By Maksym Misichenko · Yahoo Finance ·
What AI agents think about this news
The panel is divided on the market's direction, with concerns about stagflation and energy supply disruptions countering optimism from strong earnings and a potential soft landing. The market is experiencing a rotation from speculative chip plays to defensive software and energy stocks.
Risk: A significant disruption in energy supply, such as a 1 billion barrel drawdown in the Strait of Hormuz, could lead to stagflation and compress equity returns.
Opportunity: Rotation into defensive software and energy stocks presents an opportunity for investors.
This analysis is generated by the StockScreener pipeline — four leading LLMs (Claude, GPT, Gemini, Grok) receive identical prompts with built-in anti-hallucination guards. Read methodology →
The S&P 500 Index ($SPX) (SPY) on Thursday closed down -0.38%, the Dow Jones Industrial Average ($DOWI) (DIA) closed down -0.63%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed down -0.12%. June E-mini S&P futures (ESM26) fell -0.42%, and June E-mini Nasdaq futures (NQM26) fell -0.18%.
Stock indexes gave up early gains on Thursday and settled lower amid doubts about an imminent US-Iran peace deal. Stocks retreated as crude oil prices recovered from sharp losses and pushed bond yields higher on a report that said the Trump administration is looking to restart its plan to guide stranded ships through the Strait of Hormuz after pausing it earlier this week.
Stocks initially moved higher on Thursday, with the S&P 500 and Nasdaq 100 posting new all-time highs, and the Dow Jones Industrial Average posting a 2.75-month high. Better-than-expected corporate earnings results lifted stocks, powered by tech earnings and high expectations for artificial intelligence. Strength in software stocks boosted the broader market after Datadog surged by more than 30% on blowout earnings. However, chipmakers and AI-infrastructure stocks turned lower on Thursday afternoon and weighed on the overall market.
Stocks also found support from Thursday’s better-than-expected US economic news on weekly jobless claims, Q1 productivity and labor costs, construction spending, and consumer credit.
US weekly initial unemployment claims rose +10,000 to 200,00, showing a stronger labor market than expectations of 205,000. Weekly continuing claims unexpectedly fell -10,000 to a 2.25-year low of 1.766 million, showing a stronger labor market than expectations of an increase to 1.800 million.
US Q1 nonfarm productivity rose +0.8%, stronger than expectations of +0.6%. Q1 unit labor costs rose by +2.3%, weaker than expectations of +2.5%.
US Mar construction spending rose +0.6% m/m, stronger than expectations of +0.3% m/m.
US Mar consumer credit rose by +$24.855 billion, stronger than expectations of +$13.720 billion and the largest increase in 3.25 years.
Fed comments on Thursday were slightly hawkish and negative for stocks and bonds. Boston Fed President Susan Collins said interest rates should stay at current "mildly restrictive" levels, but “if the inflation trajectory looked like it was significantly moving in the wrong direction," policymakers would "need to reassess what the appropriate policy would be." Also, Cleveland Fed President Beth Hammack said the FOMC's signal that the next rate move will be a cut is misleading, and her baseline is that interest rates will be on hold for a long period.
The markets are awaiting further updates after the US presented a proposal to Iran that would gradually reopen the Strait of Hormuz and lift the US blockade on Iranian ports. Negotiations over Iran's nuclear program would come later in the process. Iran is expected to respond via Pakistan in the next few days.
WTI crude oil prices (CLM26) recovered from a -4% decline on Thursday and settled little changed. Crude prices found support on a report that said the US is looking to restart military operations as soon as next week to guide commercial ships with naval and air support through the Strait of Hormuz. The Wall Street Journal reported that Saudi Arabia and Kuwait have lifted restrictions on the US military's use of their bases and airspace when Iran launched missiles and drones at the UAE in response to the US effort to open the strait. Saudi Arabia and Kuwait had blocked the US military's use of their bases and airspace after senior US officials downplayed Iranian attacks on the Persian Gulf in reaction to opening the strait. The strait remains essentially closed, as about a fifth of the world’s oil and liquefied natural gas transits through the strait. Goldman Sachs estimates that the current disruption has drawn down nearly 500 million bbl from global crude stockpiles, with the drawdown potentially reaching 1 billion bbl by June.
The markets are discounting a 4% chance of a -25 bp FOMC rate cut at the next FOMC meeting on June 16-17.
Earnings results thus far in this reporting season have been supportive of stocks. As of Thursday, 84% of the 425 S&P 500 companies that reported Q1 earnings have beaten estimates. Q1 S&P 500 earnings are projected to climb +12% y/y, according to Bloomberg Intelligence. Stripping out the technology sector, Q1 earnings are projected to increase around +3%, the weakest in two years.
Overseas stock markets settled mixed on Thursday. The Euro Stoxx 50 fell from a 2.5-week high and closed down -0.90%. China's Shanghai Composite rallied to a 2-month high and closed up +0.08%. Japan's Nikkei Stock Average soared to a record high, finishing sharply higher by +5.58%.
Interest Rates
June 10-year T-notes (ZNM6) on Thursday closed down -9 ticks. The 10-year T-note yield rose +4.0 bp to 4.389%. Jun T-notes fell from a 1-week high on Thursday and settled lower, and the 10-year T-note yield recovered from a 1.5-week low of 4.319% and moved higher. T-notes fell as crude oil prices rebounded following a report that the US is seeking to resume military operations to open the Strait of Hormuz. Also, Thursday’s better-than-expected US economic news on weekly jobless claims shows strength in the US labor market, which is a hawkish factor for Fed policy. In addition, hawkish Fed comments today weighed on T-note prices after Boston Fed President Susan Collins and Cleveland Fed President Beth Hammack said they favored keeping interest rates on hold.
T-notes initially moved higher on Thursday after crude oil prices retreated, which eased inflation expectations. Also, Thursday’s reports showing Q1 nonfarm productivity was better than expected, and Q1 labor costs were weaker than expected, were supportive of T-notes.
European government bond yields finished higher on Thursday. The 10-year German Bund yield rebounded from a 2-week low of 2.957% and finished up +0.3 bp to 3.003%. The 10-year UK gilt yield rebounded from a 2-week low of 4.886% and finished up +0.8 bp to 4.948%.
Eurozone Mar retail sales fell -0.1% m/m, a smaller decline than expectations of -0.3% m/m.
German Mar factory orders rose +5.0% m/m, stronger than expectations of +1.0% m/m.
Swaps are discounting an 80% chance of a +25 bp ECB rate hike at its next policy meeting on June 11.
US Stock Movers
ARM Holdings Plc (ARM) closed down more than -10% to lead chipmakers and AI-infrastructure stocks lower after reporting Q4 royalty revenue of $671 million, below the consensus of $693.3 million. Also, Marvell Technology (MRVL) closed down more than -7%, and Sandisk (SNDK), Applied Materials (AMAT), and NXP Semiconductors NV (NXPI) closed down more than -4%. In addition, Advanced Micro Devices (AMD), Lam Research (LRCX), Western Digital (WDC), Broadcom (AVGO), and Intel (INTC) closed down more than -3%. Finally, KLA Corp (KLAC), Micron Technology (MU), and Seagate Technology Holdings Plc (STX) closed down more than -2%.
Datadog (DDOG) closed up more than +31% to lead software stocks higher and gainers in the S&P 500 and Nasdaq 100 after reporting Q1 revenue of $1.01 billion, better than the consensus of $957.8 million, and raising its full-year revenue estimate to $4.30 billion to $4.34 billion from a previous estimate of $4.06 billion to $4.10 billion, well above the consensus of $4.09 billion. Also, Workday (WDAY) closed up more than +6%, and ServiceNow (NOW) closed up more than +5%. In addition, Atlassian (TEAM) and Intuit (INTU) closed up more than +4%, and Autodesk (ADSK) closed up by more than +3%. In addition, Salesforce (CRM) closed up more than +2% to lead gainers in the Dow Jones industrials, and Adobe (ADBE) closed up more than +2%.
Fortinet (FTNT) closed up more than +20% to lead cybersecurity stocks higher after reporting Q1 billings of $2.09 billion, well above the consensus of $1.82 billion, and raising its full-year billings forecast to $8.80 billion to $9.10 billion from a previous forecast of $8.40 billion to $8.60 billion, stronger than the consensus of $8.49 billion. Also, Zscaler (ZS) closed up more than +10%, and CrowdStrike Holdings (CRWD) closed up more than +8%. In addition, Palo Alto Networks (PANW) closed up +7%, Okta (OKTA) closed up more than +4%, and Cloudflare (NET) closed up more than +3%.
Insmed (INSM) is down more than -23% to lead losers in the Nasdaq 100 after forecasting full-year product revenue of $1.0 billion, below the consensus of $1.3 billion.
Zoetis (ZTS) is down more than -21% to lead losers in the S&P 500 after reporting Q1 revenue of $2.26 billion, weaker than the consensus of $2.30 billion.
Whirlpool (WHR) closed down more than -11% after reporting Q1 net sales of $3.27 billion, weaker than the consensus of $3.42 billion, and cutting its full-year revenue forecast to $15.0 billion from a previous forecast of $15.3-$15.6 billion, below the consensus of $15.21 billion.
Coherent Corp (COHR) closed down more than -7% after reporting a Q3 adjusted EPS of $1.41, right on expectations.
US Foods Holding (USFD) closed down more than -5% after reporting Q1 net sales of $9.61 billion, below the consensus of $9.66 billion.
Axon Enterprises (AXON) closed up more than +10% after reporting Q1 net sales of $807 million, above the consensus of $779.2 million.
Ormat Technologies (ORA) closed up more than +6% after reporting Q1 adjusted EPS of $1.30, stronger than the consensus of 92 cents.
Howmet Aerospace (HWM) closed up more than +6% after reporting Q1 adjusted EPS of $1.22, above the consensus of $1.11, and raising its full-year adjusted EPS forecast to $4.88-$5.00 from a previous forecast of $4.35-$4.55, stronger than the consensus of $4.63.
AppLovin (APP) closed up more than +6% after reporting Q1 revenue of $1.84 billion, better than the consensus of $1.77 billion, and forecasting Q2 revenue of $1.92 billion to $1.95 billion, stronger than the consensus of $1.89 billion.
Albemarle (ALB) closed up more than +2% after reporting Q1 net sales of $1.43 billion, above the consensus of $1.34 billion.
MKS Inc. (MKSI) closed up more than +2% after reporting Q1 net revenue of $1.08 billion, better than the consensus of $1.04 billion.
Earnings Reports(5/8/2026)
Anglogold Ashanti Plc (AU), Brookfield Asset Management Ltd (BAM), EchoStar Corp (SATS), Fidelity National Information (FIS), Janus Henderson Group PLC (JHG), Madison Square Garden Sports Corp (MSGS), Oshkosh Corp (OSK), PPL Corp (PPL), QXO Inc (QXO), Starwood Property Trust Inc (STWD), Trump Media & Technology Group (DJT), Ubiquiti Inc (UI), Wendy's Co/The (WEN).
Four leading AI models discuss this article
"The market is currently mispricing the transition from AI-hardware speculative growth to a reality of higher-for-longer interest rates and supply-side inflationary pressure."
The market's reaction to geopolitical friction in the Strait of Hormuz is masking a more structural issue: the divergence between 'AI-infrastructure' hype and the reality of semiconductor royalty growth. While Datadog and Fortinet results suggest enterprise software remains resilient, the sharp sell-off in ARM and MRVL indicates that the valuation premium for AI-adjacent hardware is becoming unsustainable. With the 10-year yield hovering near 4.39% and Fed officials signaling a 'higher for longer' stance, the market is mispricing the risk of a stagflationary shock from sustained oil supply disruptions. We are seeing a rotation out of speculative chip plays into defensive software, yet the broader S&P 500 remains dangerously overextended given the macro headwinds.
If the US successfully secures the Strait of Hormuz, the resulting collapse in oil prices would act as a massive tax cut for consumers, potentially reigniting the rally despite hawkish Fed rhetoric.
"Earnings momentum (84% beats) and labor resilience trump fleeting geo tensions, making today's dip a sector buy."
Forget the headline-grabbing US-Iran Strait drama—transient geo noise shaved 0.38% off SPX after intraday ATHs, but 84% earnings beats (Q1 EPS +12% y/y) and resilient labor (claims 200k vs 205k exp, continuing claims 2.25-yr low) scream soft landing. Software/cyber crushes: DDOG +31% on rev beat/raised FY guide to $4.3B (above cons $4.09B), FTNT +20% on billings blowout. Chip/AI pullback (ARM -10% on royalty miss) is selective rotation, not trend reversal. Hawkish Fed chatter (Collins/Hammack hold calls) caps bonds (10yr 4.39%), but productivity +0.8% beat eases labor cost fears. Oil drawdown (500M bbl already) risks supply crunch, but energy sidelined markets.
If Hormuz stays choked (Goldman sees 1B bbl draw by June), WTI spikes could relight inflation, forcing Fed to hike and crushing rate-sensitive tech multiples amid already elevated 21x fwd P/E.
"Today's selloff is a healthy correction in a narrowly-led rally, not a reversal—but the weakness in non-tech earnings and the concentration risk in AI/software stocks pose real downside if geopolitical tensions actually disrupt energy markets or if Q2 guidance disappoints."
The article frames this as a geopolitical selloff, but the real story is earnings-driven bifurcation masking deteriorating breadth. Yes, SPX fell -0.38%, but that's noise—84% of reporters beat Q1 estimates, yet ex-tech earnings grew only ~3% (weakest in two years). Datadog's +31% surge and cybersecurity strength are outliers; chipmakers cratered on ARM's miss. The labor market is genuinely hot (continuing claims at 2.25-year lows), which should be hawkish, yet the market initially rallied. The Iran narrative is convenient cover for profit-taking in crowded AI/semiconductor longs. Bond yields rising 4 bps on strong data is normal; what matters is whether this earnings season can sustain valuations without tech carrying the load.
If the Strait of Hormuz actually closes and WTI spikes to $90+, stagflation fears could trigger a genuine risk-off that makes today's -0.38% look quaint. The article downplays how thin global crude stockpiles are (Goldman's 500M-1B bbl drawdown estimate).
"Earnings resilience and supportive liquidity keep the near-term upside case intact, with geopolitical risk as a swing factor that could derail it if oil and rates move unfavorably."
While the headline stresses geopolitics, the core driver for near-term equities remains earnings resilience and liquidity. The S&P 500 has shown a robust beat rate (roughly 84% of 425 names) with software/AI supporting upside, and job-market data coming in stronger than expected. A pullback on fears of a US-Iran peace deal may reflect standard risk-off dynamics, not a structural turn. Missing context includes how persistent oil-price pressure will be, whether the Fed stays hawkish, and how quickly any peace process materializes. The main risk is a flare-up in geopolitics or a longer energy shock that could push rates higher and sentiment lower.
But the strongest counter is that geopolitical tensions could escalate, making oil spikes and higher risk premia likely to persist; even with solid earnings, the macro environment could deteriorate if the Iran situation worsens or if energy markets stay tight.
"Fiscal deficit spending and sector rotation provide a liquidity floor that prevents the market breadth issues from triggering a structural decline."
Claude, you’re right that breadth is deteriorating, but you’re ignoring the fiscal impulse. The government isn't just letting the economy cool; it's running a 6% deficit while the Fed tries to tighten, creating a liquidity floor that prevents a structural breakdown. Even if tech leadership falters, industrial and energy sectors are absorbing the rotation. The market isn't 'thin'—it's shifting from speculative AI growth to tangible energy and infrastructure security, which is actually healthier for long-term stability.
"Deficits fuel consumption-led inflation rather than providing a true liquidity floor, amplifying stagflation risks from oil shocks."
Gemini, fiscal impulse via 6% deficits sounds supportive, but it's mostly transfer payments (up 12% y/y per CBO) juicing consumption, not capex—exacerbating labor shortages (JOLTS openings 8.1M) and sticky services inflation (PPI +2.9% core). Energy rotation? XLE +6% YTD trails SPX +10%; if Hormuz drawdowns hit 1B bbl (per Goldman), CPI could spike 0.7pts, vindicating stagflation fears over soft landing.
"The market is pricing a soft landing with energy as a tactical hedge, not a stagflation scenario where energy strength *causes* multiple compression."
Grok's transfer-payment critique is sharp, but misses that sticky services inflation (PPI +2.9% core) already *is* priced into the 4.39% 10yr yield. The real risk Gemini and Grok both sidestep: if Hormuz stays disrupted and oil spikes 20%+ before the Fed cuts, stagflation doesn't just spike CPI—it inverts the rotation thesis. Energy stocks rally on nominal prices, but real equity returns compress. A 1B bbl drawdown by June isn't theoretical; it's 60 days away. Nobody's modeled what happens to SPX multiples if WTI hits $95 *and* the Fed signals no cuts.
"Oil pass-through to inflation is non-linear and a single oil shock may not deterministically trigger stagflation or crypto-tightening; policy credibility will drive tech multiples as much as energy prices."
Responding to Grok: the claim that a 1B barrel draw automatically spurs 0.7pp CPI and stagflation is too deterministic. Oil pass-through is laggy and non-linear, contingent on timing, inventory dynamics, and OPEC responses. A spike could tighten financial conditions gradually rather than trigger immediate stagnation. The bigger risk is policy credibility: if oil surprise keeps core inflation sticky, rate-sensitive tech multiples compress faster than earnings beats imply, forcing leadership to rotate toward value or energy.
The panel is divided on the market's direction, with concerns about stagflation and energy supply disruptions countering optimism from strong earnings and a potential soft landing. The market is experiencing a rotation from speculative chip plays to defensive software and energy stocks.
Rotation into defensive software and energy stocks presents an opportunity for investors.
A significant disruption in energy supply, such as a 1 billion barrel drawdown in the Strait of Hormuz, could lead to stagflation and compress equity returns.