I love sessions like yesterday. The S&P 500 (SPX) gapped to 5,896 from 5,911, then chipped away until all but one sector crossed into the plus column by the closing bell.

Steel producers led the way on tariff news and the big merger. Secondarily, Technology (XLK) names continue to fetch bids.

Chips Take the Lead

VanEck Vectors Semiconductor ETF (SMH) is consolidating perfectly and positioned to retest its all-time highs.

There has been a massive shift back into Invesco QQQ Trust (QQQ) due to earnings and guidance from key tech players, and there is also a fair amount of short-covering by the smartest folks in the room.

The Economy

Don’t look now, but the Atlanta Fed GDPNow estimates are at 4.6%, up from 1.1% on May 1^st.  Personal Consumption Expenditures (PCE) climbed nicely, but equipment is surging (remember, data centers were 1% of the Gross Domestic Product (GDP) in the first quarter). Residential investment has shifted back to positive.

There are still doubters out there, and there is always a data set to help their skepticism.

Trading Partners Struggling

The S&P Global Manufacturing PMI data released yesterday sees the U.S. holding up nicely with a reading of 52.0, while Canada and Mexico struggle at 46.1 and 46.7, respectively.

Any number under 50.0 is a contraction.

Prices are an issue in the U.S., although the rate of increase is slowing. This goes against the predictions of the Street that U.S. manufacturing would implode.

I should note the Institute for Supply Management (ISM) Manufacturing release came in below the consensus, but key components edged higher.

The market is displaying the kind of grit that is needed to forge record highs.

Today’s Session

A monster deal for Meta Platforms (META), to buy nuclear power from Constellation Energy (CEG), has shares of nuclear power providers and data center stocks soaring.

Consumers Adjusting & Spending

There will be spin on news from retailers this morning focused on trading down and seeking discounts.  There is some truth to that, but more important is consumers are spending, and companies are absorbing most of the tariffs.

And yet, these same companies have raised guidance.

And it’s not just discount retailers.

Signet (SIG)   “Given our positive performance, we are increasing the low end and maintaining the high end of our Fiscal 2026 operating guidance. This outlook reflects the current macro environment and current tariffs as well as on track cost savings initiatives. Further, we are raising our adjusted EPS guidance to reflect the repurchase of more than 5% of outstanding shares year to date.”   - Joan Hilson, Chief Operating and Financial Officer.

The Company's Fiscal 2026 guidance is based on the following assumptions:

• Total sales anticipate a measured consumer environment, providing for variability in consumer spending over the year.
• The Company expects to absorb current tariffs within the adjusted operating income range provided.
• Excludes any potential impact resulting from any new tariffs and the potential outcome of reciprocal tariffs.
• Planned capital expenditures of approximately $145 to $160 million.
• Net square footage declines by 1% to flat for the year.
• Annual tax rate of 23% to 25%, including the non-cash impact of approximately 4% for the CITA2023 Bermuda tax impact previously disclosed; excludes potential discrete items.
• Diluted EPS for Fiscal 2026 excludes any potential further share repurchases subsequent to today.

Dollar General (DG)   “The Company is updating its expectations for the year, primarily to reflect its outperformance in the first quarter and the tariff uncertainty discussed above. This updated guidance assumes the Company will be able to mitigate a significant portion of the potential impact to its cost of goods from tariffs at currently implemented rates, but that consumer spending could be pressured by tariff-related price increases.”   - Dollar General’s Earnings Report

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