U.S. Futures & World Markets

US equity futures are slightly lower premarket as shifting geopolitical headlines around "Project Freedom" continue. Early reports suggested a US warship was hit by Iran, though US officials deny this. US Central Command later confirmed two ships have been successfully transited through the Strait of Hormuz. Either way, stocks remain on edge with every headline.

Stocks are on a massive run after an impressive week on the earnings front. Mega-cap tech beat estimates by wide margins, and more importantly, their forward guidance was strong. A chart below shows just how much earnings expectations have moved higher.

After last week's AI focus, attention shifts to consumer stocks. Shopify, Kraft Heinz, Disney, Uber, Airbnb, and McDonald's all report this week. We'll get much-needed insight into the health of the US consumer — and by extension, the Fed's next move on rates. April's Jobs Report arrives Friday.

S&P Futures vs. Fair Value: -8.00  |  10-Year Yield: 4.40%

CORE Headlines

Charts & Data

AI is lowering the barriers to starting a company. Torsten Slok, Apollo: "Sectors with the highest AI adoption rates have also seen the strongest growth in new business applications since 2022, showing that AI is lowering the barriers to starting a company."

AI productivity gains showing up in output data. Mike Wilson, Morgan Stanley via Daily Chartbook: "Output per employee is picking up in 'high-AI exposure' industries." Narrative is becoming data.

Private credit anxiety is mostly a retail problem. Goldman Sachs via Daily Chartbook: "Heavy withdrawal activity is only occurring in one of three main investor channels — retail. The majority of private credit AUM sits within institutional funds, where periodic investor withdrawals aren't an option."

Strategist sentiment: neutral but drifting toward sell. BofA via Daily Chartbook: "Strategists' equity sentiment unchanged in April, 'Neutral,' but closer to a 'Sell' signal than a 'Buy.'"

Historic underlying bid to stocks. Duality Research via Daily Chartbook: "The TICK INDEX (NYSE Uptick Minus Downtick) never turned negative during Friday's session — highlighting a broad, persistent bid for equities. According to Bloomberg, that has never happened in history."

Momentum thrust — historically bullish. @bluekurtic via Daily Chartbook: "For the first time in 28 years, the S&P 500 stayed above its 10-day moving average for 22 straight days while gaining 10%+. Forward returns were positive 100% of the time over the next 1 to 6 months."

Breadth diverging from the index. Goldman Sachs via Daily Chartbook: "The S&P 500 has rallied 14% from its low in late March and now trades at a new record high. However, the median S&P 500 constituent remains 13% below its respective high."

Tech overbought on extended streak. Bespoke Investment Research via Daily Chartbook: "Up until Friday's close, the sector had closed in extreme overbought territory every day for the past eleven sessions. Historically, long streaks of extreme overbought readings haven't been particularly strong periods going forward."

Tech valuations compressing even as prices hold near highs. Matt Cerminaro via Daily Chartbook: "The forward P/E ratio is in a 25% drawdown while the price is hovering around highs." Earnings are growing into valuations — that's the best-case scenario.

Q1 earnings: strongest growth since Q4 2021. FactSet via Daily Chartbook: "With 63% of the S&P 500 reported, the blended year-over-year EPS growth rate for Q1 is 27.1%."

The chart to save. FactSet via Daily Chartbook: "Analysts now expect at least 20% year-over-year EPS growth for every quarter this year."

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This content does not constitute legal, tax, accounting, or other professional expert advice. Everything published is believed to be reliable, but its accuracy or completeness is not assured. Past performance does not indicate future results. The opinions expressed herein are subject to change without notice and are solely those of the author as of the date indicated.