No good deed goes unpunished: The Magnificent 7 were down 1.25% at the close. Broadcom fared even worse. It lost 12.8% in overnight trading after reporting revenues that were a smidge below expectations, and after CEO Hock Tan didn’t raise his guidance for future AI chip sales. To put that in context, investors punished the company despite the fact that revenue was up 48% to $15 billion from the prior year, and its stock is up 38.47% for the year.
Why does the S&P 500 keep hitting new highs? Because of strong fundamentals. Revenues across the index rose 6.3% annually and earnings grew 26% in Q1, according to Ronnie Walker at Goldman Sachs.
“FEMO”: Ed Yardeni and Toby Hearst of Yardeni Research have a word for this: FEMO, which stands for “fabulous earnings momentum.” They’re still bullish: “On May 10, we raised our year-end target for the S&P 500 from 7,700 to 8,250. We are sticking with it.”
Increased “uncertainty”: Paul Donovan at UBS hit Command+F on the latest from the Fed. “The Federal Reserve Beige Book’s summary of economic anecdote mentioned ‘uncertain’ and ‘uncertainty’ no fewer than 50 times this month (before tariffs were announced). That is below the uncertainty peak that followed last year’s tariffs, but well above the 14 mentions in May 2024. Uncertainty has a paralyzing effect on business decisions—and the risk is that uncertainty endures.”
