Rally Rolls On, Fueled by Peace Hopes, AMD Results

Published as of: May 6, 2026, 9:12 a.m. ET

(Wednesday market open) Anyone who "sold in May and went away" may be having some early regrets, though there's a long way until June. Major indexes surged 1% this morning, extending the tech-fueled rally as hopes for peace sent crude oil down more than 7% back toward $94 per barrel. Wall Street's jump shot got an assist from Advanced Micro Devices (AMD), up 18% ahead of the open after a solid earnings outing, and Walt Disney (DIS), up 4% after the same.

Data this morning included ADP employment, which showed private sector job growth of 109,000 in April. That’s slightly below the 120,000 expected but almost double the 61,000 in March and the most in more than a year, led by service-providing jobs. This may lend some positive vibes ahead of Friday's April nonfarm payrolls report, expected to show relatively light jobs growth near 60,000. Still, data took a back seat to AMD earnings and crude's descent, which followed reports that Iran is reviewing a U.S. proposal and the two sides are closer to an agreement than in a while. There's no guarantee, of course, and the Strait of Hormuz remains sealed.

Major indexes surged to new all-time highs in a broad rally Tuesday, led by the roaring chip sector. "The bullish momentum still appears to be intact for the AI and AI-adjacent trade," said Nathan Peterson, director of derivatives research and strategy at the Schwab Center for Financial Research, or SCFR. "Are we overbought in tech and chips? Yes, but in the near term it doesn't seem to matter. It's tough to slow momentum when stocks and the PHLX Semiconductor Index are breaking out into all-time high territory—it suggests that price discovery is still searching for equilibrium and hasn't found it yet."

1. Results provide welcome distraction: The earnings drumbeat has kept high oil prices from being the primary factor the way they were in March. The strength of earnings season, including a strong beat rate, has shifted a little of the direct intraday correlation between oil and stocks. "The focus, maybe rightly so, has been on earnings season, which has been quite strong," said Liz Ann Sonders, chief investment strategist at SCFR, in a CNBC appearance Tuesday. "The only rub with earnings is that three stocks represent about 70% of the dollar-based growth: Alphabet (GOOGL), Amazon (AMZN), and Meta (META). That's something to be mindful of looking ahead." As earnings for the first quarter keep topping expectations, analysts have begun raising their estimates for coming quarters. Earnings growth in the first quarter is near 28% year over year, though the three stocks above contributed hugely to that.
    
2. Growth picture assessed as jobs data looms: While recent data has been mixed, generally the economy appears to be holding together despite the war and expensive crude oil. Last week's mega-cap earnings might help explain why. "The AI capex binge appears to be the dominant focus from investors, meaning, as long as AI capex is on the rise, the ripple effects will provide a foundation to economic stability," Peterson said, referring to heavy capital spending from the likes of Meta and Amazon. However, gross domestic product growth of 2% on an annualized basis in the first quarter missed expectations and is relatively low, historically. The April layoffs data early tomorrow could provide more perspective. Nonfarm payrolls on Friday, of course, is the cherry on top. That report should be closely checked for any downward revisions to past reports, which have become increasingly common. The types of jobs being created is another element to monitor, as ADP showed lower-paying services employment far outpacing growth in goods-producing jobs. 
    
3. Rate hike odds surge: As of early today, the CME FedWatch Tool put odds of a rate cut this year at just 12%, and increasingly baked in higher odds of a rate hike. Chances of rates ending the year above their current 3.5% to 3.75% range jumped to nearly 30% early this week amid war-driven inflation worries before slipping to around 13% today. Rising Treasury yields this week reflected higher rate hike odds and heavier borrowing by the U.S. Treasury, and possibly trepidation ahead of this Friday's jobs report. A surge in jobs growth could keep the yield rally going, perhaps setting up a "good news is bad news" scenario for stocks. Based on futures trading, odds remain highest of no Fed rate change this year, despite soon-to-be Fed Chairman Kevin Warsh favoring lower rates over time. Current Chairman Jerome Powell—who's staying on the board—and three other Federal Open Market Committee (FOMC) members seem prone to keep rates from falling, and Warsh has just one vote. Higher yields represent a potential brake on stock prices, especially with seasonal factors less bullish for stocks from here, historically.

• Advanced Micro Devices popped 15% after reporting better-than-expected results and guidance late yesterday. Revenue rose nearly 38% year over year, led by a 57% jump in data center segment revenue.
   
• Walt Disney posted 5% early gains after quarterly earnings topped analysts' estimates and revenue rose 7% to above $25 billion. Also, domestic theme park attendance fell 1% last quarter, though international theme parks and cruise ship revenue climbed 2%.
   
• Super Micro Computer (SMCI) soared 13% in the early going. Earnings for the data center infrastructure provider topped expectations, though revenues missed. Guidance was stronger than expected.
   
• Nvidia (NVDA) climbed 2% early and Corning (GLW) soared 18% as Nvidia announced the two companies are in a long-term partnership to strengthen U.S. manufacturing for AI infrastructure. The deal includes three new manufacturing plants that will create 3,000 U.S. jobs. These plants will focus on advanced optical connectivity manufacturing.
   
• Intel (INTC) climbed nearly 13% Tuesday and extended gains another 4% this morning on a Bloomberg report that Apple (AAPL) held talks with Intel about possibly producing some of the chips for Apple's devices. Apple has been relying on Taiwan Semiconductor Manufacturing (TSM), shares of which fell nearly 2% Tuesday. Apple rallied 2.6% and is approaching the all-time highs it posted last fall. Intel has soared from $40 to $108 per share in just over a month.
   
• Uber Technologies (UBER) popped 8% in early action even though its 14% annual revenue climb to $13.2 billion slightly missed consensus. Earnings per share topped analysts' estimates, while gross bookings, trip volume, and active users kept growing during the quarter. Guidance for the current quarter was toward the low end of the consensus range.
   
• CVS Health (CVS) added 5% this morning after easily beating analysts' earnings and revenue estimates and seeing better-than-expected growth in every business segment. CVS also raised guidance for the full year.
   
• Arm Holdings (ARM) popped 12% ahead of earnings later today. Shares surged over the last month with the rest of the chip sector. Investors might want to check for any updates on the Chinese market amid recent trade tension. At its investor day in March, ARM shared a strategic pivot in which it plans to go from being a chip licensor to a direct silicon provider. It also issued strong guidance.
   
• Airline and cruise shares racked up gains early today on falling oil prices and hopes for an end to the war. United Airlines (UAL) rose 8%, Delta Air Lines (DAL) rose 7.4%, and Royal Caribbean (RCL) recently traded 7.6% higher. Meanwhile, the dollar fell to pre-war levels and metals prices rose. Energy-related shares mostly fell.
   
• Arista Networks (ANET) tumbled 8% despite earnings and revenue that topped consensus views. The company also shared guidance above Wall Street's expectations. The company's slightly lower-than-expected forecast for second quarter adjusted operating margin may have disappointed investors, Barron's reported.

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The PHLX Semiconductor Index (SOX—purple line) has outpaced 14% gains for the small-cap Russell 2000^® (RUT—blue line) and 6.8% for the S&P 500 Index (SPX—candlesticks) over the last three months. One thing to watch is the relative strength index (RSI—bottom chart) for the S&P 500. It's now above 70, traditionally an overbought level. If RSI starts to slip, it could point to struggles for the SPX.

Check out the investors' calendar for a summary of the top economic events and earnings reports on tap this week.

May 7: February construction spending and expected earnings from Shell (SHEL), McDonald's (MCD), Gilead Sciences (GILD), McKesson (MCK), CoreWeave (CRWV), Coinbase Global (COIN), and Airbnb (ABNB).
May 8: April nonfarm payrolls, preliminary May University of Michigan Consumer Sentiment, and expected earnings from Sony (SONY) and Enbridge (ENB).
May 11: April existing home sales and expected earnings from Constellation Energy (CEG) and Circle Internet Group (CRCL).
May 12: April CPI and core CPI, and expected earnings from JD.Com (JD).
May 13: April PPI and core PPI, and expected earnings from Alibaba (BABA) and Cisco (CSCO).