The corporate profit machine

Wall Street hits a record. ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

Read in browser

Strong corporate earnings, and the Trump administration’s indefinite ceasefire in the US-Israel war with Iran, were enough for Wall Street to continue its march to record highs Wednesday. The continuing disconnect with other economic currents—such as the affordability issues facing American households, sinking consumer confidence and an increasingly difficult job market—could be tied to investor interest in something else entirely: profit. Strong company profits as well as the revival of the artificial-intelligence trade have buoyed stocks despite the above, or the continuing geopolitical risks associated with the conflict in the Middle East. Almost 80% of the S&P 500 companies reporting first-quarter results have beaten analyst earnings estimates so far, according to data compiled by Bloomberg. “While the Iran conflict is ongoing, my sense is that investors are already starting to look through it and focus on what really matters,” said Kenny Polcari at SlateStone Wealth. “We’ve seen this movie before—the headlines hit, the market reacts, then it settles down and refocuses on fundamentals.” —David E. Rovella Coming soon: Get the AI Today newsletter—chronicling the disruptions and threats of AI on businesses, workers, governments and economies with analysis from Bloomberg’s global newsroom. What You Need to Know Today Oil prices rose for a third straight session with Brent crude climbing above $101 a barrel as the standoff between Iran and the US around the Strait of Hormuz settles in. The physical markets continue to signal a shortage of near-term supplies with Dated Brent, the world’s most important real-world crude price, rising above $107 a barrel. US gasoline prices, in turn, have risen to the highest level in almost four years, putting pressure on President Donald Trump to exit the conflict. And with no sign the strait will be reopened to oil and liquefied natural gas shipments soon, experts warn of the increasing likelihood of supply shortages and a global inflation crisis. Bloomberg Explains Can the US and Iran Agree to a Lasting Deal to End the War? Read more Andreessen Horowitz and Thrive Capital are poised for a multibillion-dollar windfall from their early investments in Cursor—if Elon Musk’s SpaceX moves forward with an agreement to acquire the AI coding startup for $60 billion. SpaceX said Tuesday that it has an agreement giving it the right to buy Cursor later this year or to pay $10 billion for the companies’ work together, part of the Musk’s effort to catch up with rivals in AI coding tools. SpaceX isn’t acquiring Cursor immediately because of the rocket company’s imminent initial public offering, Bloomberg News has reported. International Business Machines posted quarterly sales Wednesday in its software unit that were in line with estimates. It has nevertheless failed to shake investor concerns about AI disruption to its business. The legacy tech giant has refashioned itself into a high-growth software firm through acquisitions of Red Hat, HashiCorp and Confluent. In doing so, it has become a target of investors concerned that AI tools will replace many current software products. In February, IBM saw its steepest selloff in decades after Anthropic unveiled a tool it said could help modernize a dated programming language that runs on IBM mainframes. Private Credit As Blue Owl’s Strain Worsened, Bankers Pitched a Long Shot In just a matter of weeks, the company became a lightning rod for investor scrutiny of private credit. Its shares plunged almost 50%. Clients were seeking to pull unprecedented sums. Activists and short sellers were piling on. Then came the pitch from Morgan Stanley. Read more The Trump administration is said to be nearing a rescue package for Spirit Airlines that could give the US government the option to own as much as 90% of the carrier once it emerges from bankruptcy. It’s the latest unorthodox move by Trump into the kind of state-driven economic policy more commonly seen in places like China. During his second term, Trump has shown an extraordinary willingness to take financial positions in private-sector companies his administration deems essential for the US, such as chipmaker Intel. The strategy has drawn scrutiny from critics who question whether the approach could skew markets and create risks for taxpayers. American Said to Explore Alaska Air Revenue-Sharing Deal The news comes after United Chief Executive Officer Scott Kirby floated a possible combination with American—which American rejected. Read more Tesla reported first-quarter earnings that beat Wall Street’s estimates, with adjusted earnings per share coming in at 41 cents, higher than the 34-cent average of analyst estimates compiled by Bloomberg. It’s the second straight quarter Tesla’s earnings have exceeded expectations—though a one-time warranty and tariff-related boost along with higher vehicle prices contributed to the profit. Shares jumped. Tesla’s Moneymaking Battery Business Suddenly Stalls As Musk spends heavily to ramp up autonomous taxis and his Optimus robots seem forever a year away, batteries have become an important source of cash. But now that’s being tested. Read more A global wave of mergers and acquisitions is looming among private equity-backed data-center companies as their debt burdens become unmanageable, warns Greg Goodman, chief executive of Australian industrial property giant Goodman Group. His company, which started out with a single industrial building in Sydney in the 1990s, is building out a global network of sites stretching from Los Angeles and Paris to Tokyo and Hong Kong. It’s among legions of businesses worldwide racing to provide infrastructure for an AI boom that will consume trillions of dollars. Greg Goodman Photographer: Brent Lewin/Bloomberg But in a rare interview at the company’s Sydney headquarters, the 63-year-old founder said he has growing concerns about the scale of private equity leverage fueling the data-center explosion. The rising refinancing costs of billions of dollars of debt are unsustainable, he warned, predicting forced asset sales that will ultimately leave a smaller group of better-capitalized players. “There’ll be consolidation around the world,” the billionaire said. “You’ll see less data center developers and operators.” Retail Lululemon Names Former Nike Executive O’Neill as CEO Heidi O’Neill arrives with many fires to put out. Disappointing sales, slowing growth and the infamous see-through leggings debacle have investors concerned the company can’t pull itself together. Read more Spring Sale: Save 60% on your first year Get the numbers behind the narratives. Enjoy unlimited access to Bloomberg.com and the Bloomberg app, plus market tools, expert analysis, live updates and more. Offer ends soon. Unlock 60% off What You’ll Need to Know Tomorrow Iran War Another Wartime Exit as Navy Secretary Leaves Hegseth’s Pentagon Bloomberg Opinion Maybe Trump Shouldn’t Visit Xi After All Federal Reserve Hassett Backs Powell Interpretation on Staying On ‘Pro Tempore’ Canada Trump Trade Aide Threatens Canada Over US Wine and Spirits Boycott Hedge Funds Schonfeld Sues Millennium’s Grunfeld Over Alleged ‘Gazumping’ Technology TSMC Says ASML’s Latest Chipmaking Gear Is Too Pricey to Use Drug Regulation US Justice Department Expected to Ease Marijuana Controls For Your Commute Bloomberg Primer The Global Race to Crack China’s Battery Dominance On the new season of Bloomberg Primer, see the frenzied contest in the US and elsewhere to catch up, and the new discoveries being made on the way.  Read more Bloomberg.com subscribers are invited to nominate candidates for the inaugural VivaTech x Bloomberg Rising Star Award, to be presented in Paris on June 18. Chosen by the Bloomberg subscriber community, the Rising Star Award honors an emerging founder, technologist, academic or creator whose work is already demonstrating meaningful early impact. It celebrates individuals whose ideas, innovation and leadership are helping shape the future of technology. Submit a nomination here. More from Bloomberg Enjoying Evening Briefing Americas? Get more news and analysis with our regional editions for Asia and Europe. Check out these newsletters, too: Markets Daily for what’s moving in stocks, bonds, FX and commodities Breaking News Alerts for the biggest stories from around the world Opinion Today for an afternoon roundup of our most vital opinions Explore all newsletters at Bloomberg.com. We’re improving your newsletter experience and we’d love your feedback. If something looks off, help us fine-tune your experience by reporting it here. Follow Us You received this message because you are subscribed to Bloomberg’s Evening Briefing Americas newsletter. If a friend forwarded you this message, sign up here to get it in your inbox. Unsubscribe Bloomberg.com Contact Us Bloomberg L.P. 731 Lexington Avenue New York, NY 10022 |