Market Snapshot
| Dow | 40946.85 | +277.49 | (0.68%) | | Nasdaq | 17829.00 | +382.66 | (2.19%) | | SP 500 | 5638.26 | +69.20 | (1.24%) | | 10-yr Note |
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| | NYSE | Adv 1606 | Dec 1101 | Vol 416.0 mln | | Nasdaq | Adv 2473 | Dec 1814 | Vol 6.43 bln |
Industry Watch
| Strong: Technology, Communication Services, Utilities, Discretionary, Energy |
| | Weak: Health Care, Consumer Staples, Materials |
Moving the Market
-- Positive response to earnings from Microsoft (MSFT) and Meta Platforms (META)
-- Gains in other mega caps
-- Ongoing momentum after rally off April lows
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Treasuries settle with losses
01-May-25 15:35 ET
Dow +277.49 at 40946.85, Nasdaq +382.66 at 17829.00, S&P +69.20 at 5638.26
[BRIEFING.COM] The major indices are holding steady ahead of the close.
Treasuries settled with losses. The 10-yr yield was up five basis points to 4.23% and the 2-yr yield settled eight basis points higher at 3.70%.
Looking ahead to Friday, market participants receive the following data:
- 8:30 ET: April Nonfarm Payrolls (Briefing.com consensus 130,000; prior 228,000), Nonfarm Private Payrolls (Briefing.com consensus 125,000; prior 209,000), Average Hourly Earnings (Briefing.com consensus 0.3%; prior 0.3%), Unemployment Rate (Briefing.com consensus 4.2%; prior 4.2%), and Average Workweek (Briefing.com consensus 34.2; prior 34.2)
- 10:00 ET: March Factory Orders (Briefing.com consensus 4.1%; prior 0.6%)
AAPL, AMZN trade up ahead of earnings
01-May-25 15:05 ET
Dow +230.90 at 40900.26, Nasdaq +356.92 at 17803.26, S&P +62.65 at 5631.71
[BRIEFING.COM] The market moved mostly sideways over the last half hour.
Apple (AAPL 212.57, +0.06, +0.03%) is fractionally higher ahead of its earnings report this afternoon. Amazon.com (AMZN 190.14, +5.72, +3.1%) shares are sharply higher ahead of the earnings report after the close.
Amgen (AMGN 284.96, -5.95, -2.1%) is another notable name reporting earnings, trading down along with other health care stocks after Eli Lilly's (LLY 811.37, -87.57, -9.7%) results.
S&P 500 rises 1.15% as Carrier, Quanta, IDEXX jump; Becton Dickinson drops on outlook cut
01-May-25 14:30 ET
Dow +232.13 at 40901.49, Nasdaq +364.58 at 17810.92, S&P +64.08 at 5633.14
[BRIEFING.COM] The S&P 500 (+1.15%) is in second place on Thursday afternoon, up about 64 points.
Briefly, S&P 500 constituents Carrier Global (CARR 69.76, +7.22, +11.54%), Quanta Services (PWR 322.93, +30.24, +10.33%), and IDEXX Labs (IDXX 471.00, +38.35, +8.86%) pepper the top of the standings following earnings.
Meanwhile, Becton Dickinson (BDX 175.63, -31.46, -15.19%) is today's top laggard after the company cut its full-year earnings guidance, citing reduced global research funding and the impact of tariffs, while revenue also missed estimates.
Gold sinks nearly 3% as stronger dollar, easing trade tensions undercut safe-haven demand
01-May-25 14:00 ET
Dow +212.88 at 40882.24, Nasdaq +353.85 at 17800.19, S&P +59.18 at 5628.24
[BRIEFING.COM] With about two hours to go on Thursday, the tech-heavy Nasdaq Composite (+2.03%) is holding a commanding lead up more than 350 points.
Gold futures settled $96.90 lower (-2.9%) at $3,222.20/oz, mostly due to a strengthening U.S. dollar and easing global trade tensions, which diminished gold's appeal as a safe-haven asset. President Donald Trump's recent statements about potential trade agreements with India, South Korea, and Japan helped alleviate trade war concerns, contributing to the reduced demand for gold.
Meanwhile, the U.S. Dollar Index is now up +0.6% to $100.26.
Dow gains 260 points despite lagging major averages; Microsoft, NVIDIA lead while Amgen drags
01-May-25 13:30 ET
Dow +260.00 at 40929.36, Nasdaq +372.24 at 17818.58, S&P +64.98 at 5634.04
[BRIEFING.COM] The Dow Jones Industrial Average (+0.64%) is in last place among the major averages, yet holds gains of 260 points.
A look inside the DJIA shows that Microsoft (MSFT 429.60, +34.34, +8.69%), NVIDIA (NVDA 113.70, +4.78, +4.39%), and Amazon (AMZN 190.04, +5.62, +3.05%) are holding solid gains.
Meanwhile, Amgen (AMGN 284.44, -6.48, -2.23%) is underperforming.
The DJIA is up about +2.0% week-to-date.
Qualcomm posts solid Q2 results on Auto and IoT strength, but soft guidance slams shares (QCOM)
Qualcomm (QCOM) delivered solid 2Q25 results, exceeding EPS and revenue expectations, driven by robust demand across each of its core markets -- handsets (+12%), automotive (+59%), and IoT (+27%) -- highlighting the momentum behind its AI-enabled chipsets. However, the upside Q2 results are being overshadowed by QCOM's disappointing in-line Q3 revenue and EPS guidance, which reflect tariff-related uncertainties and softer chip demand.
- Over the past several years, QCOM has focused on diversifying its revenue streams away from the volatile and highly seasonal handset market, but handsets still account for approximately 60% of its total revenue. Driven by healthy demand for premium-tier smartphones incorporating QCOM's Snapdragon 8 Gen series with on-device AI capabilities, handset revenue grew by 12% yr/yr to $6.5 bln. The segment benefited from a recovering smartphone market, particularly in China, where sales are rebounding.
- Strong partnerships with smartphone OEMs, such as Samsung and Xiaomi, coupled with new AI-powered features like GenAI processing, boosted demand. The healthy handset growth highlights QCOM's dominance in premium chipsets, but its reliance on China exposes it to significant tariff risks.
- The standout performer in Q2 was Automotive with the 59% surge in revenue continuing a multi-quarter trend of near-triple-digit growth, fueled by the Snapdragon Digital Cockpit and ADAS platforms. Rising adoption of connected and autonomous vehicle technologies, with design wins across 20 of the top 25 global automakers, is driving the robust growth. Furthermore, high-margin software and licensing deals, alongside multi-year contracts, are enhancing QCOM's profitability.
- Although down a bit from last quarter's 36% surge, revenue growth was still very strong for IoT at 27%, driven by demand for edge AI and connected devices in industrial and consumer applications. The company's Snapdragon X Elite platform, designed for Windows-based PCs, continues to gain traction due to its AI capabilities, power efficiency, and 5G connectivity. Major OEMs like Microsoft (MSFT), Lenovo, and HP have launched Snapdragon-powered devices (Surface Pro 11, Lenovo Yoga Slim 7x), with over 20 PC models released in the past year.
- This good news, though, is clouded over by QCOM's disappointing Q3 guidance. U.S. tariffs on Chinese imports are expected to disrupt QCOM's supply chain and increase costs, with management noting potential impacts on the handset and IoT segments. QCOM's exposure to China, which accounts for roughly half of its revenue, is a double-edged sword, driving significant revenue growth, but also amplifying tariff-related risks.
QCOM's Q1 results showcased robust 17% revenue growth, buoyed by double-digit increases in each of its main segments, but tariffs and a soft Q3 outlook are triggering a steep selloff in the stock. The company's AI-driven diversification and momentum in the automotive market are key positives that should support solid long-term growth. However, near-term risks associated with trade policies may keep a lid on the stock for the foreseeable future.
McDonald's reports weakest US comp since the pandemic, but stock holding up well (MCD)
McDonald's (MCD) is trading roughly flat after reporting mostly in-line Q1 results this morning. The real shocker was that US comps declined -3.6%, its worst comp number of any quarter since the pandemic. The main reason is that lower income consumers are constrained and nervous about their near term outlook.
- Global comps came in at -1.0%, a decline from +0.4% in Q4. MCD has now reported negative global comps in three of the past four quarters, which is a bit concerning (-1.5% in Q3 and -1.0% in Q2). MCD was lapping a decent +1.9% global comp in 1Q24 but it is still a sign of a weak consumer not just in the US but globally. Industry traffic fell more than anticipated in several of its large markets, including the US.
- Turning to US comps, it was rough at -3.6%. Overall QSR industry traffic from low income consumers was down nearly double digits yr/yr. Unlike a few months ago, QSR traffic from middle income consumers also fell nearly as much, which MCD sees as a clear indication that the economic pressure on traffic has broadened. Traffic growth from higher income consumers remains solid. It's clear that low and middle income consumers are being weighed down by inflation and heightened anxiety.
- In response, MCD plans to keep focusing on value. It now has EDAP (everyday affordable price) menus and EDAP $5 meal bundles in each of its big five markets. In early January in the US, MCD launched its McValue platform, which is a new branded equity similar to the Saver menu in the UK and the Loose Change menu in Australia, both of which have been in place for over 10 years.
- In terms of menu and promotions, MCD is encouraged by the consumer response to its Minecraft movie campaign. Also, MCD is excited about some new menu items, including the nationwide launch of McCrispy Chicken strips in the US.
Investors seem to be taking the rough US comp number in stride, which surprises us a bit. It seems investors were prepared for a weak result in Q1. We also think the overall strong market today ius helping MCD shares. Looking ahead, MCD will be lapping negative yr/yr global comps in the next two quarters, which may help comps. Another positive is that MCD believes its guest count and market share performance will improve from the Q1 low point, driven by its emphasis on value.
Meta Platforms' earnings surge in Q1 as AI tools fuel digital ad dominance (META)
Meta Platforms (META) delivered a stellar 1Q25 earnings report, surpassing expectations with robust advertising revenue growth and a significant EPS beat, driven by AI-powered ad optimization and sustained user engagement across its 3.43 bln daily active users. The company reported $42.31 bln in revenue, up 16.1% yr/yr, and EPS of $6.43, exceeding estimates by nearly 23%, fueled by a healthy 41% operating margin. META’s Q2 revenue guidance of $42.5–$45.5 bln, also above consensus, signals confidence in continued ad demand driven by its AI-powered tools, while its lowered FY25 opex guidance indicates a pullback in spending for its loss-generating Reality Labs segment.
However, elevated FY25 capex guidance of $64-$72 mln, reflecting aggressive AI and infrastructure investments, poses a risk to META's profitability, especially if global ad spending weakens amid strengthening macroeconomic pressures.
- META’s Q1 EPS increased 37% yr/yr, propelled by a combination of strong revenue growth, operational efficiencies, and disciplined capital allocation. Advertising revenue, which accounts for the bulk of total revenue (approximately 98%), grew 16% yr/yr to $41.39 bln, easily outpacing Alphabet's (GOOG) Q1 ad revenue growth of 8.5%. Operating margin expanded by 3 ppts yr/yr to 41%, reflecting cost discipline in the Family of Apps segment. Once again, the main drag on earnings was Reality Labs, which posted an operating loss of $(4.21) bln.
- The robust ad revenue growth reinforces META's leadership position in digital advertising, providing solid evidence that its massive AI investments are paying off. AI tools, particularly the Llama models, have been instrumental in driving this strong growth, enhancing ad targeting and efficiency. AI algorithms, including Llama 3, have improved ad relevance, increasing return on ad spend (ROAS) for advertisers.
- META's strong positioning with advertisers is also illustrated by the 5% increase in ad impressions. Although growth slowed a bit from 6% last quarter, ad impressions are still benefitting from increased user time spent, driven by AI-curated content. Notably, Instagram Reels engagement is up by about 20% yr/yr. Meanwhile, average price per ad jumped by 10%, up from 6% last quarter, highlighting the company's pricing power through AI-driven ad efficiency and premium placements. AI tools, including Llama 3, are enhancing ad relevance and return on ad spend (ROAS) for advertisers.
- META's aggressive AI push will continue in FY25 with the company raising its capex guidance to $64-$72 bln, up from $60-$65 bln. In the near-term, elevated AI capex and ongoing Reality Lab losses -- $15-$20 bln in losses projected for FY25 -- will create a profitability headwind. However, META's AI investments are driving ad efficiency and supporting new revenue streams, such as Threads and WhatsApp. By 2027, WhatsApp's monetization is expected to reach $10 bln.
META's impressive Q1 earnings report underscores its dominance in digital advertising, with AI-driven ad growth, operational efficiency, and a 6% increase in family daily active people (DAP) fueling an sizable EPS beat. For FY25, tailwinds from ad resilience and AI monetization are tempered by regulatory, macro, and competitive headwinds, but META is positioned for long-term growth, bolstered by genAI and new platforms like Threads.
Microsoft surges higher on strong Azure results, tops $70 bln in revs for first time (MSFT)
Microsoft (MSFT +9%) is making a big move higher following its bullish Q3 (Mar) report last night. The software giant posted it largest EPS beat in the last six quarters. Revenue rose a robust 13.3% yr/yr to $70.07 bln, which was better than expected and was a milestone by topping $70 bln for the first time ever. MSFT also guided Q4 (Jun) revs above expectations. All three segments performed better than expected, but Azure was the star of the show.
- Let's start with Azure, which grew +35% CC (constant currency), well above prior guidance of +31-32% CC after coming in at the low end of guidance in Q2. Azure AI services brought capacity online faster than expected. However, the real outperformance in Azure in Q3 was its non-AI business. The non-AI side had execution challenges in Q2, but turned that around in Q3.
- Not only did Azure outperform in Q3, but Azure's Q4 (Jun) guidance of +34-35% CC was also ahead of street estimates, driven by strong demand. In non-AI services, MSFT expects continued healthy growth. And in AI services, while the company continues to bring data center capacity online as planned, demand is growing a bit faster. Therefore, MSFT now expects to have some AI capacity constraints beyond June.
- Its two other segments, Productivity and Business Processes and More Personal Computing also came in ahead of prior guidance. PBP was driven by LinkedIn, Microsoft 365 Commercial products, and Microsoft 365 Consumer. However, the Talent Solutions business continues to be impacted by weakness in the hiring market. MPC had better than expected results across all businesses.
- In terms of the upside Q4 guidance, MSFT said that, through April, demand signals across its Commercial businesses as well as in LinkedIn, Gaming and Search have remained consistent. In Windows OEM, MSFT assumes the elevated inventory levels from Q3 will come down in Q4. As a result, MSFT has widened its guidance range in MPC to account for some of this variability. On a final note, with the weakening of the US dollar, MSFT now expects an FX tailwind of 1 pt, it has usually been a headwind.
Overall, this was a great bounce back quarter for MSFT following weakish DecQ results. The Azure result and guidance were the real standout metrics. It is rare to see a 3 pt upside with Azure. Also, the guidance should put fears to rest about clients pulling back on cloud deployments. The Azure numbers are also great news for Amazon (AMZN) and its AWS segment, which reports tonight.
Booking Holdings trades flat despite Q1 upside, seeing some changes in certain travel patterns
Booking Holdings (BKNG +0.8%) is trading roughly flat despite the online travel reservation giant reporting big upside with its Q1 report last night. Both revenue and adjusted EBITDA exceeded the high end of prior guidance. BKNG also guided to in-line revs for Q2. Despite the impressive results, we think some metrics and cautious commentary on the call are offsetting the strong results to some degree.
- In terms of Q1 metrics, room nights grew 7.2% yr/yr to 319 mln. This was BKNG's first quarter to exceed the 300 mln market, so that was an important milestone. This also slightly exceeded the high end of prior guidance. However, the 7.2% growth was below yr/yr growth in Q3 (+8.1%) and Q4 (+13.2%). It was a similar story with rental car days. Airline tickets saw growth of 44.8% to 16 mln units, which was down from Q4 on a yr/yr basis.
- While BKNG was encouraged by its Q1 results and the relative stability of trends seen thus far in Q2, the company recognizes the current geopolitical/macro uncertainty. There are concerns about the strength of consumer demand. However, BKNG believes its global diversification positions it well to navigate potential changes. BKNG remains confident in the long-term outlook for the travel industry.
- BKNG has observed notable changes in certain travel patterns. For example, it saw a moderation in trends for inbound travel into the US, particularly from bookers in Canada and to a lesser extent from Europe. However, it did see an improvement in trends in other travel corridors resulting in stable growth overall.
- Also, while it saw a yr/yr increase in length of stay on a global basis, it saw a decrease in length of stay in the US which could indicate that US consumers are becoming more careful with their spending. Looking ahead to Q2, BKNG continues to see stable travel demand trends but that could change.
Overall, BKNG's business seems to be holding up in the near term, but BKNG sounded cautious that view could change. This caution is weighing on other travel stocks: ABNB -4.5%, EXPE -3.6%.
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