Good Morning Investors!!! US stocks are coming off record highs, but the mood is more cautious this morning. Elevated oil prices, trading around $103 per barrel, are pushing bond yields higher and raising fresh concerns about inflation. This puts the focus on key economic data on business activity due out later today. Meanwhile, major companies are making headlines. Tesla announced a massive spending increase for its artificial intelligence plans and both AT&T and Freeport-McMoRan reported their latest quarterly results.
|
Key Market Drivers
Record Highs Face an Oil Headwind The S&P 500 and Nasdaq both closed at record highs Wednesday, lifted by strong tech earnings. However, stock futures are pointing lower this morning as oil prices remain elevated. With diplomatic progress stalled in the Middle East, Brent crude, the international benchmark, is trading around $103 per barrel. Sustained high energy prices act as a tax on consumers and businesses, threatening to keep inflation higher for longer. This complicates the outlook for the Federal Reserve, as sticky inflation could delay any potential interest rate cuts. Investors will be watching the April manufacturing and services data, known as the Purchasing Managers’ Index (PMI), later this morning for signs of rising cost pressures. 
Brent Crude Oil – 1 Year Chart
Bond Yields Test a Key Level In response to stubborn energy prices, the 10-year Treasury yield climbed overnight, moving toward 4.3%. That is near its highest point in over a week. Bond investors are becoming less confident that inflation will fall quickly, which pushes them to demand higher interest payments for holding longer-term government debt. This matters because higher yields on safe government bonds make riskier assets like stocks less attractive by comparison. If the 10-year yield continues to climb, it could put pressure on stock market valuations, especially for high-growth tech companies. Today’s weekly jobless claims report will offer a fresh look at whether the labor market is cooling, which could help offset inflation fears. Tesla’s AI Pivot Shakes Confidence Tesla reported first-quarter earnings that beat expectations, but the details sent the stock lower in overnight trading. The company announced it was raising its spending plans for the year to over $25 billion, a significant jump from prior guidance. The increase is meant to fund a massive pivot toward artificial intelligence and robotics. This strategic shift prioritizes long-term AI projects over near-term profitability and vehicle production goals. While the move could pay off in the future, it adds a new layer of risk for investors and moves the company’s valuation case further away from a traditional automaker. Shareholders will be watching to see how this heavy spending affects the company’s profit margins in the quarters ahead. The "Powering AI" Trade Gains Steam The AI boom is about more than just software and chips. It also requires a huge amount of electricity. This was highlighted yesterday when GE Vernova, a company that makes power-grid equipment, saw its stock jump nearly 14% after reporting stronger-than-expected earnings. The results show how the AI build-out is creating demand for the essential infrastructure needed to run power-hungry data centers. This is broadening the AI trade beyond the big tech names, creating a tailwind for industrial and utility companies that provide the "picks and shovels" for the new technology. Investors will watch earnings from Meta next week for more commentary on data center spending. |
|
Copper Miners
Copper, often called the "red metal," is suddenly in the spotlight. Prices recently hit levels not seen in years, driven by a combination of tight supply and surging demand. On the supply side, disruptions in the Middle East have created a shortage of a key acid needed for processing copper ore. At the same time, demand is getting a huge boost from the global energy transition and the buildout of artificial intelligence (AI) data centers, both of which require massive amounts of copper wiring.
This dynamic has lifted shares of companies that mine the metal. The Global X Copper Miners exchange traded fund (ETF), which holds a basket of these stocks, has climbed about 4.5% in the past week and roughly 11% over the last month. The core idea is that when the price of the metal they sell goes up, the miners’ profits can rise even faster.
Here are a few of the key players:
Freeport-McMoRan (FCX):
Freeport is one of the world’s largest copper producers, with major mines in the Americas and Indonesia. The company just reported strong first quarter earnings this morning, with revenue rising to $6.23 billion from $5.73 billion a year ago. Its net income more than doubled as it sold its copper for an average price of $5.78 per pound.
Teck Resources (TECK):
This Canadian miner recently shifted its focus to become a pure play on metals needed for the energy transition. The company is currently ramping up production at its new Quebrada Blanca mine in Chile. Teck just reported record quarterly copper sales of over 70,000 tonnes, which helped more than double a key measure of its core profit.
BHP Group (BHP):
BHP is the largest mining company in the world and operates Escondida in Chile, the single highest-producing copper mine on the planet. The company is leaning into the strong demand and recently raised its copper production forecast for 2026 to nearly 2 million tonnes.
InvestorsGrow Takeaway:
The main economic signal for copper is the Global Manufacturing PMI, an index that tracks factory activity. When it rises, it signals more demand for industrial metals. Analysts watch a key performance indicator (KPI) called Cash Cost per Pound, which is what it costs a miner to get the metal out of the ground. The biggest red flag is substitution. If copper prices stay too high for too long, manufacturers may redesign products to use cheaper aluminum instead. If global manufacturing stays strong while supply remains limited, copper miners may continue to benefit.
AT&T Inc. (T)
AT&T is one of the world’s largest telecommunications companies. It provides mobile phone services and high-speed fiber internet to millions of consumers and businesses, primarily in the United States.
The company reported its first-quarter earnings this morning before the market opened. While revenue came in slightly ahead of expectations, the results showed signs of stress in its core business. Shares were trading lower by about 3% in pre-market activity after the company announced it added fewer new monthly wireless subscribers than analysts had forecast.
AT&T’s stock has been a disappointment for long-term investors. Shares are down roughly 35% over the past five years, a period that includes the spinoff of its WarnerMedia entertainment assets. Over the last year, the stock is up about 9%, but has struggled to build momentum.
The US wireless market is highly competitive, dominated by AT&T, Verizon, and T-Mobile. These companies fight for every customer, and T-Mobile has been particularly aggressive in recent years. The main battleground is for postpaid phone customers, who pay a monthly bill and are the most profitable segment.
Investors are focused on that exact figure: postpaid phone net additions. AT&T added 349,000 of these customers in the quarter, falling short of estimates. This number is seen as a direct scorecard of a telecom company’s health and its ability to grow market share.
Looking ahead, investors will watch earnings reports from Verizon and T-Mobile to see if AT&T’s weakness was part of a broader industry slowdown or a sign of company-specific issues. If competitors post strong subscriber growth, it could suggest AT&T is losing ground.
The InvestorsGrow Takeaway: The story of AT&T is a battle between its stable, cash-generating business and its struggle for meaningful growth. The upside case rests on the company successfully expanding its fiber internet network and maintaining its attractive dividend. The primary risks are its large debt pile and the relentless competitive pressure in the wireless industry, which could continue to squeeze subscriber growth and profit margins.
|
