| | | Market Snapshot
| Dow | 40113.50 | +20.10 | (0.05%) | | Nasdaq | 17382.93 | +216.90 | (1.26%) | | SP 500 | 5525.23 | +40.44 | (0.74%) | | 10-yr Note | +5/32 | 4.27 |
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| | NYSE | Adv 1418 | Dec 1243 | Vol 957 mln | | Nasdaq | Adv 2331 | Dec 1976 | Vol 7.4 bln |
Industry Watch
| Strong: Communication Services, Consumer Discretionary |
| | Weak: Materials, Consumer Staples, Health Care, Financials, Energy, Utilities |
Moving the Market
-- Building on recent gains
-- Bolstered by mega caps; GOOG outperforms after earnings
-- Mixed price action in Treasuries
-- Mixed responses to earnings news
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Closing Summary
25-Apr-25 16:30 ET
Dow +20.10 at 40113.50, Nasdaq +216.90 at 17382.93, S&P +40.44 at 5525.23
[BRIEFING.COM] The stock market closed a winning week on a high note. The major equity indices overcame early selling pressure to finish in the green near session highs. The S&P 500 settled 0.7% higher and the Nasdaq Composite rose 1.3% while the Dow Jones Industrial Average lagged its peers, rising 0.1% from yesterday.
Gains in the major indices since last week ranged from 2.5% to 6.7%.
Mega cap stocks provided significant support to the broader equity market today. Alphabet (GOOG 163.85, +2.38, +1.5%) was among the winners after reporting earnings, as was Tesla (TSLA 284.95, +25.44, +9.8%), which continued its post-earnings rally. The Vanguard Mega Cap Growth ETF (MGK) jumped 1.7%.
Gains in the aforementioned names propelled their respective S&P 500 sectors -- communication services (+1.0%) and consumer discretionary (+2.0%) -- toward the top of the leaderboard. The technology sector also benefitted from outsized moves in its mega cap components, closing 1.6% higher.
The price action in Treasuries, along with this morning's economic data, contributed to the upside bias in the stock market. The final April reading of the University of Michigan Index of Consumer Sentiment rose to 52.2 (Briefing.com consensus 48.5) from the preliminary reading of 50.8. However, even with that uptick, consumer sentiment remains at levels last seen as the world emerged from the coronavirus pandemic with year-ahead inflation expectations (6.5%) at a level not seen since 1982.
The 10-yr yield was four basis points lower at 4.27% and the 2-yr yield was three basis points lower at 3.76%.
Looking ahead to next week, there is no US economic data on Monday.
Treasuries settle with gains
25-Apr-25 15:40 ET
Dow -46.19 at 40047.21, Nasdaq +158.20 at 17324.23, S&P +26.79 at 5511.58
[BRIEFING.COM] The major indices remain near session highs ahead of the close.
Treasuries settled with gains this week. The 10-yr yield was six basis points lower than last week at 4.27% and the 2-yr yield was four basis points lower than last week at 3.76%.
Looking ahead to next week, there is no US economic data on Monday.
Stocks recover from dip
25-Apr-25 15:05 ET
Dow +31.80 at 40125.20, Nasdaq +199.23 at 17365.26, S&P +37.48 at 5522.27
[BRIEFING.COM] The S&P 500 has recovered from a brief dip in response to President Trump telling reporters on Air Force One that he will not drop China tariffs unless China gives the US something.
The upside moves continue to draw support from mega caps while the equal-weighted S&P 500 trades 0.2% lower.
Separately, the 10-yr yield remains near its intraday low at 4.27%.
S&P 500 gains 0.6% as Charter and VeriSign surge on earnings; Erie Indemnity drops 10%
25-Apr-25 14:30 ET
Dow -18.15 at 40075.25, Nasdaq +173.01 at 17339.04, S&P +33.22 at 5518.01
[BRIEFING.COM] The S&P 500 (+0.61%) is in second place on Friday afternoon, up about 33 points.
Briefly, S&P 500 constituents Charter Comm (CHTR 370.92, +35.59, +10.61%), VeriSign (VRSN 274.62, +22.03, +8.72%), and Caesars Entertainment (CZR 28.24, +1.07, +3.94%) dot the top of the standings. CHTR and VRSN jump after earnings, while CZR is higher today after Texas Capital started coverage on the stock at Buy with a $59 tgt.
Meanwhile, Pennsylvania-based insurance firm Erie Indemnity (ERIE 366.67, -42.06, -10.29%) is one of today's top laggards following earnings.
Gold drops as safe-haven demand cools amid U.S.-China trade hopes, stronger dollar
25-Apr-25 14:00 ET
Dow -149.55 at 39943.85, Nasdaq +103.18 at 17269.21, S&P +10.32 at 5495.11
[BRIEFING.COM] The tech-heavy Nasdaq Composite (+0.60%) is up about 100 points on Friday afternoon.
Gold futures settled $50.20 lower (-1.5%) at $3,298.40/oz, ultimately down -0.9% on the week, as investors took a breather after the yellow metal's sharp rally earlier this year. The pullback came as signs of easing U.S.-China trade tensions cooled demand for safe-haven assets. A stronger U.S. dollar also weighed on prices, making gold more expensive for buyers using other currencies.
Meanwhile, the U.S. Dollar Index is now up +0.2% to $99.47.
Intel tops Q1 estimates but warns of weak Q2 as fierce competition, macro pressures persist (INTC)
A better-than-expected performance from Intel's (INTC) struggling data center business, combined with ongoing cost-cutting actions, enabled the chip maker to surpass muted 1Q25 EPS and revenue expectations. That good news, though, is being overshadowed by a weak Q2 outlook that missed the mark on EPS and revenue, indicating that INTC's turnaround is still very much a work-in-progress. Under new CEO Lip-Bu Tan, a sense of urgency to accelerate that turnaround has emerged, as illustrated by a fresh round of restructuring actions that are designed to remove management layers, eliminate bureaucracy in order to accelerate decision-making, and reduce costs.
Accordingly, INTC also lowered its FY25 operating expense target to $17.0 bln from its prior forecast of $17.5 bln, while projecting $16.0 bln in operating expenses for FY26. The company is also looking to preserve cash and improve free cash flow by slowing fab construction and delaying non-critical investments, leading to a reduction in its FY25 capex guidance to $18.0 bln from its previous target of $20.0 bln. Investors would typically cheer cost-cutting maneuvers such as these, but since INTC is implementing the restructuring program from a position of weakness, the actions only serve to highlight the magnitude of the challenge facing INTC.
- Those challenges have been front-and-center in the Data Center & AI (DCAI) segment, where INTC's severe market share losses to NVIDIA (NVDA), Arm Holdings (ARM), and Advanced Micro Devices (AMD) have led to dismal results. Following last quarter's 3% drop, DCAI revenue grew by 8% in Q1 to $4.1 bln, easily beating expectations and providing a much-needed ray of hope. The rebound was driven by improved demand for Xeon CPUs and Gaudi accelerators, but there is a catch. During the earnings call, INTC disclosed that growth was supported by customer purchases ahead of potential tariffs, putting the sustainability of this improved demand into question.
- Earlier this year, INTC announced that production of its Clearwater Forest chip -- the company's first data center CPU on the 18A manufacturing process -- would be delayed until 1H26, providing another layer of disappointment to investors. Originally planned for 3Q25, the Clearwater Forest launch represents a pivotal moment for INTC as mass production success would validate its new process technology, potentially attracting new foundry customers. However, if the chip fails to gain significant traction, concerns surrounding INTC's loss of technology leadership will only be amplified.
- INTC also has a significant launch ahead in Client Computing Group (CCG) with Panther Lake on track for release in 2H25. Designed for PCs and laptops and also built on the 18A process, Panther Lake is expected to support a new wave of AI PC adoption, helping INTC regain momentum in the client market. It was a rough quarter for CCG with revenue falling by 8% to $7.6 bln, driven by unfavorable product mix and increased competition in the PC processor market. In addition to AMD and ARM, INTC is now contending with competitive pressures from Qualcomm (QCOM) via its Snapdragon X series processors.
INTC's Q1 results were better-than-expected, thanks to outperformance in DCAI and Foundry, but the company still faces profitability challenges and competitive pressures. Restructuring and cost-cutting are central to its 2025 strategy, while the launches of Panther Lake and, later, Clearwater Forest represent key product catalysts for future growth. Execution on advanced process nodes and Foundry customer wins will be critical to INTC’s long-term turnaround.
Alphabet surges past Q1 estimates as AI-powered Gemini and Search drive strong growth (GOOG)
There has been plenty of scrutiny regarding Alphabet's (GOOG) recent splurge on AI-related technology and infrastructure, but the company's strong 1Q25 results once again demonstrated that its hefty investments are paying off. Robust adoption of GOOG's AI-powered features and tools across Search and Cloud and solid cost discipline -- total expenses increased by only 8% yr/yr -- drove EPS higher by 49% to $2.81, easily beating expectations. To top it off, GOOG also announced a new stock repurchase plan, authorizing it to repurchase up to an additional $70.0 bln of Class A and Class C shares.
GOOG's impressive results also ease concerns about the digital advertising market succumbing to a steep downturn due to tariffs and mounting macroeconomic uncertainty -- at least for the time being. During the earnings conference call, GOOG executives characterized advertiser demand as healthy, especially in the finance, retail, and travel verticals, which bodes well for Meta Platforms' (META) and Pinterest's (PINS) upcoming Q1 earnings reports on April 30 and May8, respectively. However, it's worth noting that Chief Business Officer Philipp Schindler expressed some caution last night when asked about the outlook for Q2 advertising revenue and potential macroeconomic headwinds, stating that it's "too early really to comment on that."
- Search remained resilient and is benefitting from healthy user engagement as GOOG integrates advanced AI features, enhancing the experience for both users and advertisers. In Q1, Search & Other revenue grew nearly 10% yr/yr to $50.7 bln, bolstered by GOOG's new GenAI tool, AI Overviews. Now serving 1.5 bln users per month, AI Overviews is driving higher user engagement while also improving advertiser outcomes and ROI. Despite launching AI overviews less than one year ago, the feature is already monetizing at approximately the same rate as traditional search.
- Although YouTube Ads revenue of $8.9 bln (+10%) narrowly missed analysts' expectations, the monetization rate remains strong, and the platform significantly contributed to the 18% jump in operating income for Google Services. The healthy monetization is supported by solid growth in paid subscription services, including YouTube Music and Premium, which exceeded 125 mln subscribers in Q1.
- After falling short of expectations last quarter, Google Cloud beat analysts' Q1 estimates with revenue soaring by 28% yr/yr to $12.3 bln. Google Cloud Platform (GCP) once again led the way, driven by robust demand from enterprises for products such as Vertex AI, AI agents, Cloud WAN, TPU accelerators, and Gemini AI models. During the earnings call, GOOG did warn that it could see some variability in Cloud revenue growth rates moving forward given that revenue is correlated with the timing of new capacity deployments.
- Last quarter, GOOG stunned participants when it forecasted staggering capex of $75.0 bln for FY25. Considering the turbulent macroeconomic conditions, it wouldn't have been too surprising had GOOG ratcheted its capex guidance lower. The company did not do that, though, sticking to its forecast instead, highlighting its commitment to AI and cloud leadership.
GOOG's upside Q1 results demonstrate broad-based strength across Search, YouTube, and Cloud, with AI and Gemini at the core of its outperformance. Additionally, GOOG's substantial stock buyback program and 5% bump in the quarterly dividend underscore its focus on long-term value creation for shareholders.
T-Mobile US sells off following light phone net adds and potential pull-forward effect in Q1 (TMUS)
Investors disconnect from T-Mobile US (TMUS -10%) today despite the telecom giant posting solid top and bottom-line upside in Q1. TMUS also delivered a record quarter for postpaid net customer additions, registering 1.3 mln in the quarter. At the same time, TMUS topped rivals Verizon (VZ) and AT&T (T) in postpaid phone net adds at 495,000. In fact, TMUS far outpaced the industry during the quarter as VZ saw a net loss of 289,000 postpaid phone customers while AT&T reported 324,000 postpaid phone net adds.
So why are shares selling off? Analysts had higher expectations for TMUS's postpaid phone net adds in Q1. For a stock that has strongly bucked the broader market trend this year, appreciating by around +18% YTD as of yesterday's close, TMUS was in no position to disappoint.
- The net phone add miss is taking the wind out of an otherwise solid Q1 report. TMUS ended the quarter with EPS of $2.58, marking TMUS's fifth consecutive quarter exceeding estimates by at least $0.10. Revenue meanwhile ticked 6.6% higher yr/yr to $20.89 bln, outpacing VZ and AT&T by at least 4 pts. Service revs grew by 5%, with postpaid service revs expanding by 8%.
- While net phone adds were on the lighter side, broadband net adds were healthy at 424,000. TMUS noted that for the 13th quarter straight, it has led the entire broadband industry in customer growth, pointing to its new pricing construct resonating well with customers. On that note, TMUS's ARPU growth in broadband was its highest ever in Q1.
- Looking ahead, TMUS is optimistic. The company expects postpaid phone ARPU growth of at least +1.5 %, up from +1.1% in FY24 and adjusted EBITDA of $33.2-33.7 bln, up $100 mln from its prior forecast. An interesting development rolling out over the coming months is T-Satellite, TMUS's Starlink-based mobile phone network. The company announced that the final launch pricing would be $10 per month for one year for customers regardless of their current mobile phone carrier.
TMUS's Q1 report was solid, especially when stacked against its closest rivals. However, falling short on expected net phone adds in the quarter is enough to trigger a cascade of sell orders today. Additionally, there is the concern that Q1 numbers may already have benefited from a pull-forward effect. Management mentioned that due to potential price hikes related to tariffs, customers may upgrade their phones earlier in the year than usual. If this turns out to be the case, subsequent quarterly results may fall flat. As a result, the market is locking in profits today, not taking the risk and waiting to see how tariffs, prices, and demand shake out over the next few months. This is creating a ripple effect on the telecom industry today, with shares of VZ and AT&T enduring moderate selling pressure.
Skechers gets tripped up a bit after withdrawing guidance, tariffs remain a concern (SKX)
Skechers USA (SKX -4%) is tripping up a bit following its Q1 report last night. The footwear company reported in-line EPS results while revenue rose 7.1% yr/yr to a record $2.41 bln. Both metrics were in-line, which is decent but not great. However, the main problem is that SKX withdrew its 2025 guidance due to macro uncertainties with tariff uncertainties being the main driver. That is spooking investors.
- Growth by region was pretty similar with both domestic and international sales increasing by 7%. Growth of 14% in EMEA and 8.3% in the Americas was partially offset by 2.6% decline in APAC. This was primarily due to soft consumer spending in China. However, when excluding China, APAC sales grew 12%. SKX continues to view international as its primary growth engine.
- Wholesale sales increased 7.8%, with growth of 4.2% domestically and 9.5% internationally. Domestic wholesale growth reflected broad-based demand while international wholesale experienced solid growth across many regions. On the DTC (direct-to-consumer) side, sales increased 6% with domestic growth of 11%, including a strong performance in e-commerce. International DTC increased 2.9%, but when excluding China, that jumps to 12%.
- In terms of withdrawing guidance, SKX said that the world is significantly more uncertain today than it was three months ago. SKX described tariffs as a similar level of uncertainty to what was observed during the initial phase of the COVID pandemic. On the positive side, SKX noted that two-thirds of its business is outside of the US, which is much less impacted or minimally impacted by the current situation.
- SKX says it is taking a multi-lever approach to dealing with tariffs. These include cost sharing with vendors, sourcing optimization, and price increases. SKX is in the midst of pulling these levers while simultaneously monitoring the environment for needed adjustments and closely watching consumer behavior. Ultimately, SKX remains confident in its ability to navigate these challenges. It also noted that consumer demand for the Skechers brand and its comfort technology remains extremely robust.
Overall, the Q1 results were a bit disappointing. However, we think its decision to withdraw guidance is having a bigger impact on the stock today. With that said, shares are hanging in there pretty well. Keep in mind that the stock has pulled back aggressively (-36%) from its January high of $78.85. As such, we think a lot of the bad news was priced in already. Whether SKX withdrew guidance or guided lower maybe does not make a lot of difference as sentiment may remain pretty bearish until the tariff issue is resolved. Nike (NKE -3%) is down in sympathy.
Procter & Gamble hits 52-week lows as tariffs, FX rates, and commodity costs clip FY25 guidance (PG)
Procter & Gamble (PG -4%) is amid meaningful selling pressure today after lowering its FY25 (Jun) outlook over the material impact of tariffs. The household durables giant, known for numerous brands like Tide and Pampers, reduced its adjusted EPS forecast for the year by $0.21 at the midpoint to account for a more pronounced headwind tied to FX rates, commodity costs, and tariffs, assuming they hold at current rates. Management mentioned that the largest tariff-related impact stems from raw and packaging materials as well as some finished products sourced from China. Even though the region comprises slightly over 10% of total imports for PG, the tariff rate is high enough to produce a sizeable hit to the company's earnings.
The trade policy problems for PG mirror what we saw from peer Kimberly-Clark (KMB) earlier this week, which lowered its adjusted EPS outlook for 2025. While the reciprocal tariff rates on China from earlier this month are reportedly set to change, the uncertainty surrounding the final number and the consequences remain elevated, clouding the near future and sparking alarm among investors, sending shares of PG to 52-week lows today.
- Adding to today's sell-off was PG's mixed Q3 (Mar) results, registering adjusted EPS of $1.54, marking its ninth straight beat on slightly lower-than-expected revenue of $19.78 bln, a 2.1% decline yr/yr. On an organic basis, which excludes FX and M&A impacts, sales ticked 1% higher. Volumes on a reported basis were sluggish, sliding by 1%, while organic volumes were flat.
- By category, Grooming was the notable standout and the only one to post positive reported volume growth in Q3. On an organic basis, Beauty also delivered volume growth. Health Care and Fabric & Home Care posted a 1% drop in reported volumes while Baby, Feminine & Family Care was the weakest, posting a 2% drop in reported and organic volumes.
- Prices climbed by 1% on a consolidated basis, potentially nudging some consumers to pull back their spending or shift toward lower-cost alternatives. However, on that note, PG commented that it continues to grow or maintain its market share across the U.S. and Europe as private label shares continue to trend lower, accelerating downwards in Europe. PG is leveraging this clear brand loyalty to potentially hike prices in the coming months.
- Still, in the interim, PG is wading through choppy waters. The company sliced its FY25 adjusted EPS outlook to $6.72-6.82 from $6.91-7.05 and revs to $84.04 bln from $85.72-87.40 bln, implying stagnant yr/yr growth this year.
CFO Andrew Schulten noted that the company's playbook centers on delivering balanced top and bottom-line growth over a two-to-three-year period, conceding that it will not hit that goal every quarter. As such, PG is pulling the right levers now, such as hiking prices, to place it in a more advantageous position for longer-term growth. However, this comes at a gamble as consumers are still feeling the sting of cumulative inflationary pressures and may gravitate toward private labels or pull back their spending. Meanwhile, without clarity surrounding how tariffs will shake out, investors are beginning to steer clear of PG, a trend that could persist over the near term.
The Big Picture
Last Updated: 25-Apr-25 14:45 ET | Archive
Staking a claim on the key labor market indicator
Column Summary:
*The unemployment rate is a lagging indicator and less useful for predicting future economic trends.
*Initial jobless claims are the key leading indicator for the labor market.
*The four-week moving average for initial jobless claims remains well below recession-like levels.
For obvious reasons, there will be a lot of attention on the U.S. economy in the coming months. It will be judged through the lens of economic data, particularly the hard data.
Last week we discussed why that wait will be hard for the market. It boils down to the time it will take to get a feel for developing trends. One month of data does not a trend make, nor does two months. At a minimum, it will take three months of economic data to gain a better foothold on how the economy is operating in a minefield of tariff bombs.
There is one important piece of hard data, though, that remains very much on the economy's side: initial jobless claims.
A Lagging Indicator
The unemployment rate, typically published on the first Friday of every month, tends to get top billing as the key labor market indicator. That is understandable since the unemployment rate is an indicator that resonates in the popular press, pervades the national psyche, and stands as a make-or-break point in many political campaigns.
It is accorded more cachet than it deserves, much like the Dow Jones Industrial Average is whenever one wonders how "the market" did. The Dow Jones Industrial Average doesn't represent "the market." It is a price-weighted average of just 30 stocks. The market cap-weighted S&P 500 is a far better proxy for "the market," but since the Dow Jones Industrial Average has been around so long, it is often the first thing that comes to mind when one asks, "How did the market do today?"
We digress.
The unemployment rate, currently at 4.2%, doesn't deserve the cachet it naturally receives as a key labor market indicator because it is a lagging indicator, standing out as a measure of changes in the economy that have already occurred.
Employers like to retain their employees. It can be an expensive and unproductive process hiring and training new employees, so they will hold onto employees when business activity starts to weaken, hopeful that the downturn in business will be short-lived.
It might take six or more months of declining sales for an employer to conclude the downturn isn't something that is short-lived, which is when they make the difficult decision to let employees go. Those employees are then unemployed; however, they are counted as newly unemployed after business conditions have already changed.
The unemployment rate, though, isn't devoid of value. It can be used as a confirmation signal.
When it comes to labor market data and its implications for the economy, initial jobless claims are the key labor market indicator because they are a leading indicator.
Briefing.com Analyst Insight
The value of initial jobless claims as a leading indicator is wrapped up in the understanding that they are timely. They capture on a weekly basis the number of people filing for unemployment benefits for the first time. Accordingly, a notable jump in initial jobless claims can be construed as a sign of a weakening labor market, which has important knock-on effects for the economy.
When people get laid off from their job, they won't spend as much since their regular income stream, excluding unemployment benefits, has essentially been cut off. In turn, employed individuals are apt to spend less and save more out of fear that they could also lose their job.
That is a momentous consideration because consumer spending accounts for close to 70% of GDP. Spending won't grind to a complete halt, but there is a domino effect of reduced spending that includes reduced business investment, reduced construction, and more job losses that weigh further on the economy.
Initial jobless claims, therefore, have a lot of cachet as an economic driver and market mover. Things will change, but just remember it will be the degree of change in initial jobless claims, not the unemployment rate, that matters most as a read on the labor market and economic prospects.
The encouraging news today is that initial jobless claims are nowhere close to levels seen during recessions. For the week ending April 19, the four-week moving average was just 220,250. That is way below the average levels seen during the last six recessions.
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| Jan. 1980 - July 1980 | 512,000 | 7.0 | | July 1981 - Nov. 1982 | 554,000 | 9.0 | | July 1990 - March 1991 | 434,000 | 6.1 | | March 2001 - Nov. 2001 | 416,000 | 4.8 | | Dec. 2007 - Jan. 2009 | 376,000 | 5.9 | | Feb. 2020 - April 2020 | 2,405,167 | 7.5 |
Recession PeriodInitial Claims AverageUnemployment Rate AverageSource: NBER; FactSetThat is where we want to leave things with this week's column. It is a dose of good news amid the tumult of tariff talk, and who doesn't like good news?
-- Patrick J. O'Hare, Briefing.com
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