Market Snapshot
| Dow | 40227.59 | +114.09 | (0.28%) | | Nasdaq | 17366.12 | -16.81 | (-0.10%) | | SP 500 | 5528.77 | +3.54 | (0.06%) | | 10-yr Note | +2/32 | 4.22 |
|
| | NYSE | Adv 1651 | Dec 1017 | Vol 978 mln | | Nasdaq | Adv 2417 | Dec 1930 | Vol 1.0 bln |
Industry Watch
| Strong: Utilities, Real Estate, Energy, Health Care, Financials, Industrials, Materials |
| | Weak: Information Technology, Consumer Discretionary, Consumer Staples |
Moving the Market
--Wait-and-see ahead of busy week
--Continued hope for positive trade news
--Softness in some mega-cap space
|
Closing Summary
28-Apr-25 16:30 ET
Dow +114.09 at 40227.59, Nasdaq -16.81 at 17366.12, S&P +3.54 at 5528.77
[BRIEFING.COM] It was a choppy day for stocks. The market started, and ended, the session higher. The major equity indices traded below their prior closing levels around mid-day, though. The Nasdaq Composite recovered from its session low, but didn't manage a positive finish due to weakness in some mega caps. The S&P 500 settled fractionally higher than Friday and the Dow Jones Industrial Average was up more than 100 points.
The mixed trading reflected a wait-and-see mindset ahead of a busy week. Participants receive earnings results from more than 160 S&P 500 companies, including Microsoft (MSFT 391.16, -0.69, -0.2%), Meta Platforms (META 549.74, +2.47, +0.5%), Apple (AAPL 210.14, +0.86, +0.4%), and Amazon.com (AMZN 187.70, -1.29, -0.7%).
There's also a lot of economic data to get through, including the Adv. Q1 GDP Report, the March Personal Income and Spending Report, the April ISM Manufacturing Index, and the April Employment Situation Report.
The mixed bias in the market led to mostly muted moves. None of the S&P 500 sectors moved more than 0.7%. The rate-sensitive utilities (+0.7%) and real estate (+0.7%) sectors led the bunch while the technology sector brought up the rear, logging a 0.3% decline.
The 10-yr yield settled five basis lower at 4.22% and the 2-yr yield settled eight basis points lower at 3.68%.
There was no US economic data of note today.
- Dow Jones Industrial Average: -5.5% YTD
- S&P 500: -6.0% YTD
- S&P Midcap 400: -8.9% YTD
- Nasdaq Composite: -10.1% YTD
- Russell 2000: -11.9% YTD
Looking ahead to Tuesday, market participants receive the following data:
- 8:30 ET: Advance March International Trade in Goods (prior -$147.9 bln), advance March Retail Inventories (prior 0.1%), advance March Wholesale Inventories (prior 0.3%)
- 9:00 ET: February FHFA Housing Price Index (prior 0.2%) and February S&P Case Shiller Home Price Index (Briefing.com consensus 4.7%; prior 4.7%)
- 10:00 ET: April Consumer Confidence (Briefing.com consensus 88.3; prior 92.9) and March Job Openings (prior 7.568 mln)
Treasuries settle with gains
28-Apr-25 15:30 ET
Dow +93.09 at 40206.59, Nasdaq -40.12 at 17342.81, S&P -1.89 at 5523.34
[BRIEFING.COM] The market moved up in recent trading.
The 10-yr yield settled five basis lower at 4.22% and the 2-yr yield settled eight basis points lower at 3.68%.
Looking ahead to Tuesday, market participants receive the following data:
- 8:30 ET: Advance March International Trade in Goods (prior -$147.9 bln), advance March Retail Inventories (prior 0.1%), advance March Wholesale Inventories (prior 0.3%)
- 9:00 ET: February FHFA Housing Price Index (prior 0.2%) and February S&P Case Shiller Home Price Index (Briefing.com consensus 4.7%; prior 4.7%)
- 10:00 ET: April Consumer Confidence (Briefing.com consensus 88.3; prior 92.9) and March Job Openings (prior 7.568 mln)
Equity indices continue move off lows
28-Apr-25 15:05 ET
Dow -17.12 at 40096.38, Nasdaq -84.90 at 17298.03, S&P -13.12 at 5512.11
[BRIEFING.COM] The major equity indices continue to move off session lows reached around mid-day. There was no specific catalyst to account for the move.
The Dow Jones Industrial Average moved up about 30 points over the last half hour, trading fractionally lower than Friday's close. The Nasdaq Composite still trails its peers, trading 0.5% below its prior close.
Market breadth shows a mixed vibe under the surface. Advancers are roughly even with decliners at the NYSE while decliners have an 11-to-10 lead over advancers at the Nasdaq.
S&P 500 slips 0.5% as Colgate, Tractor Supply, and Micron weigh; AbbVie rises on target hikes
28-Apr-25 14:30 ET
Dow -43.94 at 40069.56, Nasdaq -133.08 at 17249.85, S&P -25.36 at 5499.87
[BRIEFING.COM] The S&P 500 (-0.46%) is in second place on Monday afternoon, down about 25 points.
Briefly, S&P 500 constituents Colgate-Palmolive (CL 91.15, -2.76, -2.94%), Tractor Supply (TSCO 48.60, -1.32, -2.64%), and Micron (MU 77.87, -1.91, -2.39%) pepper the bottom of the standings, dragged lower by losses in their respective sectors.
Meanwhile, AbbVie (ABBV 191.48, +5.42, +2.91%) is atop the standings after catching a few sell side target raises this morning.
Gold jumps 1.5% as safe-haven demand rises, dollar slips
28-Apr-25 14:00 ET
Dow -96.08 at 40017.42, Nasdaq -170.15 at 17212.78, S&P -35.29 at 5489.94
[BRIEFING.COM] With about two hours to go on Monday the tech-heavy Nasdaq Composite (-0.98%) has chugged higher in the last half hour, now down less than -1%.
Gold futures settled $49.30 higher (+1.5%) at $3,347.70/oz, driven by renewed safe-haven demand amid ongoing geopolitical and economic uncertainties.
Meanwhile, the U.S. Dollar Index is now down -0.4% to $99.10.
InMode in sell mode after badly missing Q1 EPS estimates on sluggish U.S. demand (INMD)
Shares of Israel-based InMode (INMD) are in sell mode after the maker of minimally invasive and non-invasive medical devices for cosmetic treatments missed 1Q25 EPS expectations and revised its FY25 EPS guidance sharply lower. Two weeks ago, the company cut its Q1 revenue guidance to $77.2-$77.5 mln, but it didn't adjust its EPS outlook, setting the stage for a mixed performance relative to analysts' expectations with earnings falling well short of expectations on in-line revenue.
Although INMD is experiencing strong international growth, especially in Europe where the company achieved record revenue, weakening consumer demand in the U.S. is weighing on top-line growth and margins. Specifically, the company estimates that challenging conditions in the U.S. resulted in a 4-5% decline in operating margins.
- The company, which implements a "razor-and-blade" business model that's similar to Intuitive Surgical (ISRG), was previously benefitting from resilient demand for consumables and services. However, in Q1, revenues from consumables and services fell by 10% yr/yr, reflecting a drop in procedure volumes as consumers hold off on elective procedures amid rising macroeconomic uncertainty and high inflation.
- In addition to softening demand in the U.S., tariffs are another headwind that will negatively impact margins and profits. With U.S. tariffs at their current levels of 10%, IMND estimates that gross margin will be negatively impacted by 2-3%. Tariffs could also pressure sales of capital equipment even further if INMD choses to pass the higher costs through to its customers. Some clinics are already delaying new equipment purchases, which will also eventually hurt sales of consumables.
- On the positive side, strong international growth helped mitigate the overall 3% revenue decline. International markets accounted for a larger share of total revenue in Q1, led by robust demand in Europe.
- Additionally, INMD is optimistic that the recent launches of its Optimus Max and Ignite RF devices in December will help to offset the macro-related headwinds. Optimas Max, an aesthetic platform designed to address various skin concerns, could attract a larger range of patients due to the comprehensive suite of procedures it offers, boosting revenue for clinics and INMD.
INMD's business model is well-positioned to benefit from a secular trend favoring minimally invasive procedures, supporting resilient recurring revenue streams from consumables, but soft capital equipment demand and a pullback in elective procedures in the U.S. are creating near-term headwinds.
Roper's disciplined M&A strategy underpins a solid beat-and-raise Q1 report (ROP)
Roper (ROP), a developer of a wide range of enterprise level software products, reported solid 1Q25 results as EPS increased 8% yr/yr to $4.78, edging past expectations, on healthy revenue growth of 12% to $1.88 bln. As is typical for ROP, acquisitions played a major role in the company's growth -- acquisitions contributed 8% of the total 12% growth -- while they also expanded its recurring revenue base. Bolstered by this growing recurring revenue base and the mission-critical nature of ROP's products, the company raised its FY25 revenue growth outlook to approximately +12% from its prior outlook of approximately +10%.
However, ROP's Q2 EPS guidance of $4.80-$4.84 fell just short of expectations, which is keeping a lid on the stock. While the company's acquisitions feature high deferred revenue and strong gross retention rates (oftentimes above 95%), including its recently completed acquisition of CentralReach, the high M&A activity does come at a cost. Specifically, increasing integration costs are causing some margin compression, as reflected by the 90-bps contraction in adjusted EBITDA margin to 39.3% for Q1. This factor, combined with rising macroeconomic uncertainty, were the likely drivers behind ROP's cautious Q2 EPS outlook.
- ROP doesn't provide specific growth rates for its individual business segments, but its Application Software segment, which is its largest segment, is delivering healthy growth as it benefits from high recurring revenue streams and robust demand for industry-specific offerings. In particular, ROP's legal, professional services, construction, and insurance products are experiencing healthy demand. The acquisition of CentralReach, a cloud-native software provider for Applied Behavior Analysis therapy administration, is expected to further strengthen this segment's growth and margin profile.
- In the Network Software segment, including DAT (freight matching), ConstructConnect (construction bid management), and media measurement applications, ROP is seeing resilient demand, underpinned by the essential nature of these platforms for customers' operations. These solutions are also deeply-embedded into customers' workflows, resulting in significant switching costs and healthy gross retention rates north of 95%.
- Supporting ROP's active M&A strategy is the durability of the company's cash flow generation. On a trailing-twelve-month basis, adjusted operating cash flow climbed by12% to $2.39 bln, largely thanks to ROP's Technology Enabled Products segment. This segment combines hardware with software and analytics, focusing on niche markets within the water/wastewater, healthcare, industrial, and life sciences spaces.
ROP's solid 1Q25 results solidify its standing as a consistent generator of double-digit revenue growth, recurring revenue, and strong cash flow. The company’s disciplined M&A strategy and focus on mission-critical, high-retention software businesses underpin its resilience and long-term growth prospects, even amid macroeconomic uncertainty. While the slight downside Q2 EPS guidance is a bit disappointing, ROP's raised FY25 guidance highlights its confidence in continued execution and the durability of its business model.
Domino's US comps a bit soft, but recent UberEats and DoorDash deals should help in 2H (DPZ)
Domino's Pizza (DPZ) is trading roughly flat despite reporting strong Q1 EPS upside this morning. Revenue rose 2.5% yr/yr to $1.11 bln, which was generally in-line. We think the main concern was its US comp decline. A positive was DPZ noting that its US business sources most of its food products from within the country, so it's not expecting tariffs to have a material impact on profits.
- Let's dig in a bit on US comps. At -0.5% in Q1, this was slightly below internal expectations. It also continues its recent trend of declining comps following +0.4% in Q4, +3.0% in Q3, and +4.8% in Q2. Its US carryout comps were up +1%, while its delivery comps was down -1.5% in Q1. DPZ says its delivery business continues to be impacted by macro pressures that are impacting the low income consumer.
- In terms of comp guidance and despite the slight downside in Q1, DPZ reaffirmed its expectation that US comps in 2025 will be +3% and that it will be lower in the first half compared to the back half. However, DPZ added a caveat, that if macro pressures persist, it could put pressure on achieving this number. DPZ continues to expect +1-2% international comps as there continues to be macro and geopolitical pressures around the globe.
- DPZ launched what it describes as its biggest new menu item in its history in early March: Parmesan Stuffed Crust Pizza. DPZ admits there was a large gap in its menu relative to other pizza chains. While timing meant it did not have a meaningful impact on Q1, DPZ is very happy with how the launch has gone thus far. It has seen a high mix of orders coming with a stuffed crust pizza. DPZ is excited about the impact this product will have in 2025 and beyond.
- Another big recent change for DPZ has been its delivery system. It previously had used only its own drivers. However, last year it signed a deal with UBER Eats and then a few weeks ago it announced a partnership with DoorDash. It still also uses its own drivers, but these services allow Domino's to reach new customers. DPZ began piloting with DoorDash in a small number of stores in Q1 with a nationwide US launch expected in May 2025 and across Canada later in 2025. DPZ expects a meaningful impact from this new partnership in the back half of the year.
Overall, this was a somewhat disappointing quarter for Domino's Pizza, but not all that surprising. The company has been signaling for a while that 1H25 comps would be weaker. As such, we think investors are bracing for weak US comps in Q2, but then some improvement in Q3. We commend DPZ for getting with the times and partnering up with the major delivery aggregators, this should act as a tailwind in 2H25 especially when year ago comps get easier. This should also help its struggling delivery segment. Finally, we suspect we will hear a similar story about a pressured consumer from other QSR names that are reporting this week and next.
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. |
