| | | Market Snapshot
| Dow | 42225.32 | +235.36 | (0.56%) | | Nasdaq | 17601.05 | +151.16 | (0.87%) | | SP 500 | 5670.97 | +37.90 | (0.67%) | | 10-yr Note | -2/32 | 4.20 |
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| | NYSE | Adv 1854 | Dec 791 | Vol 990 mln | | Nasdaq | Adv 2963 | Dec 1338 | Vol 9.1 bln |
Industry Watch
| Strong: Consumer Discretionary, Industrials, Technology, Financials, Utilities |
| | Weak: Communication Services, Consumer Staples |
Moving the Market
-- Waiting on tariff announcement
-- Rebounding from early weakness, which has been the case in recent sessions
-- Digesting economic releases
| Closing Summary
02-Apr-25 16:20 ET
Dow +235.36 at 42225.32, Nasdaq +151.16 at 17601.05, S&P +37.90 at 5670.97
[BRIEFING.COM] The stock market closed with gains across the board. The Dow Jones Industrial Average (+0.6%) jumped more than 200 points while the S&P 500 and Nasdaq Composite gained 0.7% and 0.9%, respectively.
It wasn't a straight move higher for the major indices. There was continued volatility today as participants waited on President Trump's tariff announcement after the close.
The higher finish was related in part to some optimism that the tariffs will be less robust than feared. CNBC reported that a 20% universal tariff is unlikely and there's also some hope that tariffs are still largely being used as a bargaining chip to bring other countries to the negotiating table.
The higher finish in equities was also driven by gains in some mega cap names, along with upside momentum after rebound action in recent sessions. Tesla (TSLA 282.70, +14.24, +5.3%), NVIDIA (NVDA 110.42, +0.27, +0.3%), Apple (AAPL 223.89, +0.70, +0.3%), and Amazon.com (AMZN 196.01, +3.84, +2.0%) were standouts in that respect.
Just about everything came along for the upside ride. Nine of the 11 S&P 500 sectors registered gains. The consumer discretionary (+2.0%), industrial (+0.9%), and financial (+0.9%) sectors led the charge.
Treasuries saw an unwinding of safe-haven trading, which also contributed to the positive bias in equities. The 10-yr yield rose four basis points to 4.20%, and the 2-yr yield rose four basis points to 3.90%.
- Dow Jones Industrial Average: -0.8% YTD
- S&P 500: -3.6% YTD
- S&P Midcap 400: -4.5% YTD
- Russell 2000: -8.3% YTD
- Nasdaq Composite: -8.9% YTD
Reviewing today's economic data:
- Weekly MBA Mortgage Applications Index -1.6%; Prior -2.0%
- March ADP Employment Change 155K (Briefing.com consensus 120K); Prior was revised to 84K from 77K
- February Factory Orders 0.6% (Briefing.com consensus 0.4%); Prior was revised to 1.8% from 1.7%
- The key takeaway from the report is that new orders for nondefense capital goods excluding aircraft, which are considered a proxy for business spending, decreased 0.2% despite the headline beat.
Looking ahead to Thursday, market participants receive the following data:
- 8:30 ET: Weekly Initial Claims (Briefing.com consensus 224,000; prior 224,000), Continuing Claims (prior 1.856 mln), and February Trade Balance (Briefing.com consensus -$121.0 bln; prior -$131.4 bln)
- 10:00 ET: March ISM Services (Briefing.com consensus 53.2%; prior 53.5%)
- 10:30 ET: Weekly natural gas inventories (prior +37 bcf)
Stocks move up ahead of the close
02-Apr-25 15:35 ET
Dow +171.36 at 42161.32, Nasdaq +116.46 at 17566.35, S&P +26.23 at 5659.30
[BRIEFING.COM] The major indices are moving higher ahead of the close.
Looking ahead to Thursday, market participants receive the following data:
- 8:30 ET: Weekly Initial Claims (Briefing.com consensus 224,000; prior 224,000), Continuing Claims (prior 1.856 mln), and February Trade Balance (Briefing.com consensus -$121.0 bln; prior -$131.4 bln)
- 10:00 ET: March ISM Services (Briefing.com consensus 53.2%; prior 53.5%)
- 10:30 ET: Weekly natural gas inventories (prior +37 bcf)
CAG lags ahead of earnings
02-Apr-25 15:05 ET
Dow +97.70 at 42087.66, Nasdaq +77.33 at 17527.22, S&P +15.55 at 5648.62
[BRIEFING.COM] The S&P 500 trades near its flat line after giving back some gains, showing a 0.3% gain. The Nasdaq Composite sports a 0.4% gain.
Conagra (CAG 26.25, -0.34, -1.3%) has gone against the grain in front of its earnings report while Lamb Weston (LW 54.18, +0.85, +1.6%) trades up with the broader equity market in front of its earnings report.
Separately, Treasuries remain near high yields. The 10-yr yield is at 4.20% and the 2-yr yield is at 3.91%.
S&P 500 gains slightly as Leidos, Caesars, and DoorDash lead; Altria sinks on SCOTUS ruling
02-Apr-25 14:30 ET
Dow +53.18 at 42043.14, Nasdaq +56.79 at 17506.68, S&P +10.08 at 5643.15
[BRIEFING.COM] The S&P 500 (+0.18%) is in second place on Wednesday afternoon.
Briefly, S&P 500 constituents Leidos (LDOS 142.06, +7.10, +5.26%), Caesars Entertainment (CZR 26.04, +1.21, +4.87%), and DoorDash (DASH 189.03, +6.61, +3.62%) pepper the top of the average. CZR was added to Raymond James' Analyst Current Favorites list earlier, while DASH rises after announcing a partnership with Domino's Pizza (DPZ 464.46, -1.01, -0.22%).
Meanwhile, Altria (MO 56.27, -2.52, -4.29%) is at the bottom of the standings after the Supreme Court ruled unanimously that the FDA acted lawfully in denying Wages and White Lion Investments, L.L.C. (doing business as Triton Distribution) authorization to market flavored e-cigarette products. The ruling reversed a prior decision by the Fifth Circuit Court of Appeals, which had set aside the FDA's denial orders.
Gold slips $20 as tariff concerns weigh, despite weaker dollar
02-Apr-25 14:00 ET
Dow +145.97 at 42135.93, Nasdaq +124.61 at 17574.50, S&P +25.64 at 5658.71
[BRIEFING.COM] With about two hours to go on Wednesday the tech-heavy Nasdaq Composite (+0.71%) is still atop the major averages, having consolidated a modest move lower over the past half hour.
Gold futures settled $20.20 lower (+0.6%) at $3,166.20/oz, driven by investor concerns about impending U.S. "reciprocal tariffs" set to be announced by President Donald Trump later today. The tariffs are expected to impact a wide range of imports and have heightened fears of escalating trade disputes and potential economic slowdown.
Meanwhile, the U.S. Dollar Index is down now about -0.4% to $103.85.
Tesla turns positive as weak Q1 deliveries priced in; CEO stepping away from governing roles (TSLA)
There has been no shortage of noise surrounding Tesla (TSLA +5%) and its CEO Elon Musk. The alarms grew even louder following today's Q1 delivery figures, with the stock dropping by 6% immediately out of the gate. However, buyers quickly rushed in, igniting a decent rebound to bring shares above breakeven on the day.
News outlets have touched on how grim Tesla's Q1 deliveries would likely be over the past few months. For instance, two months ago, Bloomberg mentioned that sales cratered in Germany during February. The outlet followed up this report a week later, noting that shipments plunged in China during that same month. It did not help that Chinese competitors, including BYD (BYDDF), NIO (NIO), XPeng (XPEV), and Li Auto (LI) were posting uplifting delivery figures during Q1 throughout the past several days. Then, just yesterday, Reuters remarked that sales in key European markets fell again in March.
Combining these trends with the overabundance of speedbumps in Tesla's way, from lingering inflation and elevated interest rates to 25% auto tariffs and a deteriorating brand image, it may not be too shocking that the stock was already down over 40% from December highs ahead of Q1 deliveries. This context helps explain why investors were quick to jump into Tesla shares today, as much of the bad news from the Q1 delivery report was digested beforehand.
At the same time, there have been reports today that Mr. Musk will step back from his role in the Trump administration in the coming weeks. Given the political backlash surrounding the Tesla CEO, investors view this as a positive development. It may lead to Mr. Musk focusing more on his primary EV company, which faces serious headwinds.
- During Q1, Tesla's deliveries hit a nearly three-year low, posting 336,681, a 13% drop yr/yr. Deliveries did come in considerably below street estimates but were not disastrously far from the whisper number.
- Meanwhile, production reached 362,615 units, a 16% decline yr/yr. The drop was primarily fueled by the changeover of Model Y lines across four of the company's factories, leading to the loss of several weeks of production.
- Tesla added that the ramp of the new Model Y continues to progress well. With the vehicle being the best-selling SUV of the past two years, the refresh is critical to sustaining this upbeat demand.
Bottom line, Q1 deliveries were lackluster. However, this was not overly shocking given the string of reports ahead of the announcement today touching on how sales are struggling across the globe. With Elon Musk stepping away from his role within the Trump administration, perhaps the recent pronounced selling pressure will finally begin to ease.
nCino pulls back after rare EPS miss and downside guidance; sounds more positive on FY27 (NCNO)
nCino (NCNO -26%) is under pressure today. After a gap down following Q3 (Oct) results in early December, this banking software company is down sharply following its Q4 (Jan) earnings miss last night. This was the first time nCino missed on EPS in any quarter over the past five years. The guidance was troubling as well with a downside outlook for both Q1 and FY26. nCino did authorize a $100 mln share repurchase program, but it's not having much impact.
- On February 3, Sean Desmond was promoted to CEO. He explained that nCino built a strong foundation in cloud banking software, but now his focus is on leading nCino's evolution to be a leader in AI banking. Also, financial institutions continue to struggle with inefficiencies caused by legacy infrastructure. nCino's platform helps banks manage lending, onboarding, account opening and portfolio management on a scalable platform powered by AI.
- nCino provided some good color on the call. It explained that, as it expanded beyond its commercial banking roots into consumer lending, it brought to market a product capable of leapfrogging competitors. However, it has not happened as quickly as originally planned. It also saw customers pause their onboarding buying decisions this past year until nCino completed its highly anticipated acquisition from DocFox.
- With the benefit of hindsight, nCino says it was also too optimistic in expecting a drop in interest rates to drive an increase in mortgage activity. Another issue was that its sales execution in certain international markets, most notably Europe, was not as crisp as it needed to be. nCino has since made some personnel changes there. This combination of challenges created compounding headwinds that impacted new bookings momentum in FY25 and are chief contributors to weak FY26 revenue outlook.
- The new CEO also provided some good news. He said that nCino has already taken decisive action to address these challenges and he is confident they are squarely behind it. He noted that the company brought to market a best-in-breed consumer lending product last year. It's also bringing to market full omni-channel capabilities across its consumer platform at nSight. In addition, nCino plans to release its onboarding add-on in Q2, which he sees as unlocking numerous pent-up opportunities.
- As such, nCino expects improved gross bookings growth as the year progresses. This will result in subscription revenue growth reacceleration in FY27. Also, nCino notes that, while there is current volatility in the financial markets, the macro headwinds that challenged its customer base over the past couple of years have eased quite a bit. Its customers, by and large, have healthy balance sheets and are forecasting growth. Also, its US customers are telling nCino that deregulation could free up capital and enable them to adopt additional technology.
Overall, this was a rough quarter for nCino with a rare EPS miss and disappointing guidance. However, we commend the company for being candid on the call about its troubles and what it is doing to fix its issues. It sounds like FY26 is going to be a difficult year, but with some improvement in the second half. Also, nCino sounded more positive about FY27. Rates have been dropping recently and are down a good bit from January highs, which hopefully will spark mortgage activity.
BlackBerry gaps lower as tariffs and changing government policies spur soft FY26 sales guidance (BB)
BlackBerry's (BB -10%) sell-off continues today despite posting beats on its top and bottom lines in Q4 (Feb). Since surging by +160% from November to mid-February, the stock has plunged roughly 40% following today's reaction. BB no longer engages in developing phone software. Instead, it focuses solely on cybersecurity (referred to as its Secure Communications segment) and IoT (QNX) software development, which is used extensively in the automotive industry.
Despite around half of BB's QNX revenue emanating from outside North America, helping insulate the company somewhat from tariffs, there is still uncertainty surrounding the policy's future impacts, resulting in BB expanding the lower bound of its QNX FY26 sales estimate. Likewise, in Secure Communications, which depends largely on government contracts, the company is taking a prudent approach due to the uncertainty surrounding DOGE as well as changes in governments across Canada, Germany, and elsewhere. Taken together, BB projected Q1 revs and the midpoint of its FY26 top-line outlook below consensus, expecting $107-115 mln and $504-534 mln, respectively.
- While the focus is not on Q4 results, BB did perform well in the quarter, posting adjusted EPS of $0.03, well ahead of its $(0.02)-$0.00 forecast. Revenue fell by 7.3% yr/yr to $143 mln but was above BB's guidance of $126-135 mln. Notably, QNX royalty backlog grew to around $865 mln in the quarter, boding well for the ongoing health of the business.
- A major development during the quarter was BB divesting its struggling Cylance cybersecurity business to Arctic Wolf for around $160 mln in cash and around 5.5 mln shares of the privately held acquiring firm. Cylance acted as a weak link for BB, which bought the company for $1.4 bln in 2018, constantly generating losses. Combining this with a significant restructuring, BB's Secure Communications segment can move ahead in a less encumbered way.
- BB sees massive opportunities to expand its QNX software outside the automotive field, with potential use cases in health care, industrial, and robotic verticals. However, in the meantime, most of its exposure is in the automotive field, where tariffs are spurring plenty of concern. BB mentioned that thus far, it has not seen any material supply chain issues and noted that because it works with nearly every major OEM globally, it is cushioned to some extent from U.S.-specific impacts. Still, management cautioned that it remains a fluid situation.
- Meanwhile, Secure Communications faces similar federal policy-related challenges, as around a quarter of the segment's revenue is derived from the U.S. government. Again, like in QNX, BB does not see any material impacts at the moment, citing the mission-critical nature of its software in this business. However, the company remains conservative in its outlook due to the uncertainties related to its renewals and contracts.
Sellers remain in control of BB as the company steers through thick clouds brought on by tariffs, a new U.S. administration, and changes to the political landscape overseas. At the same time, macroeconomic headwinds that have persisted over the past few years remain a hindrance to overall growth. Until more clarity appears, investors are staying away, which could keep a lid on an aggressive rally over the next few months.
On stumbles on co-CEO Marc Maurer departing; company still amid strong upward momentum (ONON)
On Holding (ONON -3%) stumbles today after announcing that co-CEO Marc Maurer will leave the Swiss athletic footwear maker in July following his 12-year tenure. The current CFO and the other co-CEO, Martin Hoffmann, will become the sole CEO of the company. Along with the leadership update, ONON made several other executive changes, naming a new Chief People Officer, Chief Innovation Officer, Chief Communications Officer, and Chief Supply Chain Officer.
- Investors are feeling the sting associated with the loss of Marc Maurer today. The outgoing co-CEO helped the company go public in 2021. While the IPO preceded a broader stock market sell-off in 2022, Marc Maurer helped to initiate a quick rebound, ultimately outperforming some of its closest rivals in NIKE (NKE) and Adidas (ADDYY).
- Focusing on innovation was vital to ONON's ability to outrun NKE, whose shoes started growing stale. Throughout 2022, when supply chain challenges weighed on revenue growth, ONON stayed committed to launching new running styles, which quickly saw significant traction with online customers and retail partners.
- Speaking of which, while NKE pivoted aggressively to DTC, ONON was strengthening ties with its wholesale partners, which resulted in the company reaching over CHF 1 billion in net sales within its wholesale channel, all while its DTC channel experienced rapid growth.
- Marc Maurer is departing in the middle of ONON's three-year roadmap outlined in late 2023. The company's aspirations for 2026 revolve around winning the running segment of the footwear market through the launch of many new products, bolstering its Cloudmonster, Cloudsurfer, and Cloudrunner lines, each of which have already seen growth from +60-140% yr/yr in 2024. ONON is also looking to become a complete head-to-toe sportswear brand, having already realized over CHF 100 million in net sales from apparel last year.
Still, Marc Maurer leaves a company amid strong upward momentum, posting three straight quarters of accelerating top-line growth. Even though the macroeconomic environment is beginning to wobble, ONON is tracking ahead of its planned +26% three-year net sales CAGR, supported by a strong start to 2025. The company expects its momentum to persist, anticipating to continue outgrowing its three-year plan this year, albeit by 1 pt. Soon-to-be sole CEO Martin Hoffmann noted last month that its +27% top-line growth guidance for 2025 incorporates a certain level of prudency due to economic conditions, adding that when looking at preorders for the upcoming seasons, they signal robust growth rates that may be clouded by the macro environment.
Bottom line, the loss of co-CEO Marc Maurer is deflating. However, ONON has continued to demonstrate its ability to deliver accelerating revenue growth despite a global economy that has bogged down growth for many of its peers, reflecting brand loyalty and an innovative edge in the footwear space that can continue under Martin Hoffmann.
PVH surging today following Q4 results; upside guidance was the star of the show (PVH)
PVH Corp. (PVH +15%) is surging today after reporting Q4 (Jan) results last night. This fashion apparel company (Calvin Klein, Tommy Hilfiger) beat on EPS, but PVH broke its string of nine consecutive double-digit beats. Revenue fell 4.8% yr/yr to $2.37 bln, which was slight upside. We think the stock is being propelled bullish guidance, which was a surprise given the struggles we have seen from other fashion brands as consumers pull back on spend.
- Another catalyst was PVH saying it intends to enter into accelerated share repurchase (ASR) agreements to repurchase $500 mln in shares in 2025. The agreements are under the existing $5 bln repurchase authorization, of which $1.8 bln remains available. This ASR equates to roughly 14% of shares outstanding, which is a huge amount. The stock has been under pressure in recent months, but clearly management sees some value down here.
- Turning to the Q4 results, PVH said it delivered a strong holiday performance that beat expectations on a constant currency (-2% CC) basis, with growth in both its D2C and wholesale channels. PVH said it improved the relevance of sell through of its Fall 2024 product assortment across both brands. It also significantly increased profitability in North America.
- Starting with Calvin Klein, PVH started 2024 with what it describes as an "explosive" spring campaign featuring Jeremy Allen White driving record visibility and engagement, which CK continued to build on through the year. In Q4, CK featured Kendall Jenner, Idris Elba, Mingyu, among others. PVH elevated the brand in the marketplace, including the opening of a flagship store in Paris. Tommy Hilfiger also had a very strong brand building year, leaning into its classic American cool DNA.
- Despite good results in Q4, PVH concedes it's navigating global macro volatility, particularly in North America. Following a strong holiday, retail traffic trends in Jan-Feb took a step down, a dynamic affecting the entire sector. Also, PVH is seeing a post New Year slowdown in China that led to a step down in revenue. The trend has since stabilized at these new lower levels.
- Quickly turning to the guidance, the Q1 (Apr) guidance was generally in-line, but the full year adjusted EPS guidance EPS of $12.40-12.75 was pretty eye-popping. It was well above analyst expectations and that is despite an expected $0.20 FX impact. Revenue is expected to be flat or increase slightly and EBIT margins should be flat to up slightly with a stronger second half. PVH cites disciplined execution, strong European Order books, as well as structural cost efficiencies. The ASR will also reduce share count pretty aggressively, which helps the EPS number.
It has been a mixed earnings bag within the fashion apparel space in recent weeks. CPRI sold off on earnings, but TPR and RL did well. Also, OXM, which caters to higher income consumers, had a bad quarter last week. As such, we think investors were bracing for weak guidance given the pullback in consumer spend and with tariffs looming. Investors were pretty shocked to see PVH provide such bullish EPS guidance. It meant, at the mid-point, that the stock was trading at a P/E of just 5.1x, so investors have snapped up shares today.
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