Energy Leads S&P 500 to Another New High: Stock Market Today

Gasoline, natural gas and crude oil pipes with a line graph

Oil briefly spiked back above $100 Monday after President Donald Trump rejected a peace proposal from Iran as "totally unacceptable" on Sunday, but all three main U.S. equity indexes held on for modest gains amid a solid earnings season and more signs of strength for the market's major trend.

"I would say the ceasefire is on massive life support… when the doctor walks in and says, 'Sir, your loved one has approximately a 1% chance of living'," Trump said to White House reporters today about the state of play in the Middle East.

The front-month West Texas Intermediate crude futures contract was up as much as 5.2% to $100.37 per barrel and settled with a gain of nearly 3% above $98. WTI is up 47% since the war between the U.S., Israel and Iran began on February 28.

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"The S&P 500 continues to report impressive results," John Butters of FactSet writes. "Both the percentage of S&P 500 companies reporting positive earnings surprises and the magnitude of earnings surprises are above recent averages." The index is on track for its highest earnings growth rate since the fourth quarter of 2021.

Energy stocks led the 11 sectors on Monday. Oil and gas supermajor Chevron (CVX, +1.7%) was among the top-performing Dow Jones stocks, as was artificial intelligence (AI) revolutionary Nvidia (NVDA, +2.0%).

"The S&P 500 continues to distance itself above the 7,000-point milestone, maintaining strong upside momentum off the March 30 low," LPL Financial Chief Technical Strategist Adam Turnquist observes. "Mega-cap stocks remain the primary drivers of the rally, consistent with the broader bull market trend." Meanwhile, as Turnquist explains, strength for small-cap stocks and mid-cap stocks as well micro caps "provides a meaningful offset to concerns about narrow participation."

At the closing bell, the broad-based S&P 500 was up 0.2% at 7,412, yet another new all-time high, and the tech-heavy Nasdaq Composite had added 0.1% at 26,274, also another new high. The blue-chip Dow Jones Industrial Average was up 0.2% at 49,704.

It's time for a new Fed chair

"The top priority for Senate Republicans this week," Roll Call notes, "will be to confirm Kevin Warsh to be chairman of the Federal Reserve." The urgency here is that Jerome Powell's term as Fed chair will expire on Friday.

According to Roll Call, the Senate will conduct an initial procedural vote on Monday evening to limit debate on President Donald Trump's nomination of Warsh to join the Fed board, followed by another procedural vote for his nomination to succeed Powell as Fed chair as soon as Wednesday.

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A better-than-expected April jobs report underscores the view that inflation rather than employment is the central bank's priority right now as it considers the appropriate level for interest rates amid an energy shock.

And though the chair can't cut the federal funds rate all by himself, there are things Warsh can do to change the Fed soon after his confirmation.

LITE it up again

Lumentum Holdings (LITE) surged 15% on the March 9 announcement the stock would be added to the S&P 500, and LITE rallied another 16.6% today on word it will replace CoStar Group (CSGP, +0.5%) in the Nasdaq-100 Index before the opening bell on May 18.

Lumentum makes optical and photonics equipment for data centers and cloud computing. LITE was up more than 145% year to date through Friday and was one of the top-performing S&P 500 stocks because of its connection to the AI revolution.

Management reported fiscal third-quarter earnings of $2.37 per share (+315.8% year over year) on revenue of $808.4 million (+90.1% YoY), while operating margin improved to 32.2% from 10.8%.

Following what he described as "another strong quarter of strong execution," Susquehanna analyst Christopher Rolland reiterated his Positive (Buy) rating and his $1,100 12-month target price for LITE, citing "a long runway of growth and margin expansion ahead."

Cerabras IPO gets even bigger

A Monday filing with the Securities and Exchange Commission (SEC) confirms the Cerebras IPO will seek $150 to $160 per share for 30 million shares vs $115 to $125 for 28 million it projected last week.

Two people familiar with the matter told Reuters on Sunday that Cerebras Systems, which makes semiconductors for the AI industry, planned to boost both the price range and the number of shares for its initial public offering.

"Cerebras' IPO has drawn orders for more than 20 times the number of shares available," Reuters reported, "as the chipmaker looks to manage surging interest ahead of its May 13 pricing."

Cerebras is on track to start trading on the Nasdaq on May 14. Semiconductor stocks, as represented by the iShares Semiconductor ETF (SOXX, +2.4%), are up nearly 73% since March 30 and about 170% over the trailing 12 months.

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David Dittman is the former managing editor and chief investment strategist of Utility Forecaster, which was named one of "10 investment newsletters to read besides Buffett's" in 2015. A graduate of the University of California, San Diego, and the Villanova University School of Law, and a former stockbroker, David has been working in financial media for more than 20 years.