Palantir & IBM Take Beating, Tech Sheds Workers, Guy in Iran to Watch

You made it. Friday. I don't know about you kids, but every week feels like a marathon these days. After Thursday's broad, but not really too deep selloff, the major indexes enter this day with week-to-date losses, putting what are currently three-week winning streaks at risk. On Thursday, the S&P 500 gave up 0.41% and will enter Friday down 0.25% for the week. The Nasdaq Composite surrendered a more daunting 0.89% on Thursday and entered Friday morning down 0.12% week to date. The small to midcap indices all outperformed the general marketplace but still closed down small for the day.

The weakness in U.S. equities came by way of an apparent breakdown in peace talks between the U.S. and whoever might be in charge in Iran, if anyone is. Iran's Islamic Revolutionary Guard had fired upon three commercial vessels in the Strait of Hormuz coming into the Thursday session, seizing two and leaving the third disabled. The U.S. Navy, in turn, stopped Iranian oil tankers out in the Indian Ocean and in western Asian waters.

The situation then got worse, if one were being toted around by keyword-reading algorithms as Pres. Trump ordered the U.S. Navy to "shoot and kill" any vessels found to be mining the Strait of Hormuz. That came after Axios had reported that the Revolutionary Guard had laid more mines in the crucial passage. Crude oil, obviously, traded higher on the news.

Good News

Overnight, Pres. Trump posted to his Truth Social account the news that Israel and Lebanon had agreed to extend their ceasefire by three weeks. The new ceasefire between those two nations, which began as a 10-day truce on April 16, will now extend into mid-May. In other good news, the U.S. president ruled out the use of nuclear weapons in Iran. In news that could be taken either way, depending on perspective, the carrier USS George HW Bush arrived in the Middle East on Thursday putting three U.S. carrier strike groups in theater.

Not Such Good News...

On Thursday, Meta Platforms (META) announced that the company plans to lay off about 8,000 employees or roughly 10% of its entire workforce. These job cuts will begin on May 20 and will replace a plan to hire 6,000 people, so there's a net swing in expected demand for labor here of a loss of 14,000 positions. Meta claims that the change in plans is necessary to improve efficiency and focus on generative artificial intelligence.

Meta Platforms was not alone. Earlier in the day, Microsoft (MSFT) announced a voluntary buyout that will offer senior employees an early retirement. The company is trying to reduce its senior headcount by about 7%. After the closing bell last night, it was learned that Nike (NKE) will lay off approximately 1,400 employees from its technology department (about 2% of the company). This comes on top of the 775 employees that Nike let go earlier this year.

Bifurcated Tech

You've already read that most of the mid-major to major U.S. equity indexes traded lower on Thursday. If one is new to the term "bifurcated," the term simply means a two-way split or two-forked, as in a path. On Thursday, five of the S&P sector SPDR ETFs closed out the session in the green. The utilities (XLU) led the winners as technology (XLK) led the losers as defensives outperformed growth.

Within the tech space, the Philadelphia Semiconductor Index gained an impressive 1.71% (up 17 trading days in a row), led by Texas Instruments (TXN) as that stock ran 19.4% after reporting on Wednesday evening. On Semiconductor (ON) and Arm Holdings (ARM) also had strong days. Strong results reported and guidance issued by Intel (INTC) on Thursday night have these shares trading significantly higher this morning. Competitor Advanced Micro Devices (AMD) is up sharply overnight as well.

Turning the page, even with the strength visible in the semiconductor space, the Dow Jones U.S. Software Index gave up a whopping 5% on Thursday. ServiceNow (NOW) was badly beaten after reporting its numbers, giving back 17.8%. IBM (IBM) , a name I purchased for the Sarge-folio on weakness, gave up 7.8%, and Palantir Technology (PLTR) , a "$10K Portfolio" name, gave up 7.2%. Oracle (ORCL) also took a beating.

Breadth

On Thursday, losers beat winners by a rough seven-to-six margin at the NYSE and by a more convincing two to one at the Nasdaq. Advancing volume was about what one might expect in percentage terms. Advancing volume took down a 37.2% share of composite NYSE-listed trade on Thursday and a 33% share of composite Nasdaq-listed activity.

A new "Day One" bearish reversal of trend after Tuesday's misfire? Not really. Though aggregate trade did increase by 7.9% on a day-over-day basis across NYSE-listings, and activity across the membership of the S&P 500 grew as well, Thursday's totals fell well short of 50-day trading volume simple moving averages. Additionally, aggregate trade across Nasdaq-listings actually contracted 1.5% day over day. It's difficult to say that there was much conviction in Thursday's session of light "profit-taking."

Keeping an Eye on Bagher Ghalibaf

Mohammad-Bagher Ghalibaf. Who is that? Bagher Ghalibaf is a former Iranian Revolutionary Guard general who is now a prominent political figure inside that nation. He has served as the mayor of Tehran and has run for president four times. He is the former commander of the Iranian Air Force. He has also served as Speaker of Iran's Parliament since 2020 and may be the most important Iranian political figure still alive.

Earlier this month, Bagher Ghalibaf led the Iranian delegation that negotiated with U.S. Vice Pres. JD Vance. Though his career has been plagued by alleged corruption scandals, he is considered to be pragmatic, not necessarily a zealot or idealogue and someone that can be worked with.

Since much of the Iranian government had been eliminated, it is thought that Brigadier General Ahmad Vahidi has led Iran's war effort, Pres. Masoud Pezeshkian has managed day-to-day state functions and Bagher Ghalibaf has been considered the overall strategic leader. On Thursday, it was rumored that he had stepped down as Iran's lead negotiator due to a dispute with hardliners in the Revolutionary Guard. Those rumors have been disputed overnight, and I don't think we know whether or not he is involved at this point. I do know that financial markets want this guy engaged as at least he seems willing to play ball.

Friday Night

Friday night, Friday night
Friday night, Friday night
It's only money
Friday night, Friday night
I just got paid, no sleep 'til Monday
Friday night, Friday night
Who cares its only money

- Wray, Sigerson, Mahassen, Dean (Loverboy), 1985

Economics

(All Times Eastern)

10:00 - U of M Consumer Sentiment (Apr-F): Flashed 47.6.

10:00 - U of M One-Year Inflation Expectations (Apr-F): Flashed 4.8%.

10:00 - U of M Five-Year Inflation Expectations (Apr-F): Flashed 3.4%.

1:00 p.m. - Baker Hughes Total Rig Count (Weekly): Last 543.

1:00 - Baker Hughes Oil Rig Count (Weekly): Last 410.

The Fed

(All Times Eastern)

Fed Blackout Period.

Today's Earnings Highlights

(Consensus EPS Expectations)

Before the Open: (HCA) (7.16), (NSC) (2.50), (PG) (1.56), (SLB) (.52)

At the time of publication, Guilfoyle was long AMD, IBM, PLTR equity.