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Market Snapshot

📉 Banana Bits

• The S&P 500 and Nasdaq close at fresh record highs while the Dow slips lower.

• U.S. producer inflation posts its strongest monthly increase since March 2022.

• Oil prices ease slightly as Brent and WTI pull back from recent highs.

• Kevin Warsh is confirmed as Fed chair following a Senate vote.

• Ford surges as investors respond positively to its energy-storage strategy.

• Wix tumbles after missing Q1 expectations and reporting margin pressure.

Market News

Markets Ignore the Inflation Flamethrower

Wednesday was a weird little masterpiece…

Producer prices came in hot, the Fed got a new chair, oil stayed above $100, and Treasury yields remained near uncomfortable levels. And somehow, the S&P 500 and Nasdaq still closed at records.

That is not the market saying inflation is under control. It is the market reminding you that the S&P 500 is NOT a democracy. It is a cap-weighted monarchy with Nvidia, Tesla, Microsoft, Meta, Apple, Alphabet, and Amazon holding most of the good chairs.

Reuters noted that six of the Magnificent Seven gained between 1.4% and 3.9%, while communication services and technology led the S&P 500. That is how you get a record close, even when decliners outnumber advancers on both the NYSE and Nasdaq. The average stock had a much worse day than the index headline suggests.

The inflation print was ugly. PPI rose 1.4% month over month, nearly triple the expected 0.5% gain, and climbed 6.0% year over year. Goods rose. Services rose. Gasoline prices jumped 15.6%. That matters because PPI reflects wholesale costs before those increases reach consumers.

The bond market paid attention. The 10-year Treasury yield hovered around 4.47%, close to 4.5%, and continued to pressure rate-sensitive stocks. Markets are no longer expecting an especially dovish Fed. Instead, they are preparing for the possibility that rates stay higher for longer.

Then came Kevin Warsh's confirmation. The timing felt notable given the market backdrop, with inflation concerns, elevated yields, and uncertainty around the Fed already driving investor attention.

He was picked into a market that wants cuts, an administration that wants cuts, and inflation data that keeps walking into a room holding a flamethrower. Reuters said markets now expect no change to the Fed’s 3.50%-3.75% policy-rate target this year, with a rate hike possible as soon as January.

Still, stocks rallied because earnings remain the cleanest argument the bulls have. About 83.2% of reporting S&P 500 companies have beaten estimates so far. That is the bull case in one sentence: inflation is annoying, but profits are still winning the argument.

Peel Take: Wednesday was not a soft-landing victory lap. It was an index-weighted magic trick. Bad inflation should pressure valuations, and it did… just not enough to beat the AI megacaps and chip-adjacent winners steering the index. The market is basically saying, “Yes, inflation is back, but have you seen our data-center backlog?” That is funny until the backlog stops being enough.

What's Ripe

Nebius Group (NBIS) 15.7%

• Nebius gaines 15.7% to $207.27 after reporting a quarter that made the AI infrastructure crowd lean forward. Revenue jumped to $399M from $50.9M a year ago, beating estimates, as demand for AI cloud capacity kept running ahead of supply.

• The company also raised its annual capex forecast to $20B-$25B, up from $16B-$20B, and announced a new Pennsylvania site capable of supporting 1.2 GW of power once fully operational. Nebius also has customers, including Meta and Microsoft, plus a Meta computing-capacity deal worth up to $27B over five years.

• Peel Take: Nebius is not selling “cloud” in the cute software sense. It is selling scarce compute in a market where every serious AI buyer is fighting for capacity. The danger is the same reason it works: this business eats capital for breakfast and asks for seconds. Nebius has the demand, now it has to build fast enough without turning the income statement into a construction site accident report.

Ford Motor Company (F) 13.2%

• Ford had its best day in about six years after investors suddenly decided its energy-storage business deserved a serious look. The stock closed at $13.57, up 13.34%

• The twist… this is not really about cars. Ford is using LFP battery technology for stationary energy-storage products aimed at data centers, utilities, and large industrial customers. The company is also repurposing Kentucky plant space originally meant for EV batteries. That is the kind of pivot investors love because it turns “EV overcapacity” into “AI power infrastructure” without changing the building.

• Peel Take: Ford may have found a better way to frame its EV problem. Batteries tied to slow-selling vehicles are a margin headache. Batteries tied to data centers, utilities, and energy storage projects are starting to look a lot more like infrastructure. That does not make Ford the next Tesla. But it does give the company a more credible path to monetizing one part of the EV buildout that demand still strongly supports: power infrastructure.

What's Rotten

Wix.Com Ltd (WIX) 27.1%

• Wix got destroyed, closing down 27.11% at $55.32, after Q1 results missed the mark and margins took a nasty step backward. The company reported adjusted EPS of $0.68 on revenue of $541.17M, with adjusted earnings and sales both coming in below Wall Street expectations.

• The deeper issue was margin pressure. Adjusted gross margin fell to 66% from 69% a year earlier, while adjusted operating margin dropped to 5% from 21%. Wix spent years selling the idea that anyone can build a website. Then AI showed up and took the slogan personally.

• Peel Take: Wix is stuck in the most annoying version of the AI transition. It has to spend aggressively on AI so customers do not leave for AI, while investors punish the spending because AI is eating into margins. That is not a simple disruption story. It is a toll road where Wix is both building the road and paying the toll. The long-term product story might still work, but Wednesday was about one thing for Wix: margins.

Resideo Technologies (REZI) 17.9%

• Resideo fell 17.93% to $30.11, even though Q1 did not look terrible on the surface. Revenue rose 8% year over year to $1.91B, adjusted EBITDA rose 28% to $215M, and adjusted EPS came in at $0.65, above the high end of the company’s outlook range.

• So why did the stock get dragged? Because the market looked past the clean Q1 headline and went straight to the parts with less polish. Resideo used $145M of cash from operations, versus $65M a year earlier; ADI gross margin slipped; and the company guided Q2 revenue to $1.916B-$1.940B with adjusted EPS of $0.71-$0.75.

• Peel Take: Resideo is a reminder that “beat” is not a magic word. Hardware-ish businesses do not get unlimited forgiveness when inflation is hot, freight costs are sticky, and working capital is acting needy. The next quarter looks like it requires trust, and trust gets expensive when PPI just printed 6%. Q1 got a nod. Q2 got the sell button.

🧠 Technical Trip

Interview Q&A from Lazard

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📚 Lesson from the Library

🎥 Private Equity Secondaries: The Market Behind the Market

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🎓 Check out the Private Equity Secondaries Course

🌟 Student Spotlight

A+ Equity Research Report 📊

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Learn about WSO Academy

🦈 Deal Dispatch

M&A, IPOs, And Other Notable Transactions

• GMR Solutions raised $478.7M in its IPO, then fell 10% on its NYSE debut, valuing the KKR-backed EMS company at nearly $3.01B.

• The FCC cleared EchoStar’s $40B spectrum sale to SpaceX and AT&T. AT&T gets about 50 MHz for $23B; SpaceX gets 65 MHz for Starlink device-to-device service.

• Xpeng is reportedly shopping for a European factory, with talks involving Volkswagen and others.

• CSG offered to buy a stake in KNDS, the Franco-German tank maker, though the owner families reportedly prefer an IPO

• Nebius agreed to buy Eigen AI for about $643M, adding inference and optimization talent as its AI cloud buildout keeps moving from hype to hardware.

📊The Daily Poll

Previous Poll:

AI stocks cooling off, what’s your take?

Healthy pullback: 42.9% // Bubble starting to crack: 25.7% // Just short-term fear: 22.9% // Buying opportunity: 8.5%

Student Success Corner

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Banana Brain Teaser

Previous

A store reported total sales of $385 million for February this year. If the total sale for the same month last year was $320 million, approximately what was the percentage increase in sales?

Answer: 20%

Today

In an increasing sequence of 10 consecutive integers, the sum of the first 5 integers is 560. What is the sum of the last 5 integers in the sequence?

How Would You Rate Today's Peel?

Happy Investing,
Chris, Vyom, Ankit, Mitchell, Fernanda, Nick, & Patrick

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