Consumer Cracks Widen as Shake Shack, Fastly Crash — Software Rally Holds Firm, Oil Slides on Iran Deal Progress

The consumer spending fault line cracked wider overnight. Shake Shack is down 28% in pre-market after reporting negative same-store traffic for the first time since 2020, while Fastly has collapsed 38% on a severe revenue miss and slashed guidance. These follow Thursday’s Planet Fitness −31% disaster and Whirlpool’s halved guidance, forming a pattern that’s becoming impossible to dismiss as idiosyncratic.

In stark contrast, the software revolution that ignited Thursday is holding firm. Datadog remains elevated after its 31% surge, Fortinet’s 20% jump has stuck, and FLNC has added another 40% on clean-energy infrastructure demand. The market is painting a clear picture: companies monetizing the AI buildout are being rewarded aggressively, while consumer-facing names exposed to the high-gas-price, high-rate squeeze are being punished mercilessly.

Futures point to a modestly lower open heading into what promises to be a high-stakes Friday session. McDonald’s reports before the bell—its commentary on low-income consumer traffic will either confirm or challenge the narrative building all week. Coinbase and CoreWeave round out a slate that could set the tone for weekend positioning.

Pre-Market Snapshot

Overnight Developments

Consumer Earnings Carnage Continues

Shake Shack (SHAK) reported Q1 results that sent the stock down 28% in pre-market trading. Same-store sales fell 2.1% with traffic turning negative for the first time since the pandemic. Management explicitly cited “persistent fuel cost pressures” weighing on discretionary dining frequency, echoing the exact language Whirlpool’s CFO used Thursday when describing demand as “the lowest since the great financial crisis.”

Fastly (FSLY) is down 38% after missing revenue estimates by a wide margin and cutting full-year guidance by 15%. The CDN provider cited enterprise customers pulling back on discretionary cloud spending—a stark contrast to Datadog’s blowout results, which suggests the divide isn’t about tech spending broadly, but about who is actually delivering measurable AI-driven productivity gains versus who is a commodity infrastructure layer.

Iran Deal Framework Advancing

Oil slid to $95.25 overnight as diplomatic sources indicated the U.S.-Iran framework agreement has entered its final drafting phase. WTI has now pulled back nearly $5 from its mid-week peak above $100, unwinding a portion of the geopolitical risk premium that has weighed on consumers and transportation stocks for months. Brent crude fell to $101.06. The dollar weakened in sympathy, with EUR/USD rising to 1.1753.

Japan Consolidates Near Record Highs

The Nikkei 225 slipped 0.2% to 62,714 after surging 5% earlier this week on reopening from a three-day holiday. The index remains within striking distance of its all-time high at 63,091. Semiconductor and AI infrastructure names continue to lead in Tokyo, with Kioxia and SoftBank among the strongest performers on the week. The yen remained stable, suggesting the rally is driven by fundamental flows rather than carry-trade unwinds.

Fed Hold Fades from Focus

The Federal Reserve’s decision to hold rates at 4.25–4.50% on Thursday barely registered in overnight trading. Chair Powell’s post-meeting commentary offered no new forward guidance, reiterating the data-dependent stance. Markets continue pricing approximately two rate cuts by year-end, with the first expected in September. The real action remains in earnings and geopolitics rather than monetary policy at this juncture.

Global Markets

European markets opened lower across the board, with materials and energy leading declines as the Iran deal optimism that supports consumers works against commodity producers. The FTSE 100’s 0.75% drop was dragged down by Shell and BP, both off more than 1.5% on falling crude. The Euro STOXX 50’s 0.94% decline was broad-based, with luxury and auto names adding to the consumer-strain theme.

Macro and Rates

Treasury yields held steady overnight with the 10-year at 4.36% and the 2-year at 3.87%, maintaining the +49 basis point positive slope in the 2s/10s curve. The curve continues to signal that markets see a soft landing as the base case—growth slowing enough to justify future rate cuts without imminent recession fears.

The dollar weakened modestly against most majors, with the trade-weighted index near multi-month lows. Gold pushed higher to $4,722, its sixth consecutive day of gains, reflecting both the weaker dollar and hedging demand heading into the weekend. The persistent gold bid alongside falling VIX creates an interesting divergence—equity vol is complacent while hard-asset demand suggests underlying unease about the macro trajectory.

Corporate News

FLNC Surges 40% on Clean Energy Momentum

Fluence Energy (FLNC) is up nearly 40% in pre-market after reporting a blowout quarter driven by grid-scale battery storage demand. The company raised full-year revenue guidance by 20%, citing accelerating utility orders as the energy transition gains pace. Iran deal progress—which lowers fossil fuel prices—is paradoxically bullish for clean-energy stocks as it weakens the competitive position of natural gas generation.

SpaceX AI Infrastructure Push

Reports overnight indicate SpaceX is planning a $120 billion “Terafab” AI chip manufacturing facility in partnership with Anthropic, alongside an existing 300MW Colossus 1 data center project. The sheer scale of private AI infrastructure investment continues to validate the thesis that cloud and software companies positioned to monetize this buildout—like Datadog—have years of secular tailwinds ahead.

McDonald’s and Coinbase Report Today

McDonald’s (MCD) reports before the bell and all eyes will be on the consumer commentary. The company pre-warned that gas prices are hurting low-income traffic—confirmation in the actuals could catalyze another leg down in consumer discretionary broadly. Coinbase (COIN) reports amid a volatile crypto environment, with Bitcoin hovering near $80,000. CoreWeave (CRWV) delivers its first earnings as a public company, providing a fresh datapoint on AI compute demand.

Pre-Market Movers

Economic Calendar

The AlphaEdge Prediction

Base Case (60% probability): The S&P 500 trades in a range of 7,280–7,360, closing near 7,315. Technology holds the line while consumer discretionary and small caps continue to bleed. McDonald’s delivers mixed results—an earnings beat on cost management but weak traffic commentary—keeping the consumer debate alive without resolving it. Typical Friday de-risking caps any rally attempts.

Bull Case (20% probability): McDonald’s surprises with stable traffic trends, easing the consumer panic. Iran deal confirmation surfaces, sending oil below $93 and sparking a broad relief rally in transports and consumer names. S&P pushes toward 7,360–7,400, reclaiming Thursday’s losses.

Bear Case (20% probability): McDonald’s confirms accelerating traffic deterioration in low-income demographics. Iran deal talks stall, oil rebounds above $97. The combination triggers a risk-off cascade in consumer discretionary and small caps. S&P 500 tests 7,250, Russell 2000 breaks below 2,780. VIX spikes above 19.