Mid-Morning Look: May 19, 2026

Mid-Morning Look

Tuesday, May 19, 2026

U.S. stocks seeing some additional early weakness, with major U.S. averages extending their recent three day slide as Treasury yields soar, energy prices remain elevated and inflation fears renewed, all at the same time seeing some profit taking in the biggest tech names that have pushed markets to record highs just last week. The rally has been highly concentrated, with most gains driven by tech, media, and telecom, while risk appetite is at extreme levels and retail trading has surged, but seeing a little break the last few days. Stocks had been on a tear before the past few sessions, with the S&P 500 and Nasdaq hitting fresh record highs last week, and the Dow briefly recapturing the 50,000 level…but market positioning, profit taking, rotation, has seen Energy, Financials and defensive stocks take the lead. Global tensions remain high on reports NATO is discussing deploying troops in the Strait of Hormuz to help ships pass through the waterway if it is not reopened by early July, per Bloomberg. Home Depot (HD) reported better earnings and revs while Q1 comparable average ticket up 2.2% vs flat a year ago and Q1 comparable customer transactions dip 1.3% vs last year while maintains its outlook for year and said Americans were cutting back on large remodeling projects as they navigate macroeconomic volatility, energy prices and struggle with persistent housing affordability. Two-yr U.S. Treasury yield climbs to 4.107% and the 10-year rises 3bps to 4.65% as higher yields pressure Smallcaps (IWM).

• Japan’s preliminary Q1 GDP expanded 2.1% QoQ annualized vs forecast 1.6%. However, the better-than-expected headline number partially reflected a low base effect from a downward revision to Q4 which was cut to 0.8% from 1.3%.

• In Software: the group has bounced the last few days with some profit taking in semiconductors (SOX) after a monster run that saw the SOX rise as much as 71% YTD (now +57% YTD) and tech money rolled into software names (NOW, MSFT, TEAM, MNDY, CRWD, PANW, ZS, WDAY, DDOG, etc.);  AGYS shares jumped on results and guidance as Q4 adj EPS $0.63 vs. est. $0.50; Q4 revs $82.9M vs. est. $81.56M; sees FY27 revenue $365M-$370M, vs. consensus $363.59M and sees FY27 adjusted EBITDA 24% of revenue.
• In Insurance: PFG downgraded to Outperform from Strong Buy at Raymond James following management meetings saying valuation is full; THG was downgraded to Market Perform from Outperform with $203 PT at BMO Capital, taking profits when THG is hitting on all cylinders saying valuation multiples are nearing fair value for many insurers, including THG which exhibits a larger than peer-average home Insurance portfolio. JRVR was downgraded to Neutral from Buy at UBS and cut tgt to $4.75 from $8 driven by a higher equity cost of capital given the increased risks it sees for adverse reserve development hitting the P&L and Book Value.

• AS +3%; after Q1 adj EPS $0.38 vs. consensus $0.31 and revs $1.95B vs. consensus $1.83B; guides Q2 EPS above views and raises FY26 adjusted EPS view to $1.18-$1.23 from $1.10-$1.15 (est. $1.21) and boosts its FY26 revenue growth view to 20%-22% from 16%-18% (vs. consensus $7.74B).
• KR +3%; as defensive sectors like food & staples seeing early strength.
• RLAY +9%; after announcing initial clinical data from Phase 2 ReInspire trial of zovegalisib in vascular anomalies signaling advantage of PI3Kα mutant-selective inhibition. Of the 32 patients enrolled, 20 have been evaluated for efficacy per volumetric response assessment by blinded independent central review (BICR).
• STUB +3%; was upgraded to Buy from Neutral at Guggenheim and raise tgt to $12.50 from $8.50 representing ~30% potential upside saying Stub has reset Street expectations for this year and next year and the bar is extremely low on Direct Issuance and Advertising, therefore any progress would represent upside optionality.

• DRVN -4%; reported Q4 sales, profit that topped estimates, helped by resilient demand for its segments like Take 5, but guided annual EPS $1.15-$1.25, below consensus estimates $1.27, hit by restatement of its FY2023, 2024 financial statements and interim financial results; guided FY revs $1.95B-$2.05B vs. est. $2.03B.
• MRAM -8%; shares dropped after short seller Kerrisdale Capital said they were short shares of the $900M niche industrial memory chipmaker whose stock has soared 300% in a matter of weeks.
• SITM -5%; as announces proposed $1.1B convertible senior notes offering.
• TE -4%; mentioned as a short call on “X” by short seller Fuzzy Panda saying investors confused T1 as an Ai play. It’s Not. It is another China Hustle. Expect major accounting restatements coming soon per the report.