| | | Market Snapshot
| Dow | 39606.57 | +419.59 | (1.07%) | | Nasdaq | 16708.04 | +407.63 | (2.50%) | | SP 500 | 5375.88 | +88.10 | (1.67%) | | 10-yr Note | +1/32 | 4.39 |
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| | NYSE | Adv 1947 | Dec 672 | Vol 1.2 bln | | Nasdaq | Adv 3229 | Dec 1140 | Vol 8.5 bln |
Industry Watch
| Strong: Consumer Discretionary, Technology, Communication Services, Industrials, Financials, Materials, Health Care, Real Estate |
| | Weak: Energy, Consumer Staples |
Moving the Market
-- President Trump softened stance on Fed Chair Powell and China
-- Continued momentum from yesterday
-- Tech stocks and mega caps leading
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Closing Summary
23-Apr-25 16:30 ET
Dow +419.59 at 39606.57, Nasdaq +407.63 at 16708.04, S&P +88.10 at 5375.88
[BRIEFING.COM] The stock market registered solid gains, building on yesterday's rally. The major equity indices closed off their highs, but maintained gains between 1.1% and 2.5%. The Nasdaq Composite traded up as much as 4.5% at its high, settling 2.5% higher than yesterday.
The market is feeling good about recent commentary from the president, indicating that he has no intention of firing Fed Chair Powell and that he will not "play hardball" in trade talks with China, adding that tariff rates will come down substantially if the two sides reach a deal.
Positive price action in stocks that reported earnings also boosted sentiment. Tesla (TSLA 250.74, +12.77, +5.4%) was a standout in that respect, and shares jumped despite disappointing Q1 results. The positive response follows comments from Elon Musk indicating he will be curtailing his DOGE work.
Dow component Boeing (BA 172.37, +9.85, +6.1%) was another big earnings-related winner.
Many stocks benefitted from buying interest, leading the Invesco S&P 500 Equal Weight ETF (RSP) to close 1.0% higher and nine of the S&P 500 sectors to close in the green. Five sectors rose more than 1.0%, including the top weighted technology sector (+2.9%).
The 10-yr yield was unchanged from yesterday at 4.39%
- Dow Jones Industrial Average: -6.9% YTD
- S&P 500: -8.6% YTD
- S&P Midcap 400: -10.7% YTD
- Nasdaq Composite: -14.5% YTD
- Russell 2000: -14.0% YTD
Reviewing today's economic data:
- Weekly MBA Mortgage Applications Index -12.7%; Prior -8.5%
- April S&P Global US Manufacturing PMI - Prelim 50.7; Prior 50.2
- April S&P Global US Services PMI - Prelim 51.4; Prior 54.4
- March New Home Sales 724K (Briefing.com consensus 684K); Prior was revised to 674K from 676K
- The key takeaway from the report is that new home sales in March were aided by several factors that included better weather, more stable mortgage rates, and lower prices, but questions will remain about the sustainability factor given the jump in mortgage rates and stock market losses that have been seen in April.
Looking ahead to Thursday, market participants receive the following data: 8:30 ET: March Durable Orders (Briefing.com consensus 1.5%; prior 0.9%), Durable Orders ex-transport (Briefing.com consensus 0.3%; prior 0.7%), weekly Initial Claims (Briefing.com consensus 220,000; prior 215,000), and Continuing Claims (prior 1.885 mln); 10:00 ET: March Existing Home Sales (Briefing.com consensus 4.20 mln; prior 4.26 mln); 10:30 ET: Weekly natural gas inventories (prior +16 bcf).
Treasuries settle mixed
23-Apr-25 15:30 ET
Dow +345.56 at 39532.54, Nasdaq +384.85 at 16685.26, S&P +74.56 at 5362.34
[BRIEFING.COM] The market is holding steady ahead of the close.
Treasuries had a mixed finish. The 10-yr yield was unchanged from yesterday at 4.39% after dropping as low as 4.26% earlier. The 2-yr yield rose five basis points to 3.86%.
Looking ahead to Thursday, market participants receive the following data: 8:30 ET: March Durable Orders (Briefing.com consensus 1.5%; prior 0.9%), Durable Orders ex-transport (Briefing.com consensus 0.3%; prior 0.7%), weekly Initial Claims (Briefing.com consensus 220,000; prior 215,000), and Continuing Claims (prior 1.885 mln); 10:00 ET: March Existing Home Sales (Briefing.com consensus 4.20 mln; prior 4.26 mln); 10:30 ET: Weekly natural gas inventories (prior +16 bcf).
Many names trade up ahead of earnings
23-Apr-25 15:05 ET
Dow +391.56 at 39578.54, Nasdaq +447.42 at 16747.83, S&P +88.27 at 5376.05
[BRIEFING.COM] The major indices moved mostly sideways in recent trading.
IBM (IBM 244.85, +3.95, +1.6%), Molina Healthcare (MOH 327.62, +6.46, +2.0%), Lam Research (LRCX 66.99, +3.52, +5.6%), Texas Instruments (TXN 153.47, +6.71, +4.5%), United Rentals (URI 592.24, +17.48, +3.0%), Alaska Air (ALK 46.67, +1.73, +3.8%), ServiceNow (NOW 816.68, +49.85, +6.5%), and Chipotle Mexican Grill (CMG 48.61, +1.51, +3.2%) all trade up ahead of their earnings reports this afternoon.
Newmont Corporation (NEM 53.06, -1.47, -2.7%) and O'Reilly Auto (ORLY 1374.47, -19.07, -1.4%) are among the names trading lower in front of their earnings reports.
Market unfazed by Beige Book as growth stalls, trade uncertainty mounts; S&P 500 up nearly 2%
23-Apr-25 14:30 ET
Dow +506.41 at 39693.39, Nasdaq +496.04 at 16796.45, S&P +103.90 at 5391.68
[BRIEFING.COM] The broader market was unfazed by the release of the Fed's Beige Book, published at the bottom of the hour; the report showed that economic activity was little changed since the previous report, but uncertainty around international trade policy was pervasive across reports. Just five Districts saw slight growth, three Districts noted activity was relatively unchanged, and the remaining four Districts reported slight to modest declines. Currently, the S&P 500 (+1.96%) is in second place, consolidating afternoon gains.
- Among other notable points from the report, employment was little changed to up slightly in most Districts, with one District reporting a modest increase, four reporting a slight increase, four reporting no change, and three reporting a slight decline. his is a slight deterioration from the previous report with a few more Districts reporting declines. Hiring was generally slower for consumer-facing firms than for business-to-business firms.
- Several Districts reported that firms were taking a wait-and-see approach to employment, pausing or slowing hiring until there is more clarity on economic conditions. In addition, there were scattered reports of firms preparing for layoffs.
- Prices increased across Districts, with six characterizing price growth as modest and six characterizing it as moderate, similar to the previous report.
- The outlook in several Districts worsened considerably as economic uncertainty, particularly surrounding tariffs, rose.
Currently, the yield on the benchmark 10-yr treasury note has now turned positive on the session, but only just at 4.399%.
Gold drops 3.5% as Trump eases Fed tensions, boosts trade optimism; dollar and stocks rally
23-Apr-25 13:55 ET
Dow +590.34 at 39777.32, Nasdaq +526.40 at 16826.81, S&P +114.54 at 5402.32
[BRIEFING.COM] The Nasdaq Composite (+3.23%) is now more than 525 points higher, this ahead of the release of the Fed's Beige Book, which is due at the top of the hour.
Gold futures settled $120.90 lower (-3.5%) at $3,294.10/oz, mostly driven by a shift in investor sentiment following U.S. President Trump's decision to retract his threat to dismiss Fed Chair Jerome Powell and his expression of optimism regarding a potential trade agreement with China. These developments alleviated some political and economic uncertainties, reducing the demand for the yellow metal as a safe-haven asset. Consequently, the U.S. dollar and stock markets rebounded, further diminishing gold's appeal.
Meanwhile, the U.S. Dollar Index is up about +0.8% to $99.78.
Boeing flying higher with a return to top line growth in Q1; business seems to be stabilizing (BA)
Boeing (BA +6.5%) is trading nicely higher following its Q1 report this morning. As expected, Boeing reported another large loss, its 15th consecutive quarterly loss. But it was much narrower than expected. Revenue grew a healthy 17.7% yr/yr to $19.50 bln, which was in-line. It was good to see Boeing return to yr/yr revenue growth after four consecutive declines. It helped a lot that the IAM work stoppage ended in Q4 and Boeing is resuming deliveries.
- Its Commercial Airplanes segment was the star of the show with revs surging 75% yr/yr to $8.15 bln with (6.6)% segment operating margin vs (24.6)% a year ago. CA segment results primarily reflect higher deliveries. Importantly, BA has made changes to strengthen its quality system and it is delivering results. BA says almost every customer it talks to reports an improvement in quality.
- Boeing is currently producing 737s in the low 30s per month, and expects that to grow to 38/mo over the next few months. The company then plans to request an increase to 42/mo with the FAA later this year. The 787 program continued to stabilize production at 5/mo in Q1 and expects to increase to 7/mo this year. The 777X program began expanded FAA certification flight testing in Q1 and BA reaffirmed its goal of a first delivery of the 777-9 in 2026.
- Boeing's Defense segment did not perform as well with revs down 9% yr/yr to $6.30 bln, but op margin improved slightly to 2.5% from 2.2%. More importantly, Boeing said it's seeing a stabilizing operational performance in Defense. Defense also snagged a key win in Q1 as the US Air Force chose Boeing to build the F-47, its next-generation fighter aircraft. The F-47 is expected to have a significantly longer range and more advanced stealth.
- Tariffs were a key topic on the call. Boeing is not being impacted much on the input cost side with much of its supply chain being based in the US. However, many customers in China have indicated they will not take delivery. As such, BA is actively assessing options for remarketing already built or in process airplanes. The silver lining is that BA has many customers who want near term deliveries, so the plan is to redirect the supply to the stable demand.
The key takeaway from the Q1 report is that Boeing's business seems to be stabilizing. That was readily apparent in its plans to increase production later this year. Also, the balance sheet is in better shape thanks to an equity raise in late 2024 and BA announced yesterday it will sell portions of its Digital Aviation Solutions business to Thoma Bravo for $10.55 bln, which will allow it to focus more on its core business.
It has been a rough few years for Boeing given all its well-documented safety issues, production delays, and the IAM strike. Recall that the Boeing recently named Robert "Kelly" Ortberg as its new CEO. He took the helm on August 8, 2024 and has been making important changes, including making the company leaner and focusing more on quality.
Tesla posts weak Q1 results, but shares rise on hopes for Cybercab and new vehicle launches (TSLA)
Badly in need of a spark, Tesla (TSLA) is charging higher after delivering 1Q25 results that were predictably weak amid softening global demand for EVs, market share losses in China, and ongoing ASP/margin compression. With the market discounting Q1 as a "trough quarter", as reflected by the stock's 40% plunge since TSLA's Q4 earnings report in late January, the focus has turned to 2H25 and beyond. On that account, Elon Musk, who stated that he expects to limit his government work to 1-2 days per week starting next month, made the case that stronger growth is on the horizon.
- After TSLA reported that Q1 deliveries dove by 13% yr/yr to 336,681 vehicles on April 2, it was a foregone conclusion that this would be another rough quarter. It was indeed just that as automotive revenue fell by 20% yr/yr to $13.97 mln, badly missing expectations, driven by the drop in deliveries and a significant decline in ASPs that was likely in the high single-digit to low double-digit percentage range.
- TSLA's stale vehicle lineup, which currently lacks more affordable models, has placed the company between a rock and a hard place because it can't lean on new innovation for a competitive edge. Either the company lowers prices to protect market share, leading to steep declines in margins and profits, or it maintains prices in order to protect margins, leading to more severe market share losses. TSLA has opted for the former option and the impact continues to be felt on the bottom-line as EPS declined by 40% yr/yr to $0.27 while gross margin contracted by 110-bps yr/yr to 16.3%.
- The one bright spot continues to be the Energy Generation and Storage business, which generated revenue growth of 67% to $2.73 bln, driven by a 154% surge in energy storage deployments. The utility-scale Megapack business is experiencing robust demand, especially in the U.S., which remains TSLA's largest market for energy storage revenue.
- What's really supporting the stock today, though, is Musk's positive commentary on autonomous driving, new vehicle launches, and the Optimus humanoid robots. On the first point, Musk reiterated that he expects TSLA to be selling fully autonomous rides in Austin, Texas this June, with autonomous rides moving the financial needle in a substantial way by the middle of 2026. While the Cybercab business is highly speculative and subject to execution and regulatory risks, the revenue opportunity is significant with some internal estimates suggesting a low single-digit billions opportunity initially, eventually reaching $20-$30 bln or more.
- Production of more affordable versions of Model Y and Model 3 has been pushed back, creating more disappointment for TSLA investors, but Musk reiterated his commitment to launching new vehicles. For the low-cost Model Y, production in the U.S. is now slated to begin between 3Q25 and early 2026, while plans for the stripped-down Model 3 version remain fluid, but production could still begin in 1H25.
TSLA's weak 1Q25 results reflect a challenging environment marked by demand headwinds, market share losses, and margin compression. However, the company’s long-term innovation pipeline, strong balance sheet, and Musk’s optimistic outlook for 2H25 and beyond have driven a sharp rebound in the stock, as investors look beyond the current trough to future growth catalysts.
SAP SE making a big move after bouncing back with impressive EPS beat and guidance (SAP)
SAP SE (SAP +9%) is making a big move today following its Q1 report last night. The enterprise software giant reported a huge EPS beat although revenue was light. Given the macro uncertainty, we think investors were pleased to see SAP reaffirm some important full year cloud metrics.
- In Q1, revenue rose 12.1% (+11% CC) yr/yr to €9.01 bln. Cloud and software revenue was up 14% (+13% CC) to €7.94 bln while Services revenue was down 1% (-2% CC) to €1.07 bln. Drilling down a bit, cloud revenue was up an impressive 27% (+26% CC) to €4.99 bln while Cloud ERP Suite revenue was up 34% (+33% CC) to €4.25 bln. Cloud revenue continued to grow strongly, even as the base has expanded. Overall, the share of more predictable revenue is now at 86% of total revs. Looking ahead, its current cloud backlog grew by an impressive 28% (+29% CC) to €18.20 bln.
- SAP said its cloud revenue performance was particularly strong in APJ and EMEA and robust in the Americas region. Brazil, Chile, Germany, India, Italy, South Korea, and Spain had outstanding performances, while Canada, China, France, Japan, Singapore, and the US were particularly strong.
- SAP concedes that uncertainty in the market remains high and no one can really predict how the global economy will develop throughout 2025. However, SAP cited its highly resilient business model and its excellent market position as a source of strength. Also, while not providing specific revenue and EPS guidance, SAP noted that its pipeline for the year continues to look very solid. Also, it argues that no other tech company can offer the same suite of services at scale.
- In terms of the outlook, SAP reaffirmed FY25 guidance for cloud revenue at €21.6-21.9 bln (+26-28% CC). It also reaffirmed FY25 guidance for cloud and software revenue at €33.1-33.6 bln (+11-13% CC). While its pipeline remains healthy, SAP concedes that conversion rates could be hurt by further deceleration of current trade disputes.
Given the macro uncertainty, we think investors are very happy to see SAP reported a solid EPS beat, especially after EPS misses in back-to-back quarters in Q3 and Q4. Even more importantly, we think SAP's decision to reaffirm FY25 guidance across several metrics was very reassuring to investors. The company could have easily lowered guidance given the macro pressures. The stock has come under pressure since mid-February, along with the overall market, so this report was some much-appreciated good news. Finally, we think SAP's report/guidance bodes well for peer IBM, which is set to report Q1 results today after the close.
Intuitive Surgical up on potentially reduced China tariffs which sliced FY25 margin estimates (ISRG)
After initially cutting down on their holdings of Intuitive Surgical (ISRG +5%) following lowered FY25 gross margin guidance, investors reversed course, pushing the stock firmly higher today. The key development that flipped sentiment was President Trump's softened stance on China tariffs. The president noted that the current 145% reciprocal tariffs which are set to go into effect following the end of the ongoing 90-day pause would come down substantially if the U.S. and China can reach a deal.
The shift in stance is significant as ISRG, a robotic surgery equipment maker, stated last night that as a result of the 145% tariffs on China, where it imports numerous components into the U.S. for the manufacture of its products, its non-GAAP gross margins would come in at around 65.0-66.5% in FY25, down from its previous forecast of 67.0-68.0%. Management also warned that hospitals could encounter financial pressures due to tariffs, which would lead to a global reprioritization of capital budgets.
With these tariffs set to possibly come down, investors are speculating that ISRG can reach its previous margin guidance. When coupling this with the several uplifting trends from Q1, the stock is heading back toward April highs today.
- Headline earnings and revenue performance were sound in Q1, coming in at $1.81 and $2.25 bln, a 19.2% jump yr/yr, respectively, both exceeding analyst forecasts. Worldwide da Vinci procedure growth stayed in double-digit territory at +17%, tracking above ISRG's previous +13-16% guidance.
- Procedure growth was led by general surgery in the U.S. alongside regional performance in India, Korea distribution markets, and the U.K. ISRG's placements were similarly robust, placing 367 da Vinci systems in the quarter, including 147 da Vinci 5 systems, the company's newest surgical system. Utilization, which measures procedures per installed system, inched 2% higher yr/yr in the quarter for ISRG's multi-port platforms, 26% for its single-port (SP) platform, and 5% for Ion, its minimally invasive bronchoscopy platform.
- Further on the rollout of da Vinci 5, ISRG noted that it is progressing within expectations and looks forward to a broad launch of the system over the next quarter.
- Looking ahead, ISRG raised its FY25 procedure growth outlook to +15-17%. FY25 margins are likely not set in stone, given the fluidity behind the current trade policy. As such, ISRG may end up returning its margin outlook to its previous forecast. In the interim, ISRG is committed to ensuring the supply of its products, optimizing production costs, and adjusting its supply chain strategy and pricing after signs of a durable planning environment for trade.
ISRG's solid Q1 report was hijacked by concerns over tariffs eroding its margins for the year. However, just as quickly as ISRG shares were dragged lower on the news, they snapped back on the possibility that China tariffs could be reduced considerably. Today, the WSJ reported that tariffs could be as low as 50%, a welcomed development for ISRG. At the same time, the company's da Vinci 5 rollout is progressing nicely while procedure and utilization growth remain strong globally, keeping ISRG in a sturdy position to maintain its upbeat momentum.
Verizon's connection with investors strengthening after reaffirming FY25 guidance (VZ)
Verizon's (VZ) weak connection with investors begins to strengthen as shares rebound from earlier lows of -2.7% following Q1 results today. There were not too many surprises surrounding VZ's headline results in Q1, reporting a slim earnings beat on relatively slow revenue growth. The telecom giant also reiterated its FY25 outlook despite warning of heightened macroeconomic uncertainty.
However, initially pinning the stock lower today was VZ's increasing postpaid phone losses, posting a net loss of 289,000 wireless subscribers, considerably higher than the 114,000 reported in the year-ago period. The massive uptick in losses reflects a rebuff from consumers over recent pricing actions. With many players in the telecom arena, such as Mobile Virtual Network Operators (MVNO) like Mint and Visible, who charge a fraction of the cost of major telecoms, VZ does not command significant price inelasticity, causing many users to flee its network.
Nevertheless, investors quickly shrugged off this blemish due to VZ's confidence in still achieving its financial targets for the year, including adjusted EPS growth of flat to +3%, total wireless service revenue growth of +2.0-2.8%, and free cash flow of $17.5-18.5 bln.
- As usual, VZ narrowly exceeded bottom-line estimates, delivering adjusted EPS of $1.19. Adjusted EBITDA expanded by 4% yr/yr, exceeding its FY25 forecast of +2.0-3.5%, to VZ's best figure ever. Part of VZ's success in growing adjusted EBITDA above its target for the year is its focus on growing its wireless portfolio, which commands more attractive margins than its other businesses. VZ is also making progress on its private networks business, closing over a dozen deals in Q1. Meanwhile, the company is continuing to take costs out.
- Revenue inched 1.5% higher yr/yr to $33.5 bln despite the sizeable postpaid phone net losses, illuminating the inflationary pricing gains. Revenue in wireless services climbed by 2.7% yr/yr, with wireless equipment revs ticking 0.7% higher. Weighing on this growth was Verizon Business, which saw a 1.2% drop in revenue.
- A clear highlight was within VZ's Broadband business, which boasted 339,000 net adds in Q1, with total fixed wireless access net adds of 308,000. The gains push the total base to over 4.8 mln fixed wireless access subs, placing VZ in a firm position to reach the next milestone of 8-9 mln by 2028.
- Several factors are underpinning VZ's confidence in hitting its goals this year. For one, the company expects to achieve higher volumes, a higher premium mix, and upgrade customers to myPlan (a new customized unlimited plan). Secondly, VZ is focused on better customer retention, making the necessary price adjustments which impacted churn but should begin improving through the year, especially as more customers turn to myPlan, which locks in rates for three years.
VZ's Q1 report was initially met with a cold reception as investors zeroed in on the alarming net losses number. However, as market participants digested the full report, which included many highlights, they began to warm up to VZ, helping push the stock into positive territory today.
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