Market Snapshot
| Dow | 40527.62 | +300.03 | (0.75%) | | Nasdaq | 17461.32 | +95.18 | (0.55%) | | SP 500 | 5560.83 | +32.07 | (0.58%) | | 10-yr Note | +3/32 | 4.17 |
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| | NYSE | Adv 1728 | Dec 933 | Vol 1.0 bln | | Nasdaq | Adv 2596 | Dec 1699 | Vol 13 bln |
Industry Watch
| Strong: Real Estate, Health Care, Materials, Information Technology, Industrials, Utilities |
| | Weak: Energy |
Moving the Market
-- Continued buying interest
-- Digesting big batch of earnings news
-- Waiting on influential events this week
-- Uncertainty around tariffs still in play
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Closing Summary
29-Apr-25 16:30 ET
Dow +300.03 at 40527.62, Nasdaq +95.18 at 17461.32, S&P +32.07 at 5560.83
[BRIEFING.COM] The stock market exhibited choppy action in the early going, but finished on a high note. The Dow Jones Industrial Average was 300 points higher than Monday's close, and the S&P 500 and Nasdaq Composite each settled 0.6% higher than Monday.
The upside bias was driven by ongoing momentum following solid gains of late. With today's move, the S&P 500 is less than 1.0% away from its 50-day moving average (5,613).
Early trepidation was related to uncertainty around tariffs after Treasury Secretary Bessent indicated that the U.S. will be speaking to at least 17 important trade partners over the next few weeks. That figure doesn't include China, which indicated that there are currently no consultations or negotiations with the U.S. on tariffs.
In the afternoon, President Trump signed an executive order to prevent the cumulative application of overlapping tariffs on certain imported goods—such as automobiles and auto parts—when multiple tariff programs target the same item. The news was welcome after this morning's data reflected impact from tariff concerns in the form of dropping consumer confidence.
The April Consumer Confidence Index slumped to 86.0 (Briefing.com consensus 88.3) from 93.9 in March, pulled down by the lowest reading for the Expectations Index (54.4) since October 2011; meanwhile, average 12-month inflation expectations jumped to 7.0% from 6.0%, hitting their highest level since November 2022.
Only one S&P 500 sector closed in the red while the financial (+1.0%), materials (+0.9%), and consumer staples (+0.8%) sectors led the pack. The energy sector was alone in negative territory amid falling oil prices ($60.42/bbl, -1.65, -2.7%).
Earnings news since yesterday's close garnered mixed responses. General Motors (GM 46.94, -0.30, -0.6%) was a losing standout after reporting results and signaling that its initial full-year guidance does not contemplate the potential impact of tariffs.
Honeywell (HON 211.49, +10.83, +5.4%) and Sherwin-Williams (SHW 348.13, +15.93, +4.8%) were among the earnings-related winners.
Reviewing today's economic data:
- March Adv. Intl. Trade in Goods -$162.0 bln; Prior was revised to -$147.8 bln from -$147.9 bln
- March Adv. Retail Inventories -0.1%; Prior was revised to 0.1% from 0.1%
- March Adv. Wholesale Inventories 0.5%; Prior was revised to 0.5% from 0.3%
- March FHFA Housing Price Index 0.1% ; Prior was revised to 0.3% from 0.2%
- February S&P Case-Shiller Home Price Index 4.5% (Briefing.com consensus 4.7%); Prior 4.7%
- April Consumer Confidence 86.0 (Briefing.com consensus 88.3); Prior was revised to 93.9 from 92.9
- The key takeaway from the report is that the drop in confidence was guided primarily by the decline in consumers' outlook, which was driven by worsening views of business conditions, employment prospects, and future income. The drop in confidence was broad-based across all age groups and most income groups.
- March JOLTs - Job Openings 7.192 mln; Prior was revised to 7.480 mln from 7.568 mln
Looking ahead to Wednesday, market participants receive the following data:
- 7:00 ET: Weekly MBA Mortgage Index (prior -12.7%)
- 8:15 ET: April ADP Employment Change (Briefing.com consensus 128,000; prior 77,000)
- 8:30 ET: Q1 Employment Cost Index (Briefing.com consensus 0.9%; prior 0.9%), advance Q1 GDP (Briefing.com consensus 0.4%; prior 2.4%), advance Q1 GDP Deflator (Briefing.com consensus 3.1%; prior 2.3%)
- 9:45 ET: April Chicago PMI (Briefing.com consensus 46.0; prior 47.6)
- 10:00 ET: March Pending Home Sales (Briefing.com consensus -0.2%; prior 2.0%); March Personal Income (Briefing.com consensus 0.4%; prior 0.8%), Personal Spending (Briefing.com consensus 0.4%; prior 0.4%), PCE Prices (Briefing.com consensus 0.0%; prior 0.3%), and Core PCE Prices (Briefing.com consensus 0.1%; prior 0.4%)
- 10:30 ET: Weekly crude oil inventories (prior +244,000)
Stocks sit near highs
29-Apr-25 15:30 ET
Dow +366.98 at 40594.57, Nasdaq +105.81 at 17471.93, S&P +37.41 at 5566.18
[BRIEFING.COM] The Dow Jones Industrial Average, the S&P 500, and the Nasdaq Composite trade just off session highs.
Treasuries settled the session with gains. The 10-yr yield dropped four basis points to 4.17% and the 2-yr yield settled two basis points lower at 3.66%.
Looking ahead to Wednesday, market participants receive the following data:
- 7:00 ET: Weekly MBA Mortgage Index (prior -12.7%)
- 8:15 ET: April ADP Employment Change (Briefing.com consensus 128,000; prior 77,000)
- 8:30 ET: Q1 Employment Cost Index (Briefing.com consensus 0.9%; prior 0.9%), advance Q1 GDP (Briefing.com consensus 0.4%; prior 2.4%), advance Q1 GDP Deflator (Briefing.com consensus 3.1%; prior 2.3%)
- 9:45 ET: April Chicago PMI (Briefing.com consensus 46.0; prior 47.6)
- 10:00 ET: March Pending Home Sales (Briefing.com consensus -0.2%; prior 2.0%); March Personal Income (Briefing.com consensus 0.4%; prior 0.8%), Personal Spending (Briefing.com consensus 0.4%; prior 0.4%), PCE Prices (Briefing.com consensus 0.0%; prior 0.3%), and Core PCE Prices (Briefing.com consensus 0.1%; prior 0.4%)
- 10:30 ET: Weekly crude oil inventories (prior +244,000)
Earnings after the close
29-Apr-25 15:05 ET
Dow +348.56 at 40576.15, Nasdaq +111.09 at 17477.21, S&P +35.85 at 5564.62
[BRIEFING.COM] The major equity indices are moving sideways near session highs. The S&P 500 is about 35 points higher and the Nasdaq Composite shows a 0.7% gain.
Many stocks participated in upside moves, leading the Invesco S&P 500 Equal Weight ETF (RSP) to trade 0.6% higher.
There's a huge slate of earnings news after today's close, including results from Visa (V 340.72, +3.14, +0.9%), Mondelez (MDLZ 65.30, +0.20, +0.3%), Starbucks (SBUX 83.98, +0.08, +0.1%), ONEOK (OKE 87.79, -0.08, -0.1%), Booking Holdings (BKNG 4903.03, +13.08, +0.3%), and Caesar's Entertainment (CZR 27.91, -0.15, -0.5%).
S&P 500 near highs; Zebra, SBA, Pfizer jump on earnings, Regeneron drops
29-Apr-25 14:25 ET
Dow +333.28 at 40560.87, Nasdaq +114.78 at 17480.90, S&P +35.25 at 5564.02
[BRIEFING.COM] The S&P 500 (+0.64%) is up about 35 points this afternoon, hovering just off session highs.
Briefly, S&P 500 constituents Zebra Tech (ZBRA 259.20, +15.71, +6.45%), SBA Comm (SBAC 236.81, +13.53, +6.06%), and Pfizer (PFE 23.81, +0.76, +3.30%) are some of today's top performers following earnings.
Meanwhile, Regeneron Pharma (REGN 566.14, -44.72, -7.32%) is underperforming after missing Q1 earnings expectations this morning.
Gold retreats as easing trade tensions diminish safe-haven appeal; U.S. dollar edges higher
29-Apr-25 14:00 ET
Dow +361.21 at 40588.80, Nasdaq +110.62 at 17476.74, S&P +36.34 at 5565.11
[BRIEFING.COM] The stock market is at HoDs in recent trading, the tech-heavy Nasdaq Composite (+0.64%) up about 110 points.
Gold futures settled $13.90 lower (-0.4%) at $3,333.60/oz; the retreat followed easing trade tensions between the U.S. and its partners, notably with India and China, which diminished gold's appeal as a safe-haven asset. U.S. Treasury Secretary Scott Bessent highlighted progress in trade negotiations, including tariff exemptions, while the U.S. administration signaled a possible reduction in automobile-related tariffs. Despite these developments, concerns about a potential global recession persist, as indicated by recent polling.
Meanwhile, the U.S. Dollar Index is up about +0.2% to $99.16.
Spotify out of tune as premium subscriber growth is overshadowed by soft Q2 guidance (SPOT)
Spotify (SPOT) is out of tune today after badly missing 1Q25 EPS expectations and issuing downside Q2 revenue guidance of €4.3 bln, halting the stock's long-standing bullish momentum. Staying true to recent form, the premium subscription business performed quite well as strong subscriber gains and price hikes drove a 16% yr/yr increase in premium revenue to €3.77 bln. Those price hikes pushed ARPU higher, which, alongside favorable music content costs, drove gross margin higher by 400-bps yr/yr to 31.6%.
However, social charges of €76.0 mln came in significantly higher than anticipated and offset a decline in personnel and marketing costs, leading to the EPS miss. Social charges, which refer to payroll taxes associated with employee salaries and benefits, were above forecast due to share appreciation during the quarter. More worrisome, though, is SPOT's soft Q2 revenue guidance that suggests a slowdown in advertising spending is underway, and the downside MAU forecast of 689 mln, representing a yr/yr increase of 10%.
- Although SPOT has made major strides in profitability over the past few years, the company has now missed EPS expectations in each of the past three quarters. This underperformance relative to expectations puts SPOT's execution under the spotlight. Unfavorable FX impacts are also complicating matters as a strengthening Euro against other currencies is creating a top-line headwind that's funneling down the income statement.
- The good news is that premium subscriber growth remains robust at +12% yr/yr to 268 mln, marking SPOT's second highest Q1 net addition in its history. Even as the company hikes prices in various markets, churn has been minimal, indicating strong pricing power. Whether SPOT begins to experience a slowdown in premium subscriber growth, and/or an increase in churn in the coming quarters, will be closely monitored as consumers continue to tighten their budgets.
- Total MAU's grew by 10% yr/yr to 678 mln, matching SPOT's expectations, highlighting the stickiness of the platform and the company's ability to attract new users. The freemium model also continues to be an effective funnel for acquiring premium subscribers.
SPOT's Q1 report revealed strong execution in key areas like premium subscriber growth and gross margin expansion, suggesting the company's focus on profitability continues to yield positive results. However, the downside Q2 revenue guidance shows that SPOT is not immune to macroeconomic headwinds and currency fluctuations.
Brinker heads sharply lower despite MarQ upside; upside was not the blowout we saw in DecQ (EAT)
Brinker Intl (EAT -14%) is trading sharply lower despite reporting EPS upside with its Q3 (Mar) earnings report this morning. This restaurant operator (Chili's, Maggiano's) reported a huge 115% yr/yr jump in adjusted EPS to $2.66, which was solid upside, but not the blowout we saw in Q2 (Dec). Revenue rose a healthy 27.2% yr/yr to $1.43 bln, which also was much better than expected. EAT also increased FY25 EPS and revenue guidance.
- The metric that really jumped out at us was Q3 same-restaurant comps, which came in at a whopping +28.2% (Chili's +31.6%; Maggiano's +0.4%), which was even a bit better than Q2's +27.4% (Chili's +31.4%; Maggiano's +1.8%). EAT said that Chili's comps were driven primarily by continued increases in traffic, supported by advertising that highlights value and encourages guest trial. Operational improvements also contributed to driving repeat visits.
- Leveraging these higher sales, EAT saw improved margins. Restaurant operating margin (non-GAAP) rose to 18.9% from 14.2% a year ago. Regarding the menu, EAT is pretty excited about its recently launched Big QP, a burger pack with 85% more beef than a quarter pound burger. It joined the Big Smasher on the 3 for Me menu at the $10.99 price point.
- Following in its footsteps of turning around the Chili's brand, EAT is seeking to bring the magic back to Maggiano's by simplifying and elevating the menu, improving service levels, etc. It's also stopping unprofitable discounting that's not consistent with the Maggiano's brand. Discounting has been embedded in the business for years and EAT wants to change that.
Despite the good report, the stock is down sharply. We are not seeing anything as super negative although the EPS upside in Q3 was much narrower than Q1 and Q2. Perhaps investors were let down a bit by that. Regardless, while other chains have been struggling, its Chili's brand has been impressive in recent quarters.
Paring down the menu makes it simpler and makes employees more efficient. Also, we really think EAT has curated its value offering and has gotten it down to a science with its 3-for-Me offering. Consumers want value right now and Chili's is a great deal. Briefing.com has been profiling Brinker for some time and we have wondered why the stock had been a laggard. However, it has been making up for lost time.
Coca-Cola defies headwinds with strong 1Q25, demonstrating pricing power and resiliency (KO)
While contending with currency headwinds and sluggish conditions across its developed markets, Coca-Cola (KO) edged past 1Q25 EPS and revenue expectations, displaying the company's resiliency and solid execution. Relative to rival PepsiCo (PEP), which fell just short of Q1 EPS estimates last Thursday, KO delivered stronger results as its pricing power and cost discipline underpinned its outperformance. KO also reaffirmed its FY25 EPS growth and organic revenue growth guidance of 2-3% and 5-6%, respectively, highlighting management's confidence in sustaining growth amid intensifying macroeconomic pressures.
- Similar to the past several quarters, KO relied on pricing strength to offset inflationary pressures and currency headwinds -- although, pricing momentum slowed in Q1. Following increases of 7-8% in 3Q24 and 9% in 4Q24, price/mix moderated in Q1, up 5%, as the impact from markets experiencing intense inflation contributed less this quarter. For instance, in the EMEA region, price/mix was higher by 3% in Q1 compared to 11% in Q4.
- In terms of volume, KO continues to generate stable, albeit modest, growth. Global unit case volume grew 2% yr/yr, down a tick from Q4's growth of 3%, supported by strong performances in emerging markets like India, China, and Brazil. In more developed markets, such as North America, KO is experiencing subdued demand as consumers rein in discretionary spending and turn to more value conscious shopping behaviors. Unit case value grew by just 1% in North America in Q1.
- Due to the deceleration in price/mix and volume growth, organic revenue growth also slowed to 6% from 14% last quarter, signaling some moderation in top-line momentum. Again, relative to PEP, which generated organic revenue growth of 1.2% in Q1, KO's growth still looks solid.
- Non-GAAP operating margin expanded again, improving by 140 bps yr/yr to 33.8%, bolstered by organic revenue growth, cost management, and strategic marketing spend timing. KO does not explicitly state what its operating expenses totaled in Q1, but the substantial 71% increase in operating income suggests that KO kept a tight lid on costs.
Despite facing headwinds such as currency fluctuations and softening consumer spending patterns in developed markets, KO demonstrated its resiliency by generating robust operating income growth, showcasing its pricing power and solid cost management efforts. The strong performance underscores KO's ability to navigate difficult business climates and deliver solid results.
General Motors pulls back despite upside on guidance concerns and general uncertainty (GM)
General Motors (GM -2%) is trading lower after the automotive giant reported upside Q1 results this morning. GM posted upside for both EPS and revenue. However, the key takeaway is that GM said its FY25 guidance does not contemplate the potential impact of tariffs. GM does not appear to be formally suspending guidance or withdrawing guidance, but it does sound like it's under review.
- The other notable takeaway is that GM pushed back its Q1 earnings call from this morning to Thursday morning. The company wants to get further clarity on the evolving landscape regarding tariffs on auto components before holding a call. President Trump is holding a rally today in Michigan to mark the first 100 days of his second term. It is possible that he may announce some tariff relief. This may be why GM is holding off on the call.
- While this makes sense, we suspect that it is making investors a bit nervous and perhaps adding to the weakness in the shares today. Briefing.com will post details from that call on Thursday morning.
- Let's dig into the Q1 results a bit. Unfortunately, we did not get the same level of detail we normally get from GM as the press release is condensed and the call usually provides good color. With that said, revenue rose 2.3% yr/yr to $44.02 bln, which was a bit better than expected. However, the 2.3% growth was GM's smallest yr/yr growth since 4Q23. In fairness, GM was lapping a strong 1Q24 which was right after the UAW strike ended.
- Adjusted EBIT is the most closely followed metric. It fell 9.8% yr/yr but rose 39% sequentially to $3.49 bln. Again, the year ago result was quite strong with healthy margins. Adjusted EBIT margin fell to 7.9% from 9.0% a year ago. In January, GM had guided to FY25 adjusted EBIT of $13.7-15.7 bln and adjusted EPS of $11.00-12.00. However, it sounds like those numbers should no longer be relied upon, at least for now. We hope to get clarification on the call on Thursday.
Unfortunately, we did not get a lot of color from GM today on its Q1 report and, more importantly, its outlook for Q2 and FY25. We will have to wait for Thursday's call to get a fuller picture. However, we believe it's likely that investors are nervous that GM will formally suspend guidance or possibly lower guidance in the near future. The stock has been trending lower in recent months as investors await more certainty on tariffs.
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.
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