Morning Market Update: Wholesale Inflation, Meme Stocks, Home Depot, and More

The S&P 500 is set to open relatively flat after the April wholesale inflation report came in hotter than expected, at a 0.5% month-over-month increase compared to the estimated 0.3%. The bond market reacted calmly to the report, possibly due to the revision of the March figure from a 0.2% gain to a 0.1% decline. The key consumer price index report is scheduled for Wednesday morning.

In other news:

  1. Meme stocks surge: Video game retailer GameStop (GME) rose 130% in the premarket, while movie theater chain AMC Entertainment (AMC) rose 110%. The gains followed a post on the social media platform X from "Roaring Kitty," who is credited with leading the massive short squeeze in GameStop in 2021. AMC acted on the momentum and raised $250 million.
  2. Home Depot misses sales expectations: The company reported a miss on sales as many customers put off home projects due to higher interest rates. However, the stock did not take a hit, possibly hinting at a "coiled spring" scenario if rates decline. Home Depot reaffirmed its full-year guidance.
  3. JPMorgan upgrades Planet Fitness: The bank upgraded the gym chain to "buy" from "hold," expressing confidence in long-term growth, driven in part by higher pricing for new members.
  4. Roblox downgraded: Roth MKM downgraded Roblox to a "hold" from a "buy," citing a miss on first-quarter bookings and the cut to its 2024 guidance. The firm expressed the need for more confidence in management's ability to return to 20% annual sales growth.
  5. Constellation Brands and Boston Beer: Jefferies upgraded Sam Adams parent Boston Beer to a buy from neutral, based on a biannual distributors survey. The firm also lowered its price target on Constellation Brands, the parent company of Modelo and Corona, to $311 from $314, implying about 20% upside from Monday's close.
  6. Nvidia price target bump: Wells Fargo raised its price target on Nvidia to $1,150 from $970, the latest in a series of positive adjustments. However, the stock has failed to gain traction, likely due to fears ahead of its May 22 earnings report.
  7. IPO withdrawal: Games Global, an online casino-style games developer, filed to withdraw its initial public offering. This could be a sign of a tougher time for IPOs despite the overall market being high.
  8. Ulta Beauty target cut: Stifel cut its price target on Ulta Beauty to $475 from $565, reducing its same-store sales estimates due to weakening beauty trends for mass beauty products.
  9. Gap upgrade: Cowen lifted its price target on Gap Inc. to $21 from $24, implying nearly 8% upside from Monday's close. The analysts rated the stock a "hold."

These daily insights are provided by the CNBC Investing Club with Jim Cramer. For more coverage, subscribe to our newsletter, and you'll receive a trade alert before Jim makes a trade in the portfolio.

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