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Market Snapshot

📉 Banana Bits

• The S&P 500, Dow, and Nasdaq closed at fresh record highs in a muted trading session.

• Oil prices tumble on hopes of easing tensions between the U.S. and Iran.

• Treasury yields edge lower, offering some relief to growth stocks.

• Markets rotate out of chip stocks while consumer and healthcare shares support the Dow.

• Snowflake surges after raising guidance and announcing a major AWS deal, while Salesforce slips on weaker outlook guidance.

Market News

Stocks Hit Records and Called It a Day

Wednesday looked great on paper and a little weird in real life.

The S&P 500, Dow, and Nasdaq all closed at record highs, which sounds awesome until you notice the S&P gained 1.24 points. Not percent. Points. That was not a breakout rally so much as the market quietly drifting to another record high.

The main reason stocks held up was simple: oil finally cooled off. Crude was dumped as traders grew more hopeful about U.S.-Iran talks and a possible reopening of the Strait of Hormuz.

Lower oil prices help ease inflation pressure, give consumers a bit more breathing room, and make the Fed’s job somewhat easier. They also boosted travel stocks, since airlines tend to respond quickly when jet fuel costs start falling.

But this was not another day where AI stocks carried the entire market higher on their own. Semiconductor names cooled off, with Qualcomm, Marvell, Nvidia, Intel, and the broader chip sector all pulling back. That was not necessarily a bearish sign. After the rally they’ve had, some consolidation was expected. For once, the market’s gains were not entirely dependent on the chip trade.

Retail earnings also gave investors something to chew on. Bath & Body Works and Abercrombie popped after better-than-expected profits, which says a lot about where consumers are right now. People may be annoyed about prices, rent, groceries, gas, and the general cost of existing, but they are apparently still willing to buy jeans and a candle that smells like “Coastal Linen Regret.”

Still, nobody should get too comfortable. The Fed is still lurking. Inflation data is still coming. And markets now assign a much higher probability to a pre-2027 rate hike than they did a week ago. So yes, record highs are bullish. But this was not a euphoric rip. The market is slowly inching higher as everyone holds on to their emotional support macro charts.

Peel Take: Wednesday was a healthy-ish record close. The best part was not the size of the move; it was the rotation. Oil dropped, yields relaxed a bit, chips cooled off, and other sectors actually picked up the slack. That is better than another one-stock AI melt-up. Still, when the S&P hits a record by basically sneezing upward, you celebrate… but maybe don’t pop open the champagne.

What's Ripe

Dycom Industries (DY) 25.7%

• Dycom went absolutely feral after crushing earnings and raising guidance. The company reported adjusted EPS of $4.42 on about $2B in revenue, way above expectations, with sales up 56% year over year and backlog climbing to $11.9B. Management also raised full-year sales guidance to roughly $7.4B-$7.7B, which is Wall Street’s favorite phrase right after “margin expansion” and “strategic alternatives.”

• This is the AI infrastructure trade in its more practical form. Dycom focuses on fiber, telecom infrastructure, electrical systems, utility work, and data-center-related projects, the physical infrastructure that needs to be built before companies can scale AI systems and data centers.

• Peel Take: Dycom is not selling the flashy AI dream. It is installing the plumbing underneath. That may not get you invited to the keynote, but it can get you paid. The market spent years worshipping chips; Wednesday was a reminder that the AI boom still has to be built in the real world, by real companies, with real invoices.

Bath & Body Works (BBWI) 9.6%

• BBWI popped after beating quarterly sales and profit expectations. Adjusted EPS came in ahead of estimates, and demand held up for soaps, candles, and other “I deserve a little treat” items. The company did not raise full-year guidance, so this was not a flawless quarter, but investors came in expecting much worse.

• The consumer read-through was actually useful. Shoppers are not buying everything, but they are still spending on small luxuries that feel affordable. When people feel rich, they book trips. When they feel okay, they buy clothes and candles.

• Peel Take: Bath & Body Works is basically a mall-based consumer sentiment index with lotion samples. The stock rallied because the company showed that the customer is stretched, not dead. In this economy, that is enough. Never underestimate America’s ability to cope with macro stress through seasonal fragrance.

What's Rotten

Zscaler (ZS) 31.5%

• Zscaler had a brutal earnings reaction: the quarter was fine, but the stock still took a beating. The company beat fiscal Q3 expectations, with adjusted EPS of $1.08 and revenue of $850.5M, up more than 25% year over year. But Q4 revenue guidance came in slightly below expectations, and for a high-multiple software name, “slightly below” can quickly become “everyone run.”

• The issue was confidence. Investors were already nervous about software valuations, AI disruption, growth durability, and whether cybersecurity names can keep growing like it’s still 2021. Then management pointed to a sales leadership disruption, including two key departures. That is not exactly what shareholders want to hear from a company whose whole brand is “we keep systems secure and under control.”

• Peel Take: Zscaler did not disappoint on earnings, but investor sentiment turned negative after weaker guidance and concerns around its sales organization. That shift mattered because in software, expectations and confidence can be just as important as the quarterly numbers themselves. Cybersecurity remains a strong market, but Wednesday showed that even companies in attractive sectors can face pressure if guidance fails to reassure investors.

DICK’s Sporting Goods (DKS) 6.3%

• DICKs beat the quarter, but investors focused on the full-year profit cut. Adjusted EPS came in at $2.90, revenue hit $5.16B, and comparable sales rose 4.1%. DICK’s stores were strong, Foot Locker comps improved, and demand for sporting goods and apparel did not look broken. On the surface, this was not bad at all.

• The problem was margin pressure from the Foot Locker overhaul and upcoming market spend. The acquisition may still be smart long term, but right now, investors see integration costs, store work, promotional pressure, and a lot of “trust us” between here and the payoff.

• Peel Take: DICK’s did not get punished because consumers stopped buying sneakers. It got punished because investors are worried the Foot Locker deal could chew through earnings before it creates enough upside. The business still has demand. The stock just got reminded that acquisitions are easy to announce and annoying to digest.

🧠 Technical Trip

Interview Q&A from Evercore

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📚 Lesson from the Library

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🦈 Deal Dispatch

M&A, IPOs, And Other Notable Transactions

• Snowflake signed a five-year, $6B strategic partnership with AWS and raised its annual product revenue forecast to $5.84B from $5.66B.

• GameStop’s eBay saga remains peak finance theater. GameStop now has roughly 6.55% economic exposure to eBay, up from about 5%.

• Lululemon ended its proxy fight with founder Chip Wilson, agreeing to add two of his suggested board members after the June 25 annual meeting and a third mutually chosen director by October 1.

• InPost’s roughly $9 billion buyout offer from a FedEx- and Advent-led consortium opened May 26 and is set to run through July 27. The deal needs 80% shareholder support.

• Sunshine Silver is targeting a valuation of up to $2.32 billion in its U.S. IPO, aiming to raise up to $330 million.

📊The Daily Poll

Previous Poll:

Do you think the Fed should focus more on fighting inflation right now?

Yes: 50.0% // No: 12.5% // Only if prices rise again: 27.5% // I’m just here for cheaper groceries: 10.0%

Student Success Corner

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Banana Brain Teaser

Previous

How many odd numbers between 10 and 1,000 are the squares of integers?

Answer: 14

Today

A furniture dealer purchased a desk for $150 and then set the selling price equal to the purchase price plus a markup that was 40 percent of the selling price. If the dealer sold the desk at the selling price, what was the amount of the dealer’s gross profit from the purchase and the sale of the desk?

How Would You Rate Today's Peel?

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

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