Stock Market Watch: Key Developments and Insights for Thursday, May 8 Strong Market Open on Trade Deal Announcement: The U.S. stock market is expected to start the day strongly following President Donald Trump's announcement of a comprehensive trade deal with the United Kingdom. This deal, set to be detailed at a 10 a.m. ET press conference, has boosted investor confidence. The Federal Reserve held interest rates steady yesterday, with Chairman Jerome Powell expressing a preference to monitor the tariff impacts before making further rate adjustments. Nvidia and Chip Stocks Rally: Shares of Nvidia and other semiconductor companies saw a positive turn this morning after a Bloomberg report indicated that the Biden administration would not implement AI export controls as initially planned. These controls, scheduled for May 15, could have negatively affected the chip industry. Analysts from Bernstein noted that while this decision lifts an immediate threat, future government agreements might pose greater challenges. Arm Falls Despite Better Earnings: Arm, a prominent chip designer, experienced an 8.5% drop in its share price. Although the company reported slightly better-than-expected results for the fiscal 2025 fourth quarter, its first-quarter guidance for adjusted EPS fell short of consensus estimates. The midpoint of its revenue forecast was also lower than anticipated. Alphabet Defends Itself: Alphabet, the parent company of Google, received support from several analysts following a 7% drop in its stock price yesterday. The company reassured investors last night, stating that search queries, including those from Apple devices and platforms, continue to grow. This morning, the stock recovered roughly a third of its losses. Costco Reports Strong April Sales: Costco Wholesale Corporation reported impressive April sales figures, with same-store sales (excluding foreign exchange and gas sales) increasing by 6.7% overall. In the United States, core same-store sales grew by 7.1%, despite facing a one-day shopping deficit due to the Easter holiday shift. Online sales also performed well, adding to the company's positive outlook. Tapestry Surges After Good Q4: Tapestry, the parent company of luxury brands like Coach and Kate Spade, saw its stock jump by 9%. The company posted better-than-expected fourth-quarter results, with revenue growing 8% in constant currency. Despite ongoing tariff concerns and a challenging macroeconomic environment, Tapestry raised its full-year revenue, earnings, and cash flow projections, signaling continued optimism. Pharma Stocks Struggle: The pharmaceutical sector continued to face headwinds this week, with shares of major players like Eli Lilly and Bristol Myers Squibb moderately declining. According to a Politico report, the Trump administration is planning to focus on Medicare drug pricing, a move that could further pressure the industry's profitability and valuation. Kenvue Shares Rise: Shares of Kenvue, the recently spun-off consumer health business from Johnson & Johnson (J&J), climbed 5% after reporting slightly better-than-expected first-quarter earnings. The company also announced the appointment of a new Chief Financial Officer (CFO). While anticipating margin pressures from tariffs, Kenvue forecasts faster sales growth in the latter half of the year, supported by its strong brand portfolio including Tylenol and Benadryl. Shopify's Mixed Quarter: Shopify's stock showed modest gains after reporting quarterly revenue that slightly exceeded expectations. However, both operating income and gross merchandise volume (GMV) fell short of analyst predictions. The Canadian e-commerce platform faces a complex market landscape, balancing growth with operational efficiency. Dutch Bros Outperforms: Dutch Bros, a leading drive-thru coffee chain, saw its stock rise modestly following a better-than-expected first quarter. Same-store sales grew by 4.7%, exceeding the 4.59% forecast. Adjusted earnings per share (EPS) of 14 cents also surpassed the 11 cents expected. Barclays responded positively by raising its price target to $82 per share from $76, reflecting confidence in the company's performance and future potential. Industry Insights and Company Profiles The U.S.-UK trade deal announcement and the Fed's decision to maintain interest rates have set a positive tone for today's market. Analysts are closely monitoring the implications of the delayed AI export controls for Nvidia and the broader tech sector. Arm's dip highlights the importance of accurate earnings guidance for maintaining investor confidence. Alphabet's recovery and Costco's strong sales suggest resilience in tech and retail giants amid economic uncertainties. Pharmaceutical stocks are under renewed scrutiny due to potential regulatory actions on drug pricing. Tapestry's ability to raise its full-year outlook amid tariff concerns showcases strong management and market adaptability. Kenvue's positive performance post-earnings and new CFO appointment indicate a solid foundation for growth. Shopify's mixed results highlight the challenges in scaling e-commerce operations, while Dutch Bros' consistent overperformance reinforces its strong market position in the beverage industry.