The US market: an overview and forecast for May 9th. Quotes are driven by cautious optimism

We Wait

The mood of market participants is primarily driven by the upcoming negotiations on U.S.-China trade this weekend. The White House, in theory, is ready to reduce tariffs on Chinese goods by 50-54% next week if delegations led by U.S. Treasury Secretary Scott Bessen and Chinese Vice Premier He Lifeng can establish productive dialogue. The main goal of the meeting is to exchange views, not to resolve all disagreements immediately, but the parties are working to mitigate economic harm through joint action. The U.S. seeks the removal of restrictions on the export of rare earth minerals, which are crucial for industrial production in China. Despite public statements regarding tariffs and levels, official sources have not yet provided comments. White House spokesperson Kush Desai described the goal of the talks as advancing the “America First” economic agenda and securing fair and reciprocal trade terms, labeling the tariff discussions as forecasts.

Today, several Federal Reserve officials are expected to speak, offering more detailed assessments of the economic situation and perspectives, as well as providing future guidance on monetary policy.

Ahead of the session, companies such as Enbridge (ENB), Telus (TU), Terawulf (WULF), Plains All American Pipeline (PAA), and Starwood Property Trust (STWD) will release their quarterly reports.

U.S. stock futures are trading higher, showing moderate volatility. We expect the S&P 500 index to move within the 5580-5750 point range (-1.5% to +1.5% from the previous session’s closing).

Key Points of Attention

• Expedia Group (EXPE) reported mixed results for the first quarter, which caused the company’s stock to fall 7.68% after the close. Investors are concerned about weakening demand for travel within the U.S.

• Coinbase Global (COIN) reported a quarterly EPS of $0.24, significantly lower than the consensus of $2.09. Revenue stood at $2 billion, falling short of the expected $2.2 billion. This decline is attributed to shrinking trading volumes and an increase in lower-commission products and customers. After the report, COIN shares dropped by 3.34%.

• Cloudflare (NET) saw its stock rise by 5% after reporting a quarterly revenue of $479.1 million, surpassing the consensus estimate of $469.65 million. Adjusted EPS was in line with expectations at $0.16. The company showed growth in corporate client numbers, improved sales efficiency, and tight cost control, boosting operational leverage.

• Pinterest (PINS) shares surged 13% after reporting a 16% revenue growth, reaching $855 million, beating consensus estimates. The company’s optimistic future guidance also exceeded expectations. The improvement is attributed to developments in artificial intelligence and aggressive expansion into international markets.

Pre-market Overview

The U.S. stock markets ended the session on May 8th with positive results. The S&P 500 rose 0.58%, the NASDAQ 100 gained 0.98%, the Dow Jones increased by 0.62%, and the Russell 2000 advanced 1.85%. Leading the growth were large technology companies, such as Tesla (TSLA). The healthcare sector, including pharmaceutical companies, showed negative performance.

The market’s upward movement was driven by news of trade negotiations. The U.S. President stated that if the talks, set to take place in Switzerland on Saturday, are successful, he plans to meet with Chinese President Xi Jinping. This aligns with a general, albeit fragile, de-escalation trend, which has become a driver of growth in the stock markets.

Additionally, a limited trade agreement between Washington and London was announced, maintaining a 10% tariff on British goods while expanding access to agricultural markets and reducing barriers to U.S. automobile imports. This is the first of several deals President Trump plans to finalize next week.

Initial jobless claims decreased by 13,000 to 228,000, in line with market expectations. Labor productivity fell by 0.8% in the first quarter, marking the first decline since 2022, and unit labor costs rose by 5.7%, returning to the highest level since January-March 2024.

A survey conducted by the New York Fed showed that inflation expectations remained at 3.6% for the year, with three-year expectations reaching their highest level since July 2022, while five-year expectations slightly decreased. Assessments of the labor market and household financial conditions were pessimistic.

Company News

• EPAM Systems (EPAM: +12.9%) reported EPS of $2.41 for the first quarter, surpassing the consensus estimate of $2.29. Revenue came in at $1.3 billion, above the $1.28 billion consensus. Full-year revenue growth guidance was revised to 11.5-14.5%.

• Carvana (CVNA: +10.2%) reported EPS of $1.51, significantly beating the forecast of $0.67. Revenue was $4.23 billion, exceeding expectations of $3.98 billion. The company posted a record net profit of $373 million, adjusted EBITDA of $488 million, and operating income of $394 million. Long-term guidance remains optimistic, with expectations of continued sales and EBITDA growth and a significant improvement in the 2025 fiscal year.

• Crocs (CROX: +9.8%) saw a 3% higher-than-expected sales volume in Q1, and EPS rose by 21%. Both the Crocs and HEYDUDE brands performed well. Management revised the full-year outlook downward due to new trade policies.

• Alphabet (GOOGL: +1.9%) reported strong growth in search queries, including from Apple devices and platforms. This statement came after a 7% drop in GOOGL shares, driven by competition in AI technology for internet search and browser tools.

• Krispy Kreme (DNUT: -24.7%) reported lower-than-expected sales due to macroeconomic pressures and inflation. The company missed both EPS and revenue expectations. It suspended dividend payments, withdrew its full-year guidance, and decided to halt new store openings while revising its partnership with McDonald's.

Technical Outlook

 

The technical outlook for the S&P 500 shows a short-term consolidation pattern. The benchmark is supported by the 50-day moving average, with resistance at the 5700-point level. The failed breakout above this level yesterday created an adverse “false breakout” pattern for buyers. The medium-term trend remains bearish as the benchmark is still trading below the 200-day moving average.