Friday’s big stock stories: What’s likely to move the market in the next trading session

The 10-year Treasury yield reached its highest level since February 12, closing at 4.53% amid concerns that President Trump's tax and spending bill will increase the deficit. Quantum computing stocks experienced a surge, led by IonQ, Rigetti Computing, and D-Wave, potentially fueled by positive comments from IonQ's CEO. Meanwhile, Pershing Square initiated a position in Amazon, boosting its shares by 1%, and despite operational challenges, airline stocks are outperforming in May, with the industry up 13%.

Analysis

The S&P 500 recorded a third consecutive losing day amidst rising Treasury yields, with the 10-year note reaching 4.53%, its highest since February 12, and the 2-year yield at 3.99%. This fixed income pressure is partly attributed to concerns over President Trump's tax and spending bill potentially widening the deficit, alongside a recent weak Treasury auction; comments from Chicago Fed President Austan Goolsbee are anticipated for further rate insights. In sector-specific movements, Utilities declined over 3% in two days, with Vistra (VST) and Constellation Energy (CEG) as notable outperformers against the trend.

Quantum computing stocks experienced a significant rally, with IonQ (IONQ) surging 36% on Thursday (up 67% in May), Rigetti Computing (RGTI) jumping 26% (up 56% in May), D-Wave (QBTS) rising 24% to a new high (up 175% in May), and Quantum Computing Inc. (QUBT) gaining 14.5% (up 80% in May). This exuberance, reflected in high per-ticker sentiment scores (e.g., IONQ: 0.8, QBTS: 0.9), was partly linked to IonQ CEO's favorable comparison to Nvidia, though several of these stocks remain notably below their respective recent highs.

Company-specific news included Pershing Square establishing a new position in Amazon (AMZN), contributing to a 1% share uplift for the e-commerce giant, which is up 17% in the past month but still 16% off its 52-week high. The airline industry demonstrated strong May performance, up 13% despite operational issues, with Delta (DAL) up 16.5% and Southwest (LUV) up 11.6%, although most airline stocks, including JetBlue (JBLU) which is down 37% year-to-date, trade substantially below their recent peaks. Advance Auto Parts (AAP) saw its shares soar 57% post-earnings, aided by short covering and carrying a strong sentiment of 0.8, yet it remains 31% below its 52-week high.

Key Decisions for Investors

• Investors should monitor fixed income markets closely and assess the impact of rising yields, potentially driven by fiscal policy concerns, on rate-sensitive portfolio allocations, while awaiting Federal Reserve commentary.
• The significant rally in quantum computing stocks presents high return potential but also considerable volatility and speculative risk; careful due diligence on individual company fundamentals versus sector hype is crucial, particularly as many are still recovering from previous highs.
• While airline stocks have shown robust May gains despite operational turbulence, investors should scrutinize the sustainability of this rally against the backdrop of individual company performance, such as JetBlue's YTD decline, and consider if current prices adequately reflect recovery prospects versus existing discounts from peak valuations.
• Specific events like activist investor stakes, exemplified by Pershing Square in Amazon, or short-covering rallies, as seen with Advance Auto Parts, warrant attention for potential alpha but require thorough fundamental analysis to distinguish short-term momentum from long-term value.