Dell shares were tumbling 18% on Friday, despite rampant growth in AI-server shipments and the company’s backlog for that product. Part of the selloff could reflect elevated expectations going into that report, but Wall Street is also disappointed by the margin performance of Dell’s infrastructure-solutions group, which houses the server business. The stock is on track for its worst single-day percentage decline, based on FactSet data going back to 2016. That would require closing with a drop more than the 21.6% one seen on Dec. 24, 2018. Dell’s servers, while boosting sales, came at a cost for margins. Gross margin fell 2.5 percentage points in the first quarter, to 22.2% of revenue. Dell's profit jumped to $960 million, or $1.32 a share, in the three months ended May 3. Analysts polled by FactSet had expected a per-share profit of $1.10. Revenue of $22.2 billion also trumped analysts' forecasts.

Positive signs prevailed on the Swiss stock market on Friday. The SMI gained 1.1 per cent to 12,001 points. Among the 20 SMI stocks, there were 14 price gainers and six price losers. A total of 78.06 (previously: 18.32) million shares were traded. The SMI was led by the heavyweights Nestle (+1.5%), Novartis (+2.1%) and Roche (+1.2%). In the case of Nestle, the optimistic statements issued by CEO Mark Schneider the previous day are likely to have had an after-effect. Novartis reported successful drug trials. And investors are likely to have bought into Roche after Thursday's setback, with a sell recommendation from Goldman Sachs having weighed on the stock. Other defensive stocks such as Swisscom (+1.6%) and Givaudan (+0.8%) were also in demand. Shares in the construction sector, on the other hand, were sold in line with the European sector. Geberit, Holcim and Sika dropped by up to 1.3 per cent.

Europe
The European stock markets closed slightly higher on Friday, as investors analysed new inflation figures on both sides of the Atlantic. The Stoxx Europe 600 index gained 0.3% to 518.2 points. In Paris, the CAC 40 and SBF 120 both picked up 0.2%. The DAX 40 finished close to balance in Frankfurt, while the FTSE 100 climbed 0.5% in London. Over the week as a whole, the Stoxx Europe 600 fell by 0.5%. Renewable energy producer Neoen jumped 20.6% to €37.86 following a takeover bid from management company Brookfield for €39.85 per share. The share price had been suspended on Thursday following this announcement. Atos lost 15% after falling sharply at the very end of the session. The troubled digital services group had previously announced that it expected to reach agreement on a financial restructuring solution by 31 May. The technology sector as a whole was hit by disappointing reports from US groups Dell and Salesforce. Dassault Systèmes and Alten lost 1.3% and 2.1% respectively. Worldline fell by 1.3% and Sopra Steria by 1.2%. The pharmaceutical group Sanofi (+1.3%) announced on Friday that the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency had recommended authorisation of its drug Dupixent for the maintenance treatment of uncontrolled chronic obstructive pulmonary disease (COPD), characterised by high blood eosinophilia. Car manufacturers Renault (-0.7%) and Geely announced the creation of their joint venture HORSE Powertrain Limited, specialising in internal combustion engines. Franco-Italian semiconductor manufacturer STMicroelectronics (+0.2%) unveiled plans to build a new plant in Catania, Italy, dedicated to the production of silicon carbide wafers. The group will invest €5 billion in this plant between now and 2033, including €2 billion in subsidies from the Italian government.

United States
A late-day rally drove the Dow up 575 points and helped all three major stock indexes finish May higher despite a recent swoon in technology stocks. Stocks opened Friday higher following the premarket release of the Federal Reserve’s preferred inflation gauge. The personal-consumption expenditures price index broadly matched Wall Street expectations, posting a 2.7% gain in April from a year ago. Traders pulled back after a closely watched indicator of economic activity, the Chicago Business Barometer, fell deeper into contraction territory to register its lowest level in four years. Buyers poured into the market about 15 minutes before the closing bell to bring every sector in the S&P 500 but energy into the green for May. The Dow Jones Industrial Average added 1.5% to finish May up 2.3%. The S&P 500 gained 0.8% Friday to end the month 4.8% higher. The Nasdaq Composite shed less than 0.1% on Friday, the third straight daily decline for the tech-filled basket of stocks. The Nasdaq led major indexes higher in May, ending the month up 6.9%. The biggest gains in the S&P 500 on Friday came from the energy, real-estate, and utility sectors. Technology shares were the only industry group to finish the day down. Investors dumped shares of computer maker Dell Technologies and chip maker Marvell Technology in response to their quarterly results, disclosed late Thursday. Marvell fell 10%. The Magnificent Seven technology stocks spent much of Friday trading lower, but by the closing bell only Tesla, Nvidia and Amazon.com were in the red. Amazon lost 1.6% and was the Dow’s worst performer. Trump Media & Technology Group shares fell 5.3% after Donald Trump was found guilty on Thursday on all counts in his hush-money case. Despite the drop, shares - of which the former president owns roughly 60% - have more than tripled in price this year.

Asia
In Asia, major indexes broadly closed with gains on Monday. The strongest upward trend was seen in Hong Kong, where the Hang Seng Index rose by 2.3 per cent after the Purchasing Managers' Index (PMI) for the manufacturing sector, calculated by Caixin and S&P Global, rose to its highest level since June 2022 in May. On the Chinese mainland, meanwhile, the Shanghai Composite slipped 0.5 per cent. Automotive stocks are in demand in Hong Kong after sales of electric cars rose year-on-year in May. Li Auto gained 5.8 per cent, BYD 5.9 per cent and Geely Automobile 4.5 per cent. In Tokyo, the Nikkei index climbs 1.2 per cent. Sharp shares advance by 4.6 per cent. According to reports, the company is planning to build a data centre in Osaka together with Datasection, KDDI and Super Micro Computer. The Kospi in South Korea surged 2.0 per cent. Economic data over the weekend showed that the country's exports rose for the eighth month in a row in May. Samsung Electronics, the index heavyweight, saw its shares increase by 3.9 per cent.

Bonds
Rates on U.S. government debt posted the biggest monthly declines of 2024 on Friday after the monthly core reading from the Federal Reserve’s preferred inflation measure had its slowest increase of this year. The 10-year Treasury note yield fell by 5 basis points to 4.503%, after recovering more than 10 basis points since Monday. The 2-year Treasury note yield also shed 5 basis points, to 4.885%.

Analysis
Price target Swiss Re: Julius Baer raises target to CHF 110 (100) - Hold
Price target Swisscom: Bernstein SG upgrades to CHF 620 (600) - Outperform
Deutsche Bank upgrades Richemont target to CHF 165 (150) - Buy

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