Return of retail, risk and rallies

Here is what you need to know on Friday, May 27:

Equity markets got their rally on during Thursday’s session as finally there was some positive news on the earnings front. Retail was the en vogue sector following the shock of Walmart and Target’s downbeat commentary last week. However, Dollar Tree, Dollar General and Macy’s all posted strong gains with double-digit advances, and Macy’s and Dollar Tree closed nearly 20% higher. Interest rate markets also priced out 25 basis points of Fed hikes, a curious move in our view but one that further emboldened equity investors to return to risk assets.

GameStop popped as the retail army showed it still has legs and pushed the stock 13% higher on top of Wednesday’s 25% gain. We feel this move may be running out of steam though. Fridays Michigan sentiment, as well as personal consumption data, will give us more clues as to who is correct, Walmart/Target or DollarTree/General. Is the US consumer holding up or slowing down? The big miss (excuse the pun), but Big Lots (BIG) now puts another cloud over the sector.

The dollar is now holding after recent losses, at 101.80 now for the dollar index. Oil is at $113, and Gold is at $1,860. Bitcoin is also flat at $28,800.

See forex today

European markets are higher: Eurostoxx +1%, FTSE +0.2% and Dax +0.8%.

US futures are also higher: S&P +0.3%, Dow +0.1% and Nasdaq +0.4%.

Wall Street Top News (QQQ) (SPY)

Costco (COST) beats on top and bottom lines, but shares fall.

Alibaba (BABA) closed up on strong earnings.

Pinduoduo (PDD) beats on top and bottom lines. Stock up 6%.

NIO may be looking to expand operations manufacturing to US according to report in Yicai.

Big Lots (BIG) down 12% on earnings miss.

McDonald’s (MCD) declares dividend of $1.38, 2.2% yield.

DELL up 12% on earnings beat.

Workday (WDAY) down 8% on earnings.

Marvell Tech (MRVL) up 5% on earnings.

Economic releases

The author is short Tesla and Twitter.

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