WS #6793

Consumer sentiment fell to a fresh record low of 48.2 in May, missing estimates of 49.7, driven by surging gas prices due to the Iran war. This reinforces stagflation fears and is bearish for consumer discretionary and growth stocks. The US-Iran military confrontation in the Strait of Hormuz continues to escalate, with multiple sources reporting new kinetic events: US Central Command disabled two tanker vessels in the Gulf of Oman, and scattered clashes between Iranian forces and US warships were reported. However, a counter-signal emerged: Iran is expected to respond to US proposals on Friday, and Trump said the ceasefire is intact, suggesting a potential de-escalation path. Separately, the Virginia Supreme Court struck down a voter-approved Democratic congressional redistricting plan, a political development with potential implications for midterm elections but limited direct market impact. In corporate news, Innodata soared 90% after blowout Q1 results and raised 2026 outlook, while Inseego plunged 20.5% on weak guidance. Sony Group reported Q4 EPS miss. Chris Hohn's $8 billion Microsoft stake reduction (from prior awareness) continues to be a bearish signal for MSFT. The narrative on US-Iran is ESCALATING but with a potential de-escalation path as diplomatic channels remain open.