U.S. stock futures advanced on Friday, led by gains in technology shares, as investors awaited the monthly employment report. Oil prices were volatile amid efforts by the U.S. administration to broker a peace deal with Iran. S&P 500 and Nasdaq 100 futures rose 0.5% and 0.6%, respectively, putting the indexes on track to test record highs. U.S. markets outperformed while equities in other regions faced pressure; ongoing Middle East conflicts risk undermining efforts to secure a permanent end to hostilities. Benchmark stock indexes in Europe and Asia declined. European shares fell, with the pan-European STOXX 600 index down 0.9%. Major indices in Frankfurt and Paris posted similar losses. Earlier, Asian markets retreated slightly from record levels. The MSCI Asia ex-Japan index fell 1%. However, South Korea's KOSPI index edged up 0.1%. Driven by significant gains in shares of Samsung Electronics and SK Hynix, the index posted a weekly advance of over 13.5%, its largest since 2008. Asian equities had previously rallied on the back of strong revenue and spending plans from U.S. AI hyperscalers, which are seen as beneficial for regional chipmakers. U.S. stocks rose in the latter part of the week. Optimism that the conflict was nearing an end, coupled with strong earnings from major technology companies, propelled the S&P 500 to consecutive record closes. Hopes that oil flows through the Strait of Hormuz would resume soon also eased inflation concerns, despite lingering uncertainty over how quickly the U.S. and Iran could reach an agreement. An improved corporate earnings backdrop and a recovery in investor sentiment prompted RBC Capital Markets strategists to raise their 12-month rolling price target for the S&P 500 to 7,900 from 7,750. Jefferies strategist Mohit Kumar stated the firm remains bullish on tech stocks, as mild stagflation should not impact corporate profits. "Investor sentiment remains strong for now, as equities are looking through the impact of high oil prices," said Marija Veitmane, Head of Equity Research at State Street Global Markets. "We continue to highlight that the strength in earnings is highly concentrated in the information technology sector. These sectors are also the least exposed to the pass-through of physical supply chain and commodity costs." **Parties Downplay Escalation as Oil Prices Swing** Brent crude oil initially rose 2.9% before paring gains, trading just above $100 per barrel. Regarding the latest Middle East developments, a clash between U.S. and Iranian forces in the Gulf and another attack on the UAE tested a month-long ceasefire. However, all parties involved downplayed the situation, leaving investors to speculate on the next steps. U.S. forces struck missile and drone launch sites and other military assets inside Iran. The U.S. stated these facilities were linked to attacks on three U.S. warships transiting the Strait of Hormuz. U.S. President Donald Trump said the month-long ceasefire remained in effect. The clash occurred as the U.S. awaited Iran's response to a proposed deal aimed at reopening the Strait of Hormuz and ending the war. Trump threatened more severe U.S. strikes if Iran rejected his terms. "Markets seem to be seizing every opportunity to price in a quick end to the war. But an agreement looks unlikely. I still think disruptions in the Strait of Hormuz will last longer and won't be resolved quickly," said Jan von Gerich, Chief Analyst at Nordea. "Any signs of a deal in the Middle East ahead of next week's U.S.-China summit are enough to push equities higher in the short term," said Skylar Montgomery Koning, Bloomberg Macro Strategist. "A quick, comprehensive deal looks improbable, but for markets, the key is the potential reopening of the Strait of Hormuz while talks continue. That matters more than the underlying geopolitics itself." **U.S. Nonfarm Payrolls in Focus** U.S. Treasury prices rose ahead of the April nonfarm payrolls report, with the yield on the two-year note falling 2 basis points to 3.89%. A Reuters poll showed economists expect the U.S. economy added 62,000 jobs in April, following a rebound of 178,000 in March. Meanwhile, the April jobs report is expected to show U.S. hiring maintained a modest pace of growth for a second consecutive month and may be sufficient to push the unemployment rate lower for the first time in nearly a year. Recent concerns about oil-driven inflation and data indicating a still-resilient labor market have led traders to rule out Federal Reserve rate cuts this year. "The labor market is still holding up quite well," said Nordea's Jan von Gerich. "With the market focus on the Middle East, and its impact being felt more through inflation than growth, especially in the U.S., this jobs report might not be as critical as it has been at times in the past." "I expect that stronger-than-expected data would keep Fed hawks in the driver's seat but wouldn't necessarily dampen equity risk appetite," wrote Ipek Ozkardeskaya, Senior Analyst at Swissquote. If data is weaker than expected, "it could reignite expectations for a Fed dovish pivot and further support equity valuations, provided war-related news leaves room for the market to react." Currency markets were broadly steady. The U.S. dollar edged lower, on track for a second consecutive weekly decline. However, the Japanese yen remained in focus. A source told Reuters that Japan intervened in the foreign exchange market during the early May holiday period to stem further weakness in the yen. The euro traded at $1.1742. The Chinese yuan, Asia's best-performing currency since the war's outbreak, traded near the 6.8 per dollar level, close to its strongest level since 2023. The dollar was last down 0.1% against the yen at 156.8, poised for a second weekly drop. However, since last Thursday, suspected Japanese intervention of nearly $70 billion spurred a sharp yen rally, making it difficult for the dollar to sustain levels above 155. **BofA: Stocks and Gold Head for Rare Fourth Year of Gains; Materials Could Lead Next Bull Run** Michael Hartnett, a prominent strategist at Bank of America, stated that U.S. stocks and gold are heading for a fourth consecutive year of double-digit gains, an exceptionally strong run historically rare. The team led by Hartnett noted the S&P 500 is on track for an annualized return of 20%, while gold could achieve a 30% gain. They stated that for equities, such a prolonged "mega" rally has previously only occurred during World War II, the post-war peace years, and the 1995-1999 bubble period. Gold's sustained multi-year rally occurred during the stagflation era of the 1970s. **AI Bull Run 60% Complete? Legendary Investor Who Predicted 'Black Monday' Rings Bell: Could Last Another One to Two Years.** Paul Tudor Jones, founder and Chief Investment Officer of Tudor Investment, one of the world's most-watched macro investors, dropped a significant conceptual bombshell in an interview. The legendary hedge fund manager, famed for predicting and profiting from the 1987 "Black Monday" crash, used history as a guide to offer an AI bull market timeline blending optimism with caution: the current AI-driven U.S. stock rally has about one to two years of upside remaining, and he has recently increased his exposure to AI-related stocks via a "basket" approach. However, if the market advances another roughly 40%, valuation expansion could set the stage for a "suffocating" correction. **Notable Stock Movers** Akamai Technologies surged 27%. A leading U.S. frontier AI model provider committed to investing $1.8 billion in its cloud infrastructure services over the next seven years, and its Q1 adjusted earnings beat expectations. CoreWeave fell 7% after its Q2 revenue guidance fell short of Wall Street expectations. Microchip Technology rose 3% after reporting Q4 earnings and revenue that exceeded forecasts. IREN Limited gained over 8%. The company announced a partnership with chip giant Nvidia to deploy up to 5 gigawatts of AI infrastructure. Nvidia will also invest $2.1 billion in the company. Gen Digital rose 6% after its quarterly and full-year revenue guidance surpassed analyst expectations. Upwork plunged 23% after announcing a restructuring plan involving a 24% workforce reduction. The Trade Desk tumbled nearly 13% after its quarterly revenue guidance and Q1 adjusted profit fell short of expectations. Expedia fell 7%. It projected Q2 revenue between $4.11 billion and $4.19 billion, with the midpoint slightly below the analyst consensus of $4.12 billion. Lyft dipped 1%. The company reported Q1 EPS of 4 cents, below the Refinitiv analyst consensus of 6 cents. Bill Holdings rose 6%. The company reported better-than-expected fiscal Q3 results and announced plans to cut its workforce by 30% by fiscal Q1 2027. Gilead Sciences fell 2% after lowering its full-year outlook, projecting an adjusted full-year EPS loss between $1.05 and $0.65. Texas Roadhouse rose 6% after reporting Q1 EPS above expectations. Wendy's gained over 5% after Q1 revenue and profit topped estimates. The company also announced an expansion plan to open up to 1,000 stores in China over the next decade. Sweetgreen fell nearly 2% after Q1 revenue missed FactSet analyst expectations. Toast fell nearly 10%. Its Q2 adjusted EBITDA guidance of $185 million to $195 million was below the FactSet consensus of $204.4 million. Rocket Lab rose 7% after Q1 revenue beat expectations. Its backlog reached a record $2.2 billion, up 20.2% sequentially. Block gained about 7% after issuing Q2 and full-year adjusted profit guidance that exceeded FactSet consensus expectations. Monster Beverage rose nearly 8% after Q1 results beat expectations across the board. Figs fell 7.5% after reporting Q1 EPS of 3 cents, only slightly above the FactSet consensus of 1 cent. Coinbase Global fell 3% after reporting an unexpected Q1 loss and revenue that missed expectations. Cloudflare plunged 18% after announcing plans to lay off approximately 1,100 employees. Synaptics, a subsidiary of Synopsys, dipped 1%. It reported Q3 adjusted EPS of $1.09, beating the FactSet consensus of $1.01. Revenue of $294.2 million also topped the market expectation of $290.5 million. JFrog surged nearly 16% after its full-year profit guidance exceeded expectations. SoundHound AI fell 9.5% after reporting Q1 adjusted EBITDA loss of $26.7 million. DraftKings fell 1.5% after issuing tepid guidance.
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