%(+7.0 percentage points) chance of 3.5%-3.75%. (current target rate is 3.5-3.75%)
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +1,640 open in Japan 
• China A50 Futures: Indicating -27 open in China

• DAX Futures: Indicating +70 open in Germany

Portfolio:

• Higher: On gains in my biotech/consumer discretionary/industrial/tech sector longs
• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges, then added them back
• Market Exposure: Moved to 75% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Value +.8%

Sector Underperformers:

• 1) Energy -2.9% 2) Social Media -1.3% 3) Healthcare Providers -.4%

Stocks Falling on Unusual Volume: 

• PCVX, BRUN, WRBY, TGT, WOLF, PUMP, VFC, TGS, ADI, RDDT, GDS, BILI and MRAM

Stocks With Unusual Put Option Activity:

• 1) EWG 2) XP 3) TE 4) HIVE 5) GT

Stocks With Most Negative News Mentions:

• 1) INTU 2) PHR 3) ZIM 4) MEDP 5) ATRA

Sector ETFs With Most Negative Money Flow:

• 1) IXN 2) XLF 3) IYJ 4) UTES 5) XLK

Charts:

• ETFs Falling on Unusual Volume
• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Small-Cap Growth +2.6%

Sector Outperformers:

• 1) Airlines +8.6% 2) Alt Energy +4.3% 3) Semis +3.7%

Stocks Rising on Unusual Volume:

• IMVT, CTEV, XNDU, RVI, NVTS, ALAB, RIOV, FCEL, ENPH, ARM, GH, KURA, QUIK, USAR, RXO, RLAY, ALGT, ALK, LPG, NNE, W, SA, UAL, SMCI, IREN, PPTA, CCL, NCLH, TLN, AEVA, LSCC, CLSK, BE, AAL, VOR, TOL, MARA, SYNA, CEG, UEC, JHX, INOD, SGI, DRTS, ATRO, BURL, RDW, POET, AMBQ, POET, VSH, KLAR, KELYA, TKR, VST, SYM, QXO, INTC, XP, CRVS, HMY, XP, CPA, GMAB, DSGN, GENB, CYRX, MT, TJX, UUUU, TTMI, DSGN, DB, RYAAY, ORKA, MLYS, CHRW, SSSS, RRX, DXCM, MRVL, TX, BAP, OSK, CAVA, OPCH, GILT, ONTO, ABVX, MBX, FLEX, HUN, BSAC, MU, OUST, CEPT, GMED, LKQ, KYIV, GPCR, AAP, AS, CMBT, AZTA, HSBC, RIVN, NU, GCT and SKY

Stocks With Unusual Call Option Activity:

• 1) DOC 2) TE 3) ORBS 4) SABR 5) HIVE 

Stocks With Most Positive News Mentions:

• 1) CAPS 2) UAL 3) LPG 4) DAL 5) NCLH

Sector ETFs With Most Positive Money Flow:

• 1) XLV 2) SMH 3) IYK 4) XLC 5) IGV

Charts:

• ETFs Rising on Unusual Volume
• Stocks Rising on Unusual Volume

Tomorrow's Earnings/Economic Releases of Note; Market Movers

Earnings of Note 
Company/Estimate 

Before the Open:

• (AAP)/.43
• (DE)/5.70
• (NTES)/15.12
• (RL)/2.55
• (WMT)/.66 

After the Close: 

• (CPRT)/.41
• (DECK)/.
• (ROST)/1.73
• (TTWO)/.57
• (WDAY)/2.51
• (ZM)/1.42 

Economic Releases 

8:30 am EST

• Initial Jobless Claims for last week is estimated to fall to 210K versus 211K the prior week.
• Continuing Claims is estimated to rise to 1787K versus 1782K prior.
• The Philly Fed Business Outlook Index for May is estimated to fall to 17.6 versus 26.7 in April.
• Housing Starts for April is estimated to fall to 1419K versus 1502K in March.
• Building Permits for April is estimated to rise to 1383K versus 1363K in March.  

9:45 am EST

• S&P Global US Manufacturing PMI for May is estimated to fall to 53.8 versus 54.5 in April.
• S&P Global US Services PMI for May is estimated to rise to 51.1 versus 51.0 in April.
• S&P Global US Composite PMI for May is estimated to fall to 51.6 versus 51.7 in April. 

11:00 am EST

• The Kansas City Fed Manufacturing Activity Index for May is estimated to fall to 8.0 versus 10.0 in April. 

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Barkin speaking, Atlanta Fed GDPNow Q2 update, Fed's weekly balance sheet report, weekly EIA natural gas inventory report, (ELAN) annual meeting, (BMI) investor day, (AMKR) investor day, (CMI) analyst day, (NEE) annual meeting, (LH) annual meeting, (HD) annual meeting, (MTZ) annual meeting, (PWR) annual meeting, (WING) annual meeting, (VZ) annual meeting, (SPOT) investor day, (W) annual meeting, (APA) annual meeting, (BE) annual meeting, (SCHW) annual meeting, (ILMN) annual meeting, (NOW) annual meeting, (DD) annual meeting, (HOG) annual meeting, (GNTX) annual meeting and the B. Riley Tech Conference could also impact global trading tomorrow.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running +4.4% Above 100-Day Average 
• Nasdaq/NYSE Volume Ratio 14.1 -1.4
• 7 Sectors Rising, 4 Sectors Declining
• 72.6% of Issues Advancing, 25.6% Declining 
• TRIN/Arms 1.20 +75.0%
• Non-Block Money Flow +$198.1M
  
• 70 New 52-Week Highs, 65 New Lows
• 51.5% (+4.4%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 53.4 +5.9

Polymarket: 

• Will China invade Taiwan by end of 2026? 7.0% unch.
• Trump announces US blockade of Hormuz lifted by June 30th 49.0% +1.0 percentage point
• US x Iran permanent peace deal by June 30th 36.0% +2.0 percentage points 
• Iran Ceasefire Continues through June 30th 48.0% -3.0 percentage points 
• US Invades Iran before 2027 27.0% -1.0 percentage point

Other:

• Bloomberg Global Risk-On/Risk-Off Index 122.9 -1.5%
• Global Monitor Iran Instability Index 92.0 +6.0
• Strait of Hormuz Oil Tanker Traffic Curtailed Estimate 74.0% -24.0 percentage points
• US High-Yield Tech Sector OAS Index 452.75 -5.25 basis points
• Bloomberg Cyclicals/Defensives Index 254.0 +.8%
• Morgan Stanley Growth vs Value Index 152.1 +.5%
• CNN Fear & Greed Index 61.0 (GREED) unch.
• 1-Day Vix 13.3 -.4%
• Vix 17.8 -1.7%
  
• Total Put/Call .63 -24.1%

Wednesday Watch

Around X:

• @Business  

• The European Union finalized the text of its long-delayed US trade deal after months of negotiations, clearing a major hurdle to ratifying the pact before President Donald Trump’s threatened deadline to impose higher tariffs. 
• For months, US banking executives fretted that Trump was poised to conscript their workforces in a sweeping crackdown on immigration. Now, abruptly, Trump appears to be sparing them that trouble.
• Taiwan’s status was thrust back into the spotlight after US president Donald Trump made a series of comments about the island following his high-stakes summit with Chinese leader Xi Jinping. Here's why the issue of Taiwan's independence is so fraught.
• Donald Trump signed an executive order that directs regulators to issue guidance on banking services to undocumented migrants, in a move that could tighten access to the financial system. 
• Japanese stocks are under pressure as long-term interest rates approach 3%, levels which are stoking fears about a hit to corporate earnings via increased borrowing costs.
• Get up to speed on what's moving global markets.
• Here’s what you need to know to start your day.    

• @ZeroHedge

• Multiple States Begin Ejecting Illegal Immigrants From Subsidized Healthcare.
• Cuban Leader Warns Of Potential 'Bloodbath' If US Takes Military Action. 
• Iran Teaching Civilians How To Shoot: Public Tutorials On State TV & In Marketplaces. 
• Sanctuary Jurisdictions Must Comply Or Face More ICE Boots On The Ground: Homan.
• Massie Out: Gallrein Wins Kentucky Republican Primary.
• and UAE building out a 2nd pipeline that should be ready next year. Hormuz may never again be what it was for oil.         
• "Need Solidarity , Not Stigma": African Officials Say US Ebola-Related Restrictions Unnecessary.
• Americans Who Can Are Dropping Medical Insurance.
• Korean Bubble Mania: Retail Investors Max Out On Margin Debt, Choose To "Risk Complete Collapse" Than Miss Stock Rally.
• You know what soaring Treasury yields will really help with? The $1.3 trillion in annual US interest expense. For context, the largest US government outlay is Social Security. It is $1.6 trillion.
• Trump Announces Expansion Of TrumpRx With 600 New Generic Drugs.
• TX-35 Democratic candidate Maureen Galindo says she will convert ICE detention center in Karnes County into an internment camp for "American Zionists.". "It will also be a castration processing center for pedophiles, which will probably be most of the Zionists," she added.      
• *US PLANS TO SHRINK FORCES AVAILABLE TO NATO DURING CRISES: RTRS. *US TO TELL NATO ALLIES THIS WEEK ABOUT PULLBACK: RTRS.
• Americans Are Getting Behind On Their Debts At A Very Frightening Pace.
• Memorial Day Gas Demand Surge Collides With Hormuz Shock As $5 Demand-Destruction Line Nears. 
• Bond volatility is exploding, upside skew across MegaCap AI names sits near the 100th percentile, and cash just triggered a sell signal. That is not a stable setup. 
• Dip-Buyers Rescue Stocks (ish) From Bond Bloodbath Ahead Of NVDA Earnings; Oil Up, Gold Down.

• @CNBC

• CNBC Daily Open: Bond markets and the Senate rebuke Trump as Iran war worries linger. 
• Asia markets poised for mixed open amid spike in Treasury yields, Iran tensions.
• SpaceX picks Goldman Sachs for lead left position on record-breaking IPO, sources say.
• Wednesday's big stock stories: What’s likely to move the market in the next trading session.
• U.S. Treasurys are now firmly in the 'danger zone,' strategists say. 
• Stock futures are little changed as traders await Nvidia’s earnings: Live updates.
• OpenAI announces new Guaranteed Capacity offering for customers to secure compute.
• Fed to hike? When traders see a rate increase coming.       

• @TheTranscript 

• Toll Brothers CEO: "We are pleased with our first quarter results, as we met or exceeded guidance across nearly all metrics."

Night Trading 

• Asian equity indices are -1.25% to -.25% on average. 
• Asia Ex-Japan Investment Grade CDS Index 76.5 +1.5 basis points. 
• China Sovereign CDS 43.0 +.5 basis point.
• China Iron Ore Spot 107.25 USD/Metric Tonne -.5%. 
• Crude Oil 107.80/bbl. -.8% 
• Gold 4481.3 USD/t oz. -.7%. 
• Swiss Franc/Offshore Chinese Renminbi Cross 8.63 -.16%.
• Bloomberg Emerging Markets Currency Index 35.25 -.01%.
• Bloomberg Global Risk-On/Risk Off Index 124.5 -.2%.
• US 10-Year Yield 4.67% unch.
• Japan 30-Year Yield 4.12% -4.0 basis points. 
• Volatility Index(VIX) futures 20.5 +.4%.
• Euro Stoxx 50 futures -.51%. 
• S&P 500 futures +.04%.
• NASDAQ 100 futures +.18%.

Morning Preview Links

BOTTOM LINE: Asian indices are modestly lower, weighed down by technology and Metals & Mining shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower.  The Portfolio is 50% net long heading into the day.