| | | Market Snapshot
| Dow | 37645.59 | -320.01 | (-0.84%) | | Nasdaq | 15267.92 | -335.35 | (-2.15%) | | SP 500 | 4982.77 | -79.48 | (-1.57%) | | 10-yr Note | -29/32 | 4.26 |
|
| | NYSE | Adv 617 | Dec 1975 | Vol 1.6 bln | | Nasdaq | Adv 995 | Dec 3419 | Vol 10 bln |
Industry Watch
| Strong: -- |
| | Weak: Materials, Consumer Discretionary, Energy, Real Estate, Technology, Consumer Staples, Communication Services |
Moving the Market
-- Early rebound tied to optimism that Trump administration is open to negotiating trade deals and feeling that stocks are due for a bounce after significant declines
-- Subsequent selling related to ongoing uncertainty around China in terms of trade policy
-- More selling in Treasuries following weak demand in today's auction
|
Closing Summary
08-Apr-25 16:30 ET
Dow -320.01 at 37645.59, Nasdaq -335.35 at 15267.92, S&P -79.48 at 4982.77
[BRIEFING.COM] It was another volatile session in the stock market. There was a strong rally right out of the gate, resulting in the S&P 500 and Nasdaq Composite trading up as much as 4.1% and 4.6%, respectively. The Dow Jones Industrial Average was more than 1,400 points higher than yesterday at its best level.
However, the major indices finished in negative territory and the S&P 500 (-1.6%) closed below 5,000. Catalysts being cited as reasons for the deterioration include a confirmation from the White House that 104% tariffs on imports from China go into effect at midnight tonight, and weak demand for today's $58 billion 3-yr note auction.
Stocks were already in a slow decline before those catalysts were in play, which suggests some selling into early strength as a driving factor for the turnaround.
Increased selling in mega caps and chipmakers was another driving factor. Apple (AAPL 172.42, -9.04, -5.0%), which had been up as much as 4.9% at its session high, and NVIDIA (NVDA 96.30, -1.34, -1.4%), which had surged as much as 8.4%, were influential losers from the space.
Every S&P 500 sector was higher in the early rally, and every sector rolled over. The materials (-3.0%) and consumer discretionary (-2.5%) sectors were the worst performers, while the financial sector saw the slimmest loss, down 0.4%.
The Treasury market also exhibited a sharp turnaround. The 10-yr yield, which settled 11 basis points higher at 4.26%, moved as low as 4.17% today.
Today's economic calendar was limited to the NFIB Small Business Optimism Survey, which dropped to 97.4 in March from 100.7.
- Dow Jones Industrial Average: -11.5% YTD
- S&P 500: -15.3% YTD
- S&P Midcap 400: -17.9% YTD
- Nasdaq Composite: -20.9% YTD
- Russell 2000: -21.1% YTD
Mega caps and chipmakers drive market lower
08-Apr-25 15:35 ET
Dow -354.21 at 37611.39, Nasdaq -357.56 at 15245.71, S&P -83.46 at 4978.79
[BRIEFING.COM] Losses have accelerated into the close. The S&P 500 sports a 1.6% decline.
Chipmakers and mega caps had been leading market gains earlier, but show outsized declines now. Apple (AAPL 172.66, -8.74, -4.8%), which had been up as much as 4.9% at its session high, and NVIDIA (NVDA 96.10, -1.49, -1.6%), which had surged as much as 8.4%, are standouts in that respect.
The Vanguard Mega Cap Growth ETF (MGK) is 1.6% lower and the PHLX Semiconductor Index (SOX) trades 4.2% lower.
Slow decline continues
08-Apr-25 15:00 ET
Dow -3.87 at 37961.73, Nasdaq -136.47 at 15466.80, S&P -26.43 at 5035.82
[BRIEFING.COM] The slow, steady decline off session highs that began mid-morning continued over the last half hour. The three major equity indices hit fresh session lows with losses ranging from 0.5% to 1.8%. The Dow Jones Industrial Average is a relative outperformer, trading around its prior close.
Small and mid cap stocks are hit the hardest in today's pullback. The Russell 2000 trades 1.7% lower and the S&P Mid Cap 400 shows a 1.0% decline.
The downturn coincided with today's weak $58 billion 3-yr note auction, along with headlines indicating that 104% tariffs on imports from China go into effect at midnight tonight.
S&P 500 edges up as Humana surges on Medicare boost; Albemarle sinks on tariff woes
08-Apr-25 14:30 ET
Dow +191.44 at 38157.04, Nasdaq -4.01 at 15599.26, S&P +5.64 at 5067.89
[BRIEFING.COM] The S&P 500 (+0.11%) remains narrowly higher, jostling between gains and losses a bit in the last half hour.
Briefly, S&P 500 constituents Humana (HUM 277.53, +22.82, +8.96%), Carnival (CCL 17.03, +0.60, +3.65%), and General Dynamics (GD 255.55, +7.87, +3.18%) dot the top of the standings. Health insurers, including HUM, rise on Tuesday after the U.S. announced a 5.06% average increase in the government's final reimbursement rates for 2026 Medicare Advantage (MA) health plans - more than double of what was proposed in January, while CCL and GD are among some names getting a reprieve from the recent tariff-related selling.
Meanwhile, Albemarle (ALB 52.16, -5.94, -10.22%) is today's top laggard as analyst weighed tariff concerns and the impact on earnings estimates in the chemicals space.
Gold rebounds from 4-week low as trade tensions weigh on dollar
08-Apr-25 14:00 ET
Dow +289.24 at 38254.84, Nasdaq +56.08 at 15659.35, S&P +21.52 at 5083.77
[BRIEFING.COM] With about two hours to go on Tuesday the tech-heavy Nasdaq Composite (+0.36%) is back in the green after spending a brief portion of the prior half hour in negative territory.
Gold futures settled $16.60 higher (+0.6%) at $2,990.20/oz, rebounding from a near four-week low. The gains were due in part to renewed investor concerns related to escalating global trade tensions, particularly between the United States, China, and the European Union.
Meanwhile, the U.S. Dollar Index is down about -0.4% to $103.09.
RPM Inc misses Q3 estimates as weather disruptions and focus on cash flow pressure earnings (RPM)
RPM Inc. (RPM), a manufacturer of specialty chemicals for the industrial, construction, and consumer markets, experienced a combination of weather-related headwinds and operational issues in 3Q25, resulting in EPS and revenue missing expectations. Making matters worse, the company also guided for flat yr/yr revenue in Q4 to $2.01 bln, falling short of estimates as macroeconomic conditions remain challenging.
- The company's exposure to weather-sensitive construction markets worked against it in Q3. Revenue for the Construction Products Group (CPG), which makes sealants, adhesives, concrete mixtures, and roofing and flooring systems, fell by 4.5% yr/yr to $473.4 mln. Unseasonable cold weather in the southern U.S., in addition to wildfires in the west, reduced construction and project activity.
- Meanwhile, the Specialty Products Group saw a 10.1% drop in revenue to $158.7 mln driven by significantly softer demand for disaster restoration products. In the year-earlier period, freeze-related flooding drove higher sales for these products, which didn't repeat in 3Q25. Additionally, transitional costs related to the consolidation of eight manufacturing plants added to the problem, causing segment adjusted EBITDA to plunge by 44.5% yr/yr.
- On a consolidated basis, RPM's adjusted EBIT declined by 29% to $78.2 mln and adjusted EPS dove by nearly 33% to $0.35. Besides the lower revenue, a main cause behind the decline in profitability is RPM's focus on cash flow generation under its MAP 2025 initiative. The company generated $91.5 mln in operating cash flow in Q3 -- marking the second highest Q3 total in its history -- due in part to its disciplined inventory management. However, that disciplined inventory management, which led to an inventory reduction of $36 mln, also caused RPM to reduce production levels, leading to lower fixed cost absorption and compressed margins.
- On a brighter note, the company is seeing pockets of positive momentum, and it's well-positioned to benefit from the trend of consumers and businesses looking to extend asset life amid an uncertain and volatile economic backdrop. Bolstered by new product launches and efficiency improvements, RPM anticipates modest earnings growth in Q4 with more substantial improvements expected when volume growth returns.
RPM's Q3 results reflect recent challenges from weather disruptions and strategic trade-offs under its MAP 2025 initiative, with strong cash flow generation offset by margin pressures. Plant consolidations and an associated drop in fixed cost absorption added to RPM's troubles. However, more favorable yr/yr revenue and EPS comparisons in the coming quarters should work in RPM's favor.
Dave & Buster's Q4 results reflect ongoing challenges, but lower spending plans provide hope (PLAY)
With shares hovering around multi-year lows and down by nearly 75% on a yr/yr basis, expectations were at rock bottom levels ahead of Dave & Buster's (PLAY) 4Q25 earnings report. Against this bearish backdrop, the entertainment and dining company delivered better-than-feared results, offering some hope that recently appointed CEO Kevin Sheehan has the beleaguered company heading in the right direction. Although PLAY didn't provide formal EPS or revenue guidance, it did forecast a decline in FY26 capex to less than $220 mln compared to $330.2 mln in FY25, which has investors cheering.
PLAY's results were far from spectacular -- comparable store sales fell by 9.4% and the company missed revenue expectations -- but the anticipated decline in capex and some encouraging commentary surrounding foot traffic and food and beverage sales trends in March and April has created optimism.
- Mr. Sheehan, who replaced Chris Morris as CEO last December, has implemented a "back-to-basics" strategy that aims to undo the missteps of the past few years. In his view, PLAY overwhelmed customers with too many menu changes and store remodels, resulting in seven consecutive quarters of negative comps. The back-to-basics strategy reduces menu complexity be eliminating low-performing items and improving kitchen efficiency, while also only targeting high-return locations for remodeling, providing some relief to capex.
- Under Morris's leadership, PLAY was aggressive with store remodels, completing 44 remodels since 2023. On the positive side, the remodels have shown strong results, outperforming non-remodeled locations by approximately 9% post-renovation. The issue, though, is that the high upfront costs and incremental labor and marketing costs associated with the remodels were straining PLAY's margins and earnings.
- In Q4, operating margins plunged to 8.3% from 15.0% in the prior year period, while EPS fell by 22% to $0.69. By avoiding overextension in its remodeling plans, PLAY should be able to stabilize its margins. Whether its menu simplification efforts and new initiatives like "Eat & Play Combo" can reverse the negative comp trend remains to be seen. The improved foot traffic and sales trends in March and April are a positive sign, but PLAY may be hard-pressed to maintain that momentum given the intensifying macro headwinds.
PLAY's Q4 results continued to reflect consumer related and operational challenges. However, the company's back-to-basics strategy to reverse prior missteps and its more conservative capex plans for FY26 is providing optimism that healthier margins and profits may be on the horizon.
Levi Strauss trades higher after strong EPS beat, but tariff impact still being assessed (LEVI)
Levi Strauss (LEVI) traded higher at the open, but has pulled back after reporting a huge EPS beat with its Q1 (Feb) results last night with in-line revs. The Q2 (May) guidance was mixed with upside revs, but EPS was a bit light. Importantly, LEVI reaffirmed full year guidance, which we think is a big catalyst for the strong move today. LEVI guided FY25 lower last quarter, so a reaffirm despite the tariffs and macro pressures is being seen as a pleasant surprise.
- As a quick housekeeping matter, LEVI has reclassified its Dockers segment as discontinued operations as LEVI explores a sale of the brand. This makes LEVI's comparison to consensus a bit more difficult. However, LEVI said it exceeded expectations across sales, margins and EPS, driven by the momentum of its strategy. A key driver of growth has been loose and baggy fits, which now make up roughly 15% of its bottoms portfolio.
- LEVI says FY25 is off to a strong start in terms of its shift to becoming more of a Direct-to-Consumer company (owned stores, online). DTC continues to be LEVI's primary growth driver, up 12% organically, fueled by client growth, new openings and strong e-com performance. DTC reached a milestone with over half of global sales now being DTC, it was at 52% in Q1. Looking ahead, LEVI believes ecommerce offers a significant runway for growth as it comprises just 12% of revs right now. Its Wholesale business delivered another quarter of positive growth, up 5% organically, driven by strong growth in the US.
- For most of its history, LEVI has been known as a men's jeans business. However, over the last couple of years, the company has significantly expanded its head-to-toe offering, especially with women, while maintaining dominance with men. Its women's business continues to accelerate, growing double digits over the last two quarters and now represents 38% of revs. LEVI's recent launch of the Cinch Baggy for women went viral on TikTok.
- LEVI addressed the tariff situation on the call. Given that the changes were just announced last week, LEVI said the impacts are uncertain. It is in the process of scenario planning and determining different mitigation strategies. For now, its full year outlook remains unchanged and includes no impact from proposed tariffs. LEVI also said tariffs will have minimal impact on Q2 margins, as most of the product for spring, early summer is already in the US.
- LEVI also noted that it has made good progress with expense reductions, which has aided margins and should help withstand tariff pressures. LEVI also noted it sources from 28 countries, 20 of which, are countries that it sources into the US. Pricing is another lever in tis tariff playbook. LEVI believes it has pricing power. Also, LEVI noted that almost 60% of revenue is generated outside the US.
Overall, this was a good quarter. Investors like the large EPS upside and LEVI reaffirming guidance despite the macro/tariff pressures. The guidance also follows some recent guide downs, so investors are taking the reaffirm as a win. The caveat we see here is that the tariffs were just announced and LEVI is still evaluating the impact. As such, pressure may increase later in the year.
RH surges as reduced tariffs from Vietnam could boost margins and lower costs (RH)
A sluggish housing market, stubbornly high interest rates, inflationary pressures, and more recently, tariff-related risks, have combined to hammer shares of luxury home furnishings retailer RH (RH), which were down by 63% on the year heading into today's session. Good news has been hard to come by, but the company offered an encouraging update on one of those issues today, reminding investors that it shifted most of its China production to Vietnam and to its own factory in North Carolina. With Vietnamese leaders now looking to negotiate friendlier tariff terms with the U.S., this sourcing detail from RH carries some significant weight.
- Approximately 35% of RH's products were sourced from Vietnam last year, while about 10% were manufactured in the U.S. Vietnam, which has a trade surplus north of $120 bln with the U.S., had a tariff rate of 15% on many U.S. exports, compared to 25% tariffs from China. Vietnam is now expressing interest in lowering import tariffs on U.S. goods to zero, provided that the U.S. reciprocates for Vietnamese imports.
- If that scenario unfolds, RH will stand to benefit due to lower import costs for its products, especially in categories like wood furniture, textiles, and home decor. Lower import duties would directly reduce RH's cost of goods sold, which accounts for a significant portion of its total expenses. In FY24, COGS represented nearly 52% of total revenue.
- Consequently, RH's margins, profits, and free cash flow would improve. On that note, the company introduced its free cash flow outlook for FY25 this morning, guiding for $250-$350 mln in free cash flow compared to $(67.1) mln in FY24.
- RH's margins have spiraled lower recently, driven by rising raw materials costs and more aggressive pricing strategies amid a highly promotional retail market for furniture. In 2022 and 2023, RH's gross margin hovered in the low-50% range. More recently, though, RH has reported gross margin in the mid-40% area, including a mark of 44.2% in 4Q24.
Zero tariffs from Vietnam would significantly benefit RH by lowering its costs of imported goods, providing a positive lift to both RH's profitability and to investor sentiment, which has soured greatly this year.
Meta Platforms doubles down on AI with Llama 4 Herd and data center amid growing tariff risks (META)
Amid intensifying concerns that a global trade war will sink the digital advertising market, Meta Platforms (META) released the first two models in its Llama 4 herd -- Scout and Maverick -- and is also reportedly planning a new $1.0 bln data center project in Wisconsin. META's aggressive AI investments have catapulted the company to the front of the pack within the digital advertising space, as illustrated by robust Q4 yr/yr revenue growth of 21%, driven by new AI-powered tools that improve ad targeting and generate stronger ROI for advertisers.
While investors are increasingly scrutinizing tech companies' massive AI spending plans, especially as economic growth concerns escalate, META has earned the benefit of the doubt, proving that its AI products are providing it with a competitive edge. Therefore, the company's launch of Llama 4 Scout and Llama 4 Maverick is creating some hope that its superior tech can help to offset the fierce macro-related headwinds.
- Scout and Maverick, which are now powering Meta AI in WhatsApp, Messenger, and Instagram Direct, offer advancements from META's past Llama models in a variety of ways. For instance, these models provide higher performance in image and text understanding, enabling more precise visual question answering. Additionally, Llama Herd models are customizable, meaning that developers can train the model to suit specific needs or tasks within particular industries, languages, or types of data.
- Llama Herd models can also process data faster and more effectively than previous models, and like past models, it's available as an open-source project. As a result, developers can access the model's code, use it, modify it and improve upon it.
- Despite the tumultuous environment, there are no signs that META is planning to slow its ambitious spending plans. When META posted upside Q4 results in late January, it reiterated its FY25 capex guidance of $60-65 bln, representing a yr/yr increase of nearly 60%. After the close on Friday, Bloomberg reported that META is planning to spend about $1.0 bln to construct a new data center project in Wisconsin, putting those spending plans back under the spotlight.
- This news comes after the company announced a $10.0 bln data center project in Louisiana last December, which is expected to open in 2030. With these AI infrastructure investments, META is positioning itself to maintain or improve upon its solid competitive position, but if its growth takes a major hit as tariffs take effect, it will have a more difficult time justifying these huge cash outlays to investors,
In the long-term, META's launch of the Llama 4 Herd AI model and its new data center project in Wisconsin will drive revenue growth through enhanced AI capabilities, but tariff-related pressures are likely to weigh on the company's profitability on a shorter-term basis.
|
|
