What The Dell? FEMO Powering Stock Market Higher
U.S. equities closed at record highs on Friday, while crude prices slipped, helping the major averages score a winning month, boosted by technology.
The Nasdaq Composite settled up 0.2% at 26,972.62, while the S&P 500 climbed 0.22% to 7,580.06. The Dow Jones Industrial Average finished up 363.49 points, or 0.72%, at 51,032.46. All three indexes hit fresh all-time intraday highs earlier as well.
Dell Technologies was a winner. Shares surged nearly 33%, seeing its best day on record, after the laptop maker reported a first-quarter beat on both the top and bottom lines and raised its full-year guidance.
Shares of Micron Technology and Qualcomm rose 5% and 3%, respectively, adding to their recent gains. While the two have suffered notable drops this month, they both posted sizable gains in the period. Micron jumped almost 88% in May, while Qualcomm rose close to 40%.
The Technology Select Sector SPDR Fund (XLK), which hit a new 52-week high Friday, moved up nearly 20% on the month.
“Dell is like the poster child for [the] AI broadening earning story,” said David Nicholas, CEO and founder of XFUNDs by Nicholas Wealth. “We started with chips, memory, but it’s really now about the broad kind of AI infrastructure stack.”
Friday marks the final trading session of May, and all three major averages notched gains. The Nasdaq outperformed, recording an advance of more than 8% for the month. The S&P 500 finished up 5%, while the Dow posted an almost 3% climb.
All three major indexes also ended the week higher, with the Nasdaq in the lead with a gain of more than 2%. The S&P 500 rose more than 1% on the week, while the blue-chip Dow notched a gain of slightly less than 1%.
Stocks are coming off a record-setting session after the U.S. and Iran agreed to Iranian negotiators agreed on a 60-day memorandum of understanding to extend the ceasefire.
The president said in a Truth Social post Friday morning that he is meeting in the Situation Room “to make a final determination” and insisted that Iran “must agree that they will never have a Nuclear Weapon.” He also said that the Strait of Hormuz must be “immediately open.”
After the announcement, West Texas Intermediate futures closed down 1.73% to $87.36 per barrel. Brent crude dropped 1.77% to close at $92.05. The U.S. benchmark saw its biggest monthly decline since April 2025 as prices dropped nearly 17%.
“There’s always that black swan risk that something pops off, but my gut tells me that this thing should be coming to an end very quickly,” Nicholas said. “The market has priced a lot of that in, but I just think it unlocks the market to continue moving higher.”
It was another fabulous week in the stock market for a small group of tech companies that are killing it, Dell being the poster boy today.
Basically, semis, photonoics, anything related to data centers and AI has gone parabolic in recent weeks.
But this week, software shares came back strong led by great earnings from Snowflake:
It also helps that Microsoft is making a comeback here, putting to rest all the Saas-copolypse nonsense in the software sector:
Both Microsoft and IGV are buys here; they were buys in late March when the software storm hit them hard.
As a rule of thumb, whenever Microsoft drops below its 200-week exponential moving average, don't ask questions, load up.
However, I have to tell you, it wasn't Mag-7 stocks powering the stock market higher this week, it was these stocks below, led by Dell (full list here):
What is driving all this price action? Ed Yardeni told Bloomberg this week that 'FEMO' is the key to a rally built on reality, not hype:
Veteran market strategist Ed Yardeni of Yardeni Research dismissed concerns that U.S. stocks are in a bubble, arguing the rally is driven by “fabulous earnings momentum” rather than speculation.
“The big difference is earnings,” Yardeni said Wednesday on Bloomberg Television’s Surveillance, adding that the forward price-to-earnings ratio for the S&P 500, at 20 to 22, looks reasonable if the economy avoids recession over the next few years. He coined the term “FEMO”—fabulous earnings momentum—to distinguish the current rally from “FOMO,” or fear of missing out, which he said is based on hope and hype rather than fundamentals.
Yardeni, president and chief investment strategist for the firm that bears his name, acknowledged the market feels like a “meltup” with some semiconductor stocks rising sharply. He expects the S&P 500 to reach 10,000 by the end of the decade, representing a 33% run-up, in what he calls the “roaring 2020s” scenario. Yardeni said he has seen only one meaningful selloff this year, in March, and doubts another will occur before year-end.
His FEMO thesis helps underpin his 2026 S&P 500 target at 8,250. That’s the highest among analysts tracked by Bloomberg, though the band of bulls seeing at least 8,000 expanded again when Goldman Sachs Group Inc. strategists raised their year-end estimate to 8,000 from 7,600.
Regarding U.S. inflation, Yardeni said the current spike is related to higher crude costs but lacks the wage-price spiral seen in 2022. He expects productivity growth to accelerate to 3% or 4% from the current three-year average of more than 2%, which would offset wage pressures and keep unit labor cost inflation near zero. Year-over-year unit labor cost inflation currently stands at 1.2%, he said.
Oil markets have stabilized around $100 per barrel despite the blockade of the Strait of Hormuz, Yardeni said, with the U.S. and Venezuela exporting more crude while China’s economy appears weaker than recognized.
FEMO leads to more FOMO, which is why you're seeing parabolic moves in some stocks.
Anyway, enjoy your weekend, there's a big ASCO meeting in Chicago this weekend where the world's best healthcare companies showcase their cancer pipeline.
Replimune shares surged 86% on huge volume today after the Wall Street Journal reported this morning that the FDA will look at their advanced melanoma drug for a third time after it was rejected twice:
Just insane! Meanwhile, shares of Iovance Biotherapeutics (IOVA) which has an FDA-approved treatment for advanced melanoma based on TIL therapy was down on the news.
Welcome to the wacky world of biotech where insiders regularly manipulate the market.
Alright, time to watch some hockey and enjoy my weekend.
Below, CNBC’s Kristina Partsinevelos reports on Dell as the laptop maker surged after raising its full-year guidance.
Next, Tom Lee, Fundstrat, and Brian Belski, Humilis founder and CEO, joins 'Closing Bell' to talk the trajectory of the market (from day ago).
Third, Brad Gerstner, Founder and CEO of Altimeter Capital, joins CNBC's "Halftime Report” to talk everything from markets, tech and how to navigate the flood of mega IPOs releasing this year.
Lastly, Ed Yardeni, president at Yardeni Research, says the basic thrust of the market is higher as he touts “FEMO” or the “fabulous earnings momentum” he sees driving a melt up in stocks (two days ago).
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