To The Moon

We saw the broad sector weakness in the stock market on Monday (05 May), S&P 500 ends its multiple days winning streak.

The stock market ended the session in the red with S&P 500 snapping its nine-session winning streak, closing 0.6% lower. Despite an attempt to move into positive territory, the index fell as much as 0.9% during the session.

Following a robust rally from April lows, the decline is not a surprise but rather a natural pullback. S&P 500 had came out recently from the correction territory and managed to stay above its 50-day moving average, with today's losses being relatively modest compared to recent gains.

PLTR Decline Because Investors Looks At High Valuation Not Strong Future Growth

Shares of $Palantir Technologies Inc.(PLTR)$ dropped 3% in after-hours trading despite surpassing first-quarter expectations and raising its full-year guidance. The company now forecasts full-year revenue between $3.89 billion and $3.9 billion, exceeding the prior estimate of $3.75 billion. Palantir also increased its adjusted operating profit and free cash flow outlooks, projecting a strong upcoming quarter with revenue and profit expectations above analyst estimates.

As a long term investor for Palantir, this decline might be due to the high valuation that did not meet investor expectation, but for Palantir we need to look long term, especially when the effect of tariffs could come later in the year, PLTR could forecast a better revenue for 2025 full-year, mean that they have plans to do stronger upcoming quarters.

I think there would be more upside coming for PLTR after this short pullback.

Stronger-Than-Expected ISM Services PMI for April Ease Recession Fears

We saw a stronger-than-expected ISM Services PMI for April, which eased fears of a looming recession. April ISM Services Index at 51.6%, surpassing expectations of 50.2% and previous 50.8%. The report indicates an acceleration in services sector growth, although inflation concerns were raised due to the prices paid index reaching its highest level since January 2023.

Investor sentiment was bolstered by this data and boost further by Treasury Secretary Bessent expressed optimism about nearing trade agreements, providing further support to the market.

S&P 500 Sectors Displayed Weakness

However, significant losses in mega-cap stocks heavily influenced the index's performance. The Vanguard Mega Cap Growth ETF (MGK, Financial) fell by 0.7%, while the Invesco S&P 500 Equal Weight ETF (RSP, Financial) saw a 0.3% decline.

The consumer discretionary (-1.3%) and technology (-0.98%) sectors, home to many mega-cap stocks, were among the hardest hit, alongside the energy sector (-1.76%). The energy sector was particularly affected by a drop in oil prices to $57.16 per barrel, down 2.1%, following OPEC+'s announcement of a 411,000 barrels per day production increase starting in June.

Note Yield Rose As Equities Falls

In the bond market, the 10-year Treasury note yield rose by two basis points to 4.34%. Meanwhile, a $58 billion auction of 3-year notes attracted decent interest.

Stocks To Watch

$Hims & Hers Health Inc.(HIMS)$ reported a significant year-over-year revenue increase of 110.6% for the first quarter, with a GAAP EPS of $0.20, beating expectations by $0.08. Subscriber growth reached 2.4 million, up 38% from the previous year. However, the company's shares fell by 2% as its second-quarter revenue guidance fell short of consensus estimates, projecting between $530 million and $550 million.

The Schwab Trading Activity Index (STAX) reported a decline to 41.18 in April, marking the lowest level in two years. Charles Schwab (SCHW) noted that retail investors showed risk aversion, reducing exposure to most S&P 500 sectors, except energy, amid market volatility spurred by tariff announcements from President Trump.

$Ford(F)$ exceeded first-quarter expectations with a non-GAAP EPS of $0.14 and revenue of $40.66 billion. However, the company suspended its full-year financial guidance due to tariff-related uncertainties, which are expected to have a $1.5 billion adverse impact on adjusted EBIT for 2025.

$ON Semiconductor(ON)$ saw an 8% decline in shares despite surpassing first-quarter estimates. Revenue fell 22.3% year-over-year, while non-GAAP EPS dropped 49% to $0.55. The company highlighted a disciplined approach to managing costs and maintaining cash flow during the downturn.

$Berkshire Hathaway(BRK.B)$ shares fell 4.1% following Warren Buffett's announcement of stepping down as CEO at the end of the year, with Greg Abel set to take over. The timing of the announcement surprised investors, leading to uncertainty and weighing on the stock.

Summary

I think the market pullback on Monday (05 May) could be attributed to some of the big names decline which caused the sectors weakness, but April ISM services index stronger-than-expected figure has put investors concerns of looming recession at ease.

So could we see the rally restart back again on Tuesday (06 May)?

Appreciate if you could share your thoughts in the comment section whether you think market could come back with another rally after the short pullback.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.