Palantir Technologies Inc. shed 6.9% after boosting its revenue view, while missing US commercial sales estimates. ON Semiconductor Corp. rose 0.6% after first-quarter results were slightly better than expected, but its outlook suggested recovery in key markets will be slower than hoped.
PayPal Holdings Inc. sank 7.8% after saying it’s seeing trends at the lower end of its full-year outlook. Earlier, first-quarter adjusted earnings per share topped estimates, and the company said it plans to cut jobs. Pfizer Inc. added 0.6% after reporting better-than-expected sales as demand for older blockbusters helped to offset a decline in revenue from Covid products.
In economic news, the Institute for Supply Management’s services index eased to a five-month low as orders growth slowed and input prices stayed higher.
“The sharp drop in new orders and continued elevated level of inflation makes this a slightly negative reading on the economy,” Vital Knowledge founder Adam Crisafulli wrote.
Meantime, tax refunds have climbed $47 billion versus last year, while tax payments have dropped $63 billion, with much of the benefit accruing later in refund season to higher-income households who may not immediately spend the money, Wolfe Research’s Tobin Marcus wrote.
“We should already be past the peak impact on consumption, but with a residual cash cushion that will help buffer the economy against shocks (e.g. if the US-Iran crisis drives energy prices higher for longer),” Marcus said.
Later this week, attention will shift toward Friday’s payrolls report and its potential influence on Federal Reserve interest-rate policy.
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“A strong jobs report would probably cause markets to price in meaningfully more hikes, even though we think hikes are unlikely,” Bank of Americas Securities US economist Shruti Mishra wrote in a Tuesday note. She anticipates a “solid” jobs report, based on jobless claims and weekly ADP data.
Sectors in Focus
- Semiconductor and memory stocks like Micron, Sandisk and Intel rallied, with Intel jumping 13% to a record high as Apple Inc. was said to have held exploratory talks about using Intel and Samsung Electronics Co. to produce the main processors for its devices in the US. Plus, Taiwan memory company Nanya Technology Corp. reported April sales rose 717.3%. Discounts in memory stock market caps, especially relative to operating income, are “so large that it suggests that the memory trade could have further to run,” according to Bespoke Investment Group.
- Big banks like JPMorgan Chase & Co. and Bank of America Corp. advanced, with the benchmark KBW Bank Index rising 1%. Anthropic PBC unveiled new artificial intelligence agents designed to handle financial services tasks, like drafting pitch decks for client meetings. Separtely, results from the Federal Reserve’s Senior Loan Officer Opinion Survey showed “consumer demand continues to soften,” including for residential real estate, auto and credit card lending, according to Hovde analyst Brendan Nosal. “The only consumer bucket with healthy demand is home equity,” Nosal wrote in a note.
- Housing-linked shares rose as yields on 10-year Treasuries retreated. Climbing yields have been “painful for housing-related stocks,” Bespoke Investment Group wrote in a note, citing Home Depot Inc. as a “perfect example.” Home Depot gained 1% while the S&P composite homebuilder index gained 1.7%. New-home sales also beat estimates, though the median selling price slid to a more than four-year low.
