Equity futures point to a lower future this morning following another session of tech leadership that sent the S&P 500 and Nasdaq Composite to fresh record highs. Stocks have been on a tear in recent sessions, though the somewhat narrow concentration of leadership across large tech names has invited some concerns around the sustainability of the rally.

Additionally, there are a few geopolitical developments that add to the less enthusiastic tone this morning. The summit between President Trump and President Xi concluded without any notable breakthroughs. Both leaders expressed a desire to keep the Strait of Hormuz open, but the U.S. and Iran remain locked in a stalemate, prompting concerns that military action could resume.

Oil prices are moving higher this morning, with WTI crude currently up $3.03 (+3.0%) to $104.20 per barrel.

In corporate news:

• Applied Materials (AMAT 435.00, -5.56, -1.3%) beat EPS expectations by $0.18, beat revenue expectations, and guided Q3 EPS and revenues above consensus.
• DexCom (DXCM 60.30, +2.48, +4.3%) is higher after headlines that Elliot Investment Management has taken a stake in the company, according to Reuters.
• Microsoft (MSFT 412.69, +3.26, +0.8%) is higher in the premarket after Pershing Square's Bill Ackman unveiled a new position, according to Bloomberg.

Reviewing overnight developments:

Equity indices in the Asia-Pacific region had a broadly lower finish to the week with South Korea's Kospi (-6.1%) plunging from a record high alongside a jump in the country's 10-yr yield (+16 bps to 4.25%) amid worries about a potential employee strike at Samsung Electronics, though the employee union indicated willingness to push talks back to early June. Japan's Nikkei: -2.0%, Hong Kong's Hang Seng: -1.6%, China's Shanghai Composite: -1.0%, India's Sensex: -0.2%, South Korea's Kospi: -6.1%, Australia's ASX All Ordinaries: -0.2%.

In news:

• Japanese debt was also pressured, sending yields to fresh highs for the year even though Finance Minister Katayama said that an extra budget will not be needed this year.
• U.S. Trade Representative Greer said that discussions about rare-earth materials with China went ok as President Trump wrapped up his visit to Beijing.
• Some CEOs that accompanied the president stayed behind to continue business discussions.

In economic data:

• Japan's April PPI 2.3% m/m (expected 0.7%; last 1.0%); 4.9% yr/yr (expected 3.0%; last 2.9%). April Machine Tool Orders 45.1% yr/yr (expected 28.1%; last 24.2%)
• South Korea's April Import Prices Index 20.2% yr/yr (last 20.4%); 40.8% yr/yr (last 29.5%)
• Hong Kong's Q1 GDP 2.9% qtr/qtr, as expected (last 1.0%); 5.9% yr/yr, as expected (last 3.8%)
• India's April trade deficit $28.38 bln (expected deficit of $27.00 bln; last deficit of $20.67 bln)
• New Zealand's April Business PMI 50.5 (last 52.8) and April Food Price Index 0.0% m/m (last -0.6%)

Major European indices are on track for a lower finish to the week. STOXX Europe 600: -1.2%, Germany's DAX: -1.6%, U.K.'s FTSE 100: -1.5%, France's CAC 40: -1.4%, Italy's FTSE MIB: -1.8%, Spain's IBEX 35: -1.3%.

In news:

• G-7 finance ministers will meet in France this weekend to discuss bond volatility.
• British Prime Minister Starmer may face a leadership challenge from Andy Burnham, who is the mayor of Greater Manchester. However, Mr. Burnham is not in parliament, so he would first need to win a special election to fill a vacant seat created by the resignation of a Labour MP.
• The European Central Bank's latest economic bulletin acknowledged the increase in energy costs due to the conflict in Iran, noting that households and firms are becoming more reluctant to consume and invest.

[BRIEFING.COM] Sustained enthusiasm across the AI trade sent the S&P 500 (+0.8%) and Nasdaq Composite (+0.9%) to fresh record highs again today, while the DJIA (+0.8%) reclaimed and closed above the 50,000 mark.

There was relatively firmer participation across the broader market today, which helped the DJIA keep pace with the other major indices, but its gain is also largely due to an impressive post-earnings rally from Cisco (CSCO 115.53, +13.66, +13.41%). The company decidedly topped earnings expectations and issued much better-than-expected Q4 guidance driven by accelerating AI infrastructure demand and broad-based networking strength.

Cisco's gain made it the top-performing component of the information technology sector (+1.9%) and the S&P 500 as a whole.

The world's largest company by market capitalization, NVIDIA (NVDA 235.74, +9.92, +4.39%), also posted a solid gain today that leaves it on the doorstep of a double-digit gain for the week. Reuters reported that the U.S. approved sales of the company's H200 chip to ten Chinese companies, while UBS raised its price target on the stock to $275 from $245.

NVIDIA's gain helped the PHLX Semiconductor Index (+0.5%) finish higher despite some profit-taking after yesterday's rally. Meanwhile, software stocks outperformed, sending the iShares GS Software ETF 2.3% higher. 

The eagerly anticipated IPO of Cerebras Systems (CBRS 311.07, +126.07, +68.15%) added to today's AI momentum, with the upsized 30.0 million-share deal pricing at $185 per share, well above the already raised $150-$160 range, before opening at $350 for an 89% first-trade gain. The deal underscores the huge appetite for pure-play AI infrastructure exposure, but it also leaves investors staring at a nose-bleed valuation with a market cap near $70 billion and a price-to-sales multiple close to 140x.

Elsewhere, gains were more modest, with six total S&P 500 sectors finishing higher. The energy sector (+0.8%) was a top performer amid a modest increase in oil prices, though geopolitical headlines remained muted today, with the summit between President Trump and Chinese President Xi producing little in the way of surprises.

Mega-cap stocks outside of the technology sector faced some profit-taking after yesterday's rally, which contributed to weakness in the consumer discretionary (-0.3%) and communication services (-0.2%) sectors.

The materials (-0.8%) and real estate (-0.6%) sectors underperformed.

Outside of the S&P 500, the Russell 2000 (+0.7%) and S&P Mid Cap 400 (+0.4%) captured decent gains.

Overall, it was another winning session for stocks as the AI trade was supported by several catalysts, while the broader market fared better than in recent sessions marked by narrow leadership. Weaker breadth has prompted some analyst concerns around stretched valuations and the potential for speculative excess across AI-linked names, but the exceptionally strong Q1 earnings season and continued flow of supportive catalysts have helped reinforce confidence in the rally and provide meaningful fundamental support for many of the market's leaders. Additionally, investors have consistently stepped in to buy recent pullbacks across semiconductors and mega-cap tech stocks, reinforcing the market's momentum and helping keep the major averages near record territory.

U.S. Treasuries finished Thursday on a mostly higher note, though intraday action saw a pullback in shorter tenors while the long end outperfo rmed, hanging onto the bulk of today's starting gains. The 2-year note yield finished unchanged at 3.99%, and the 10-year note yield settled down two basis points to 4.46%.  

• Russell 2000: +15.2% YTD
• Nasdaq Composite: +14.6% YTD
• S&P Mid Cap 400: +11.0% YTD
• S&P 500: +9.6% YTD
• DJIA: +4.2% YTD

Reviewing today's data:

• April Retail Sales 0.5% (Briefing.com consensus 0.4%); Prior was revised to 1.6% from 1.7%, April Retail Sales, ex-auto 0.7% (Briefing.com consensus 0.4%); Prior 1.9%
  • The key takeaway from the report is that solid spending activity was seen across most retail categories in April, which is when consumers were digesting the gas price shock from the Iran war. Excluding auto and gasoline station sales, retail sales were up 0.5% month-over-month.
• Weekly Initial Claims 211K (Briefing.com consensus 208K); Prior was revised to 199K from 200K, Weekly Continuing Claims 1.782 mln; Prior was revised to 1.758 mln from 1.766 mln
  • The key takeaway from the report is that, even though initial and continuing jobless claims were up in the latest week, neither has risen to a level that would ring alarm bells about a serious deterioration in the labor market.
• April Import Prices 1.9%; Prior was revised to 0.9% from 0.8%
• April Import Price ex-oil 0.8%; Prior was revised to 0.2% from 0.6%
• April Export Prices 3.3%; Prior was revised to 1.5% from 1.6%
• April Export Prices ex-ag. 3.4%; Prior was revised to 1.6% from 1.7%
• March Business Inventories 0.9% (Briefing.com consensus 0.3%); Prior 0.4%