Market Snapshot
| Dow | 40368.96 | -155.83 | (-0.38%) | | Nasdaq | 16823.16 | -8.32 | (-0.05%) | | SP 500 | 5396.63 | -9.34 | (-0.17%) | | 10-yr Note | +27/32 | 4.32 |
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| | NYSE | Adv 1487 | Dec 1190 | Vol 1.0 bln | | Nasdaq | Adv 2375 | Dec 1973 | Vol 7.5 bln |
Industry Watch
| Strong: Financials, Energy, Technology, Communication Services, Real Estate, Utilities, Industrials |
| | Weak: Health Care, Consumer Discretionary, Consumer Staples, Materials |
Moving the Market
-- Positive responses to earnings results from Bank of America (BAC) and Citigroup (C)
-- Reacting to tariff-related headlines: Bloomberg report suggested that the EU and US have made little progress on trade talks
-- Choppy action in mega caps
-- Ongoing buying in the Treasury market acting as support for stocks
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Closing Summary
15-Apr-25 16:30 ET
Dow -155.83 at 40368.96, Nasdaq -8.32 at 16823.16, S&P -9.34 at 5396.63
[BRIEFING.COM] The stock market headed higher at the open, yet closed with modest declines at the index level. The S&P 500 was 0.2% lower, the Nasdaq Composite registered a 0.1% decline, and the Dow Jones Industrial Average settled 0.4% lower. Moves in either direction were limited as investors continue to weigh the potential impact of tariffs after a slate of trade-related headlines.
Comments from President Trump suggested there may be tariff adjustments for the auto sector, a Bloomberg report suggested that the EU and US have made little progress on trade talks, and the Department of Commerce launched Section 232 investigations into imports of semiconductors, semiconductor manufacturing equipment, pharmaceuticals, and pharmaceutical ingredients, piquing concerns about tariff increases.
Market participants were also digesting earnings news from Bank of America (BAC 37.99, +1.32, +3.6%) and Citigroup (C 64.33, +1.11, +1.8%), which received positive responses and boosted the overall equity market. Breadth was positive despite the slightly negative finish for major indices. Advancers had a 3-to-2 lead at the NYSE and a 4-to-3 lead at the Nasdaq.
Moves in the S&P 500 sectors were also limited. The technology sector led the pack, closing 0.3% higher, while the consumer discretionary sector brought up the rear, closing 0.8% lower.
Treasuries settled higher, building on yesterday's gains. The 10-yr yield dropped four basis points to 4.32%, and the 2-yr yield was unchanged at 3.83%.
- Dow Jones Industrial Average: -5.1% YTD
- S&P 500: -8.3% YTD
- S&P Midcap 400: -11.8% YTD
- Nasdaq Composite: -12.9% YTD
- Russell 2000: -15.6% YTD
Reviewing today's economic data:
- April Empire State Manufacturing -8.1 (Briefing.com consensus -14.8); Prior -20.0
- March Export Prices 0.0%; Prior was revised to 0.5% from 0.1%
- March Export Prices ex-ag. -0.1%; Prior was revised to 0.5% from 0.1%
- March Import Prices -0.1%; Prior was revised to 0.2% from 0.4%
- March Import Prices ex-oil 0.1%; Prior was revised to 0.1% from 0.3%
There's a big slate of data to get through on Wednesday, including:
- 7:00 ET: Weekly MBA Mortgage Index (prior 20.0%)
- 8:30 ET: March Retail Sales (Briefing.com consensus 1.3%; prior 0.2%), Retail Sales ex-auto (Briefing.com consensus 0.2%; prior 0.3%)
- 9:15 ET: March Industrial Production (Briefing.com consensus -0.3%; prior 0.7%) and Capacity Utilization (Briefing.com consensus 77.9%; prior 78.2%)
- 10:00 ET: February Business Inventories (Briefing.com consensus 0.3%; prior 0.3%) and April NAHB Housing Market Index (Briefing.com consensus 39; prior 39)
- 10:30 ET: Weekly crude oil inventories (prior +2.55 mln)
- 16:00 ET: February Net Long-Term TIC Flows (prior -$45.2 bln)
Treasuries settle higher
15-Apr-25 15:30 ET
Dow -92.56 at 40432.23, Nasdaq -10.93 at 16820.55, S&P -3.85 at 5402.12
[BRIEFING.COM] The major indices are fractionally lower heading into the close.
Treasuries settled higher, building on yesterday's gains. The 10-yr yield dropped four basis points to 4.32%, and the 2-yr yield was unchanged at 3.83%.
There's a big slate of data to get through on Wednesday, including:
- 7:00 ET: Weekly MBA Mortgage Index (prior 20.0%)
- 8:30 ET: March Retail Sales (Briefing.com consensus 1.3%; prior 0.2%), Retail Sales ex-auto (Briefing.com consensus 0.2%; prior 0.3%)
- 9:15 ET: March Industrial Production (Briefing.com consensus -0.3%; prior 0.7%) and Capacity Utilization (Briefing.com consensus 77.9%; prior 78.2%)
- 10:00 ET: February Business Inventories (Briefing.com consensus 0.3%; prior 0.3%) and April NAHB Housing Market Index (Briefing.com consensus 39; prior 39)
- 10:30 ET: Weekly crude oil inventories (prior +2.55 mln)
- 16:00 ET: February Net Long-Term TIC Flows (prior -$45.2 bln)
UAL, OMC, IBKR trade up ahead of earnings
15-Apr-25 15:05 ET
Dow -101.86 at 40422.93, Nasdaq -13.42 at 16818.06, S&P -4.07 at 5401.90
[BRIEFING.COM] The major equity indices trade around their prior closing levels.
United Airlines (UAL 66.55, +0.84, +1.3%), Omnicom (OMC 77.13, +0.59, +0.8%), and Interactive Brokers (IBKR 174.12, +2.13, +1.2%) trade higher ahead of their earnings reports this afternoon.
JB Hunt Transport (JBHT 134.29, -3.54, -2.6%) lags the broader equity market in front of its earnings report.
S&P 500 holds top spot despite dip; ALB, MRNA, DECK lag while PLTR pops on NATO AI deal
15-Apr-25 14:30 ET
Dow -103.24 at 40421.55, Nasdaq -43.59 at 16787.89, S&P -10.55 at 5395.42
[BRIEFING.COM] The S&P 500 (-0.20%) is in "first" place on Tuesday afternoon, down just 10 points.
Briefly, S&P 500 constituents Albemarle (ALB 54.02, -3.37, -5.87%), Moderna (MRNA 25.76, -1.04, -3.88%), and Deckers Outdoor (DECK 103.54, -3.61, -3.37%) dot the bottom of the standings. ALB caught some sell side target cuts this morning, while MRNA and DECK dip despite a dearth of corporate news.
Meanwhile, Palantir Technologies (PLTR 97.11, +4.49, +4.85%) is one of today's better performers, continuing momentum from Monday's +5.3% gain. The continued momentum is mostly due to reports out yesterday that NATO would adopt Palantir's AI-enabled Maven Smart System to enhance military capabilities.
Tariff turbulence ignites gold rally
15-Apr-25 14:00 ET
Dow -43.47 at 40481.32, Nasdaq -12.42 at 16819.06, S&P -2.33 at 5403.64
[BRIEFING.COM] With about two hours to go on Tuesday the tech-heavy Nasdaq Composite (-0.07%) is in second place, but only just.
Gold futures settled $14.10 higher (+0.4%) at $3,240.40/oz, as the market weighs the possibility of U.S. tariffs on semiconductor and pharmaceutical imports, which President Trump has linked to national security considerations.
Meanwhile, the U.S. Dollar Index is up about +0.5% to $100.23.
Netflix heads higher today as it eyes $1 trillion market cap and doubling of revenue by 2030 (NFLX)
Netflix (NFLX +5%) caught a nice tailwind today after the WSJ reported that the streaming giant was looking to reach $1 trillion in market cap, an over 100% jump from its current standing, and double its FY24 revenue of $39 bln by 2030. NFLX has been holding its ground despite tariff-related uncertainty lately, fully recovering from a roughly 8% sell-off following the Trump administration's policy announcement on April 3. It helps that the company is mostly cushioned from the trade policy effects, only dealing with a potential drop in consumer confidence and a subsequent pullback in spending due to tariff uncertainty.
- NFLX has proven that its steady stream of new content creates a competitive edge by maintaining and growing its user base. Despite many new entrants since NFLX first launched streaming service nearly 20 years ago, its user base has expanded consistently over the years, ending FY24 with over 300 million subscribers, a 30% jump from FY22 levels.
- Users have stuck with NFLX even as its prices hike and password sharing is eliminated. Monthly prices for NFLX's Standard plan have crept higher since starting at $7.99 in 2011, currently priced at $17.99. Meanwhile, NFLX introduced additional tiers, with its ad-supported service costing the initial Standard price and the Premium plan, which includes high definition, better audio, and other features, costing $24.99. NFLX has been tactical in its price hikes by accompanying them with additional tiers, creating a powerful revenue tailwind in the process.
- The ad-supported tier and untapped potential overseas will be critical components of reaching $1 trillion in market cap. Since launching in November 2022, NFLX's ad-supported tier already boasts 70 mln subs globally. By offering a relatively low entry-level price, NFLX increases its total addressable market. It appeals to consumers who may have never considered spending over $200 annually on the service, finding more than half that cost more palatable.
- Similarly, there is ample opportunity outside the U.S., especially as NFLX creates content catered to these markets. NFLX has reportedly told its staff that India and Brazil are key markets that are ripe for increasing penetration.
- Live remains a crucial growth category for NFLX. The company avoided bidding on live sports throughout its history, as this endeavor can get pricey. However, recently, NFLX has started to build out its live offering in the U.S. Management has repeatedly stated that it is not a sports strategy but a live event strategy, broadening its focus outside of just sports to deliver more entertainment value as it can pinpoint certain events to host on its platform, such as the Tom Brady Roast, the Paul-Tyson fight, and the NFL on Christmas Day.
NFLX's $1 trillion market cap goal is ambitious but achievable. While volatility could arise over the near term, given the uneasiness surrounding trade policy and some calls for a recession, NFLX is starting from a leadership position, boasting more subscribers than its competitors. The company also touts many items in the works that can help push it past its goals within the next five years.
Bank of America's diversified model helps deliver solid Q1 results, but net charge-offs rise (BAC)
The string of solid quarterly results from the banking industry continued with Bank of America (BAC) beating 1Q25 EPS and revenue expectations, displaying its resiliency and the benefits of its diversified business model. Encouragingly, BAC's net interest income (NII) increased by 3% to $14.6 bln (Full Tax Equivalent), meeting the company's guidance and enabling it to maintain its 4Q25 NII forecast of $15.5-$15.7 bln. Higher interest rates and modest loan growth are supporting NII growth, while strong capital inflows into BAC's Wealth and Management segment are helping to provide stability in a choppy and increasingly volatile environment.
However, the effects of persistently high interest rates, inflation, and macroeconomic uncertainty are rearing their head, especially among BAC's lower-income borrowers. This is illustrated by BAC's net charge-offs, which increased by $118 mln yr/yr to $1.3 bln in the Consumer Banking segment, continuing a trend of rising charge-offs and signaling some deterioration in credit quality.
- Staying in the Consumer Banking segment, credit/debit card spend remained healthy, growing by 4% to $228.0 bln, down a tick from last quarter's 5% increase. Still, net income for the segment fell by about 5% yr/yr to $2.5 bln as provision for credit losses increased by 12% to $1.3 bln. Higher provision for credit losses indicates that the bank is setting aside more funds to cover potential loan defaults. While net charge-offs remain manageable and within historical norms, they have increased from $800 mln in 2Q24, to $1.0 bln in 3Q24, and then to $1.1 bln last quarter and $1.3 bln in 1Q25.
- Similar to Morgan Stanley (MS), BAC's Wealth and Investment Management business was a standout in Q1 as client balances grew by 5% to $4.2 trillion, driven by positive net client flows and higher market valuations. Since 1Q24, the company has seen positive AUM flows of $79.0 bln, facilitating increased asset management fees and revenue. In Q1, the segment generated revenue growth of 5% to $6.02 bln, while net income was flat yr/yr at $1.0 bln.
- Following earnings reports from MS, Goldman Sachs (GS), and JPMorgan Chase (JPM), a downturn in BAC's Global Banking segment was fully anticipated. Indeed, the segment experienced a slowdown as revenue came in flat yr/yr at $6.0 bln with investment banking fees dropping by 3% to $1.5 bln. Declines in equity underwriting fees amid a softening IPO market are weighing on BAC and the investment banking industry as a whole.
- Also like MS, BAC achieved record equities trading revenue in Q1 due to heightened market volatility tied to the global trade war. Equity revenue jumped by 17% to $2.2 bln, outperforming the 8% increase in FICC trading revenue to $3.5 bln. On the FICC side, trading activity for commodities and credit products remained healthy.
BAC delivered solid Q1 results with EPS growing by 18% yr/yr, driven by robust NII of $14.6 bln and another strong performance in the Wealth and Investment Management unit. However, net charge-offs continue to creep higher, raising some concern about credit quality and highlighting potential risks in BAC's bread-and-butter Consumer Banking segment as economic pressures mount.
Citigroup heads higher on solid Q1 beat, following recent pattern seen among the banks (C)
Citigroup (C +2%) is trading higher after reporting solid Q1 results this morning. Citi reported its seventh consecutive double-digit EPS beat with upside revs. Total revenue rose 2.8% yr/yr to $21.60 bln with record revenue in its US Personal Banking (USPB) and Wealth segments. Net interest income increased 4%, driven by USPB, Markets, Wealth and Services, largely offset by declines in All Other and Banking. Citi also reaffirmed FY25 revs of $83.10-84.10 bln.
- Citi's largest segment is Markets and it performed very well in Q1 as revenue rose 12% yr/yr to $6.0 bln, driven by growth in both Fixed Income and Equity markets revenue. Fixed Income revenue rose 8% to $4.5 bln, fueled by growth across rates and currencies as well as spread products and other fixed income. Equity markets revenue jumped 23% to $1.5 bln, primarily driven by equity derivatives. Increased market volatility and higher client activity fueled results in Q1.
- USPB is Citi's next largest segment, but it did not perform as well with revs up only 2% to $5.2 bln, driven by growth in Branded Cards and Retail Banking, largely offset by a decline in Retail Services. Net interest income (NII) increased 6%, driven by loan growth in Branded Cards as well as higher deposit spreads in Retail Banking. Non-interest revenue decreased 168%, primarily driven by higher partner payment accruals in Retail Services.
- A real standout was its Wealth segment, unfortunately, it's one of Citi's smaller segments at $2.1 bln, but revenue jumped 24%. Growth was strongest across Citigold ($200K account minimum), the Private Bank and Wealth at Work. NII of $1.3 bln increased 30%, driven by growth in deposit spreads, partially offset by lower deposit balances.
- Citi's Services segment grew 3% to $4.9 bln, driven by growth in Treasury and Trade Solutions (TTS), which continued to gain market share. Its Banking segment did well with revs up 12% to $2.0 bln, driven by growth in Investment Banking as well as the impact of mark-to-market on loan hedges, partially offset by a decline in Corporate Lending. Citi's worst performing segment was All Other (managed basis), with revs down 39% yr/yr to $1.4 bln.
We are definitely seeing a pattern among the banks as earnings season gets underway. Most are reporting strong Q1 results but with caution moving forward due to macro concerns about tariffs, inflation, companies getting more cautious on spend, slowing growth etc. We did not see much in terms of cautious comments from Citi, but its call starts at 11am ET so we do not know what they will say yet.
Citi did reaffirm FY25 revenue guidance, so that was good to see. Also, Citi CEO Jane Fraser said that once trade imbalances and other structural shifts are behind us, the US will still be the world's leading economy, and the dollar will remain the reserve currency. That last point was especially good to hear given the concerns about foreign investors selling Treasuries.
Albertsons sells off on soft FY26 EPS guidance; long-term plan set to erode near-term margins (ACI)
Investors are shopping their Albertsons (ACI -7%) shares today after the national grocery store chain issued downbeat FY26 (Feb) earnings guidance. The company still managed to top Q4 earnings and revenue expectations while delivering healthy identical sales growth. Meanwhile, the midpoint of ACI's FY26 comp guidance topped estimates. However, following a decent +10% run on the year ahead of Q4 numbers as well as general uneasiness surrounding weakening consumer confidence amid dynamic tariff policies, market participants did not need many negative developments to ignite a sell-off today.
There has been no shortage of headlines surrounding ACI since December, when the company terminated its pending merger with Kroger (KR) after federal and state courts blocked the deal. At the time, ACI authorized a $2.0 bln repurchase plan, representing around 16% of its market cap, and hiked its quarterly dividend by 25%. Then, last month, ACI announced that its COO Susan Morris would take over as CEO, effective May 1, replacing Vivek Sankaran, who is retiring. The CEO shakeup triggered a sell-the-news event. However, news that ACI would join the S&P MidCap 400 occurred the next day, whiting out the negative segment.
- Nevertheless, today's downbeat outlook was sufficient to push the stock toward 2025 lows. ACI projected adjusted EPS of $2.03-2.16, firmly below analyst expectations. The underlying cause is ACI's investments related to its Customer for Life strategy, which management noted last quarter would begin accelerating, aiming to achieve at least +2% comps over time with adjusted EBITDA growth outpacing comp growth.
- Central to ACI's investments are bolstering its digital platforms and modernizing its store fleet. The company is also strengthening its relationships with partners to address inflationary pressures on its customers. ACI is also investing in its private labels to increase profitability while taking advantage of shoppers' needs for greater value. Additionally, ACI wants to improve its ability to define shopper audiences and run targeted media campaigns. Management cautioned that the result of these investments will be a short-term hit to margins.
- Outside of ACI's disappointing earnings outlook, other trends were healthy. During Q4, e-commerce sales grew by 24% yr/yr, far outpacing overall revenue growth of 2.5% to $18.8 bln and identical sales growth of +2.3%. Loyalty members rose by 15% yr/yr to 45.6 mln, reflecting success related to ACI's mobile app, which offers personalized deals and rewards points. Lastly, ACI projected solid comps for FY26, targeting +1.5-2.5%, within its long-term Customer for Life strategy range.
- Regarding tariffs, ACI procures over 90% of its products domestically. However, ACI is aware that there may be impacts from ingredients within these products that are sourced from tariff-impacted areas. As such, it is staying close to the situation, deploying a task force to better understand the complexities and having a plan ready to help mitigate any possible adverse impacts.
Overall, ACI delivered a decent Q4 report, underscoring healthy demand and reflecting the defensive nature of its business. However, investors are displeased by the degree to which ACI's earnings will suffer at the hands of its Customer for Life strategy, taking some of their profits off the table today.
Certara surges on strong outlook as regulatory and AI tailwinds position it for strong growth (CERT)
After soaring by 33% last Thursday and Friday, Certara (CERT) is launching higher again today following the company's upside 1Q25 revenue guidance, reaffirm of FY25 guidance, and announcement of a new $100.0 mln share repurchase plan. The initial spark for this remarkable rally is tied to the FDA's announced plans on April 10 to phase out animal testing in the development of monoclonal antibody therapies, which aligns with CERT's expertise in bio-simulation models and should drive even stronger demand from pharmaceutical companies for CERT's bio-simulation software.
- In Q1, software revenue jumped higher by 18% yr/yr, representing an uptick from last quarter's growth of 17% and Q3's increase of 16%. Rising adoption of CERT's bio-simulation software -- especially its Simcyp Simulator for pharmacokinetics modeling -- is a primary driver behind the healthy gains. The FDA announcement paves the way for AI-enabled bio-simulation tools, such as Simcyp Simulator, to significantly build upon the expanding adoption within the biopharmaceutical industry.
- CERT has increasingly leveraged AI across its platform to enhance predictive modeling accuracy and to streamline drug development workflows. For example, the latest version of Simcyp Simulator includes features like the "Ask Simcyp" AI-enabled help chat and chemical structure-based parameter predictors, improving usability and precision in drug modeling. These tools are helping to drive customer net retention rate, which was strong at 110% in 2024.
- Separately, the company also announced the launch of its Non-Animal Navigator platform in support of the FDA's plans to phase out animal testing. Positioned as a key solution for transitioning drug manufacturers away from animal testing, Non-Animal Navigator offers strategic regulatory advice, integrated preclinical development plans, and optimized AI-enabled modeling toolkits. The platform should bolster CERT's existing bio-simulation offerings, leading to increased adoption among biopharmaceutical companies that are focused on monoclonal antibodies and anti-body drug conjugates.
The main takeaway is that CERT's strong and improving software revenue growth reflects its ability to capitalize on a growing industry adoption trend to use new approaches like AI-enabled bio-simulation in the drug development process. Regulatory tailwinds, such as the FDA's decision to reduce animal testing, and CERT's integration of AI into its software offerings, position the company for healthy growth in the quarters ahead.
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