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“To have a comeback, you have to have a setback.” – Mr. T

Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.  

Equity futures this morning are lower, but it’s not because of Nvidia (NVDA) earnings. Those are basically shaping up to be a non-event. The culprit this morning is news out of Iran, as the country’s Supreme Leader said that the country will not let its enriched uranium leave the country. That lowers the odds of a peaceful solution, which has oil prices moving higher and equity prices lower. The S&P 500 looks to open down about 0.4% while the Nasdaq is down 0.6%.

As mentioned, crude oil is up about 3%, treasury yields are higher, gold is down about 0.6%, and Bitcoin is fractionally lower.

In Asia, Japan rallied 3.1% while South Korea surged more than 8% as the strike at Samsung was averted. China bucked the positive tone, though, and fell 2%. In Europe, equities are lower across the board with the STOXX 600 down 0.3% as flash PMI indices for the region largely missed expectations.

It’s been a busy morning for data already in the US, and the results have been mixed. Jobless claims were basically in line with forecasts, the Philly Fed for May missed expectations, while Building Permits and Housing Starts came in better than expected.

For all the focus the media puts on Nvidia (NVDA) earnings, the stock is poised to gap up 0.52% today as the market rates the report a snoozer. To put that in perspective, shares of Walmart (WMT) are priced to gap down 2.4% at the open. Today’s moves continue a trend where a relatively ‘boring’ stock like WMT has had a more volatile initial reaction to earnings than NVDA. Including today’s reaction, shares of WMT have had a larger gap (in terms of magnitude) than NVDA for six of the last eight quarters. While NVDA’s average gap on earnings reaction days in the last eight quarters has been 2.6%, WMT’s average gap has been +/-3.6%.

The S&P 500 closed within 0.2% of a 52-week high yesterday, so you would expect investors to feel more optimistic, but the latest sentiment survey from the American Association of Individual Investors (AAII) showed the opposite. In this week’s survey, bullish sentiment declined from 39.3% down to 31.7% while bearish sentiment spiked up to 43.6% for a bull-bear spread of -11.9. Historically, when the S&P 500 was within 1% of a 52-week high, the bull-bear spread was positive 14.6!

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