Wall Street Daily (May 12): US stocks continued to hit new highs on Monday, but without a strong trend expansion, defensive demand is rising; energy led the gains, with technology/materials/industrials following, and stablecoin trading is heating up

Summary: US stocks edged higher on Monday, with the S&P 500 up 0.19%, Nasdaq up 0.10%, Dow Jones up 0.19%, and Russell 2000 up 0.33%. The S&P and Nasdaq continued to set new closing highs, but the pace of increase slowed significantly, and the market did not show strong trend expansion, with the breadth of the uptrend remaining unchanged. The VIX rose to 18.38, gaining 6.92% in a single day, indicating that although indices are still rising, defensive demand is simultaneously increasing. The most important pricing changes of the day were: first, after Trump rejected Iran's latest proposal, the market re-priced geopolitical risks, pushing crude oil up by 3.77%; second, Circle's revenue and reserve income growth fueled further warming in stablecoin trading, with CRCL surging 15.91%. In terms of sector performance, energy was the strongest, followed by technology, materials, and industrials, while communication and consumer sectors lagged. In major asset classes, the US dollar index rose 0.09%, gold increased by 0.43%, and Bitcoin climbed by 1.13%.

I. Major Events

1. Trump rejects Iran's latest proposal, ceasefire weakens again

Trump rejected Iran’s response to the latest peace proposal and stated that the ceasefire was “on life support.” The market immediately reassessed the risks of prolonged conflict and continued obstruction in the Strait of Hormuz, driving crude oil up by 3.77% on Monday. Against this backdrop, US stocks did not show a clear shift toward risk aversion; instead, they maintained strength under tighter energy constraints.

2. Circle surges after earnings report, stablecoin continues to heat up

Circle reported growth in Q1 revenue and reserve earnings, with the circulation scale of USDC continuing to expand. The market views it as a direct beneficiary of stablecoin adoption and regulatory framework advancements, with CRCL closing up 15.91%. Looking at the day’s market action, the crypto chain did not experience a broad-based surge; what was truly strong was the direction of stablecoins and Bitcoin, which also shows that capital is concentrating along clearer themes with more direct monetization paths.

II. Major Trends

The index continues to hit new highs, but the upward structure has not broadened. On Monday, the S&P 500 rose by 0.19%, Nasdaq increased by 0.10%, Dow Jones gained 0.19%, and Russell 2000 climbed 0.33%. Over a two-week period, QQQ surged 7.39%, continuing to outperform SPY’s 3.37% and DIA’s 0.83%; over a three-month horizon, QQQ soared 16.49%, while DIA was only at -0.46%. The current market remains in an 'index rising, core driven by technology' structure.

The breadth issue persists. Over a three-month period, SPY rose 7.13%, while RSP only gained 0.69%; over a two-week period, SPY rose 3.37%, and RSP increased 1.09%. The continued weakness in equal-weighted performance indicates that new highs are more supported by heavyweights and leading assets rather than a synchronized rise across the entire market.

Growth style and leading technology stocks still hold dominance. SPYG climbed 12.12% over three months, significantly higher than SPYV's 1.57%; MAGS surged 9.89% over three months, surpassing XMAG's 4.49%. However, XMAG’s two-week change continued to rise from 2.09% to 2.81%, indicating that non-leading growth stocks are marginally improving but have not truly taken over leadership.

III. Market Sentiment

VIX closed at 18.38, up 6.92% in a single day. The slight new high in the index with a notable increase in volatility shows that the market's defensive needs regarding oil prices and geopolitical risks are increasing; the current sentiment is not one of easy upward momentum. The CNN Fear & Greed Index stands at 67, unchanged from the previous value, remaining in the relatively greedy zone. Market sentiment has not weakened significantly but hasn't intensified either, resembling a state of maintaining optimism at high levels while increasing hedging positions.

The Cboe market statistics page shows that as of 03:15 PM (Central), the total Put/Call ratio was 0.78, the index options Put/Call ratio was 1.19, and the stock options Put/Call ratio was 0.58. Risk appetite remains at the stock level, but hedging demand on the index side is significantly higher. Considering VIX, the CNN Fear & Greed Index, and Put/Call together, Monday's market sentiment resembles 'highs leaning warm, but protective positions continue to thicken'.

IV. Market Scan

1. Index ETFs:The Russell 2000 ETF IWM rose 0.41%, showing relative strength, while the Dow ETF DIA increased 0.20%, being the weakest. Broad-based indices only slightly trended upward without accelerating unilaterally, suggesting that Monday was more about maintaining highs and adjusting structures rather than initiating a new all-out rally.

2. Industry sectors:In sector performance, Energy XLE led with a 2.64% rise, Technology XLK climbed 1.34%, Materials XLB increased by 1.30%, Industrials XLI rose 1.06%, while Communication XLC fell 1.16%, lagging behind. Rising oil prices directly boosted energy, with materials and industrials benefiting as well, but the communication sector remained notably weak, indicating that the market did not evenly distribute risk budgets. In specific sub-sectors, uranium URA surged 3.72%, gold mining GDX climbed 3.18%, oil services OIH rose 2.45%, oil and gas exploration XOP gained 2.12%, copper COPX increased 1.88%, and semiconductors SMH rose 1.72%, showing continued dominance in resource chains, energy chains, and some tech hardware.

3. Seven major tech companies:There is clear divergence within the seven major tech stocks. TSLA surged 3.89% to lead gains, while GOOG dropped 2.59% and NFLX fell 2.33%. Although tech giants still support the index, true strength is concentrated in a few highly elastic stocks, failing to form a unified offensive.

4. Chinese concept stocks:Chinese concept stocks also showed significant divergence. BIDU rose 3.35%, relatively the strongest, while FUTU dropped 3.27%, being the weakest. Capital seems more willing to return to sectors supported by policy expectations or lower valuations, while the reception for high-elasticity financial platforms remains unstable.

5. Cryptocurrencies:Bitcoin rose 1.13%, CRCL surged 15.91%, MSTR climbed 4.45%, and PLTR fell 0.66%. The stablecoin and Bitcoin-related chains were clearly stronger, but capital did not spread evenly across broader high-elasticity assets, keeping hotspots relatively concentrated.

$S&P 500 Index (.SPX.US)$$SPDR S&P 500 ETF (SPY.US)$$NASDAQ 100 Index (.NDX.US)$$Invesco QQQ Trust (QQQ.US)$$Dow Jones Industrial Average (.DJI.US)$$State Street® SPDR® Dow Jones Industrial Average® ETF Trust (DIA.US)$$Russell 2000 Index (.RUT.US)$$iShares Russell 2000 ETF (IWM.US)$$Roundhill Magnificent Seven ETF (MAGS.US)$$USD (USDindex.FX)$$U.S. 10-Year Treasury Notes Yield (US10Y.BD)$$iShares 20+ Year Treasury Bond ETF (TLT.US)$$XAU/USD (XAUUSD.CFD)$Bitcoin (BTC.CC) Ethereum (ETH.CC)$SPDR Gold ETF (GLD.US)$$CBOE Volatility S&P 500 Index (.VIX.US)$$NVIDIA (NVDA.US)$$Tesla (TSLA.US)$$Meta Platforms (META.US)$$Amazon (AMZN.US)$$Alphabet-C (GOOG.US)$$Microsoft (MSFT.US)$$Apple (AAPL.US)$

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