| | | Market Snapshot
| Dow | 42410.10 | +1160.72 | (2.81%) | | Nasdaq | 18708.34 | +779.43 | (4.35%) | | SP 500 | 5844.19 | +184.28 | (3.26%) | | 10-yr Note |
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| | NYSE | Adv 2020 | Dec 660 | Vol 1.3 bln | | Nasdaq | Adv 3248 | Dec 1184 | Vol 10 bln |
Industry Watch
| Strong: Consumer Discretionary, Technology, Energy, Communication Services, Materials, Industrials |
| | Weak: Utilities |
Moving the Market
-- New developments in the trade war fueling hopes of further de-escalation
-- U.S. will drop tariffs on China from 145% to 30% and China will drop tariffs on U.S. from 125% to 10% for a 90-day period
-- Short-covering activity and fear of missing out on further gains
| Closing Summary
12-May-25 16:30 ET
Dow +1160.72 at 42410.10, Nasdaq +779.43 at 18708.34, S&P +184.28 at 5844.19
[BRIEFING.COM] The stock market closed sharply higher across the board. The Dow Jones Industrial Average was more than 1,100 points higher than Friday's close. The S&P 500 jumped 3.3% and the Nasdaq Composite closed 4.4% higher.
Market participants were enthused by a notable easing in the trade war with China. Both the U.S. and China agreed to a 90-day reduction in tariffs, effective Wednesday, with the U.S. dropping tariffs on China from 145% to 30% and China dropping tariffs on the U.S. from 125% to 10%.
The good news for the market is that the reductions were larger than expected. The less than good news for the market is that the reductions expire in 90 days if both sides can't reach a more permanent trade deal.
The market was focused on the positive takeaway for today, fueling an everything-rally. Moves were helped by short-covering activity and a fear of missing out on further gains.
Outsized moves in the mega cap space also played a big role in the performance of major equity indices. Apple (AAPL 210.79, +12.52, +6.3%) was a standout in that respect, surging 6%.
Apple, along with other mega caps and chipmakers, helped propel the S&P 500 technology sector to close 4.7% higher. The consumer discretionary (+5.7%) and communication services (+3.4%) sectors, which also house mega cap constituents, were among the top performers.
The risk-on bias in the market left the defensive-oriented utilities sector (-0.7%) alone in the red by the close.
The risk-on skew also resulted in the selling of Treasuries, the gain in the U.S. Dollar Index (+1.6% to 101.90), a drop in gold prices ($3,228.90, -15.80, -3.5%), and the sharp decline in the CBOE Volatility Index (-16.3%, or 3.55, to 18.35).
The 10-yr yield settled eight basis points higher at 4.46% and the 2-yr yield settled 12 basis points higher at 4.00%.
- Dow Jones Industrial Average: -0.3% YTD
- S&P 500: -0.6% YTD
- S&P Midcap 400: -2.3% YTD
- Nasdaq Composite: -3.1% YTD
- Russell 2000: -6.2% YTD
Reviewing today's economic data:
- The Treasury Budget for April showed a surplus of $258.4 billion compared to a surplus of $209.5 billion in the same period a year ago. The April deficit resulted from receipts ($850.1 billion) exceeding outlays ($591.8 billion). The Treasury Budget data are not seasonally adjusted so the April surplus cannot be compared to the March deficit of $160.5 billion.
- The key takeaway from the report is that there was some relief on the deficit side of things with tax receipts swelling in April; however, the budget deficit at this point in the fiscal year is still 22% greater than in fiscal 2024.
Looking ahead to Tuesday, market participants receive the following economic data:
- 6:00 ET: April NFIB Small Business Optimism Index (prior 97.4)
- 8:30 ET: April CPI (Briefing.com consensus 0.3%; prior -0.1%) and Core CPI (Briefing.com consensus 0.3%; prior 0.1%)
Stocks hold near highs ahead of close
12-May-25 15:30 ET
Dow +1106.28 at 42355.66, Nasdaq +738.89 at 18667.81, S&P +174.27 at 5834.18
[BRIEFING.COM] The Dow Jones Industrial Average (+2.7%), the S&P 500 (+3.0%), and the Nasdaq Composite (+4.0%) are at session highs with 30 minutes left in the session.
A short time ago, House Republicans released text of the large reconciliation bill which includes an extension of 2017 tax cuts for all income levels, spending cuts (Medicaid and green energy spending), energy reform, immigration reform, and a debt ceiling increase of $4 trillion.
The 10-yr yield settled eight basis points higher at 4.46% and the 2-yr yield settled 12 basis points higher at 4.00%.
Looking ahead to Tuesday, market participants receive the following economic data:
- 6:00 ET: April NFIB Small Business Optimism Index (prior 97.4)
- 8:30 ET: April CPI (Briefing.com consensus 0.3%; prior -0.1%) and Core CPI (Briefing.com consensus 0.3%; prior 0.1%)
Earnings season rolls on this week
12-May-25 15:10 ET
Dow +1126.82 at 42376.20, Nasdaq +748.55 at 18677.47, S&P +176.24 at 5836.15
[BRIEFING.COM] The market sits at or near session highs with major equity indices showing sizable gains.
Earnings season rolls on this week with results from DaVita (DVA), Hertz Global (HTZ), Topgolf Callaway Brands (MODG), ZoomInfo (ZI), Getty Images (GETY), and others this afternoon.
JD.com (JD), Tencent Music (TME), Sea Limited (SE), On (ONON), and others report earnings ahead of Tuesday's open.
Stocks hold steady as Treasury reports $258.4B April surplus; Deficit still up 22% YTD
12-May-25 14:30 ET
Dow +1111.35 at 42360.73, Nasdaq +753.61 at 18682.53, S&P +175.35 at 5835.26
[BRIEFING.COM] Trading has held firm, mostly unchanged over the prior half hour following the release of the April Treasury Budget which hit at the bottom of the hour. Currently, the S&P 500 (+3.10%) is in second place, up about 175 points.
The Treasury Budget for April showed a surplus of $258.4 billion compared to a surplus of $209.5 billion in the same period a year ago. The April deficit resulted from receipts ($850.1 billion) exceeding outlays ($591.8 billion). The Treasury Budget data are not seasonally adjusted so the April surplus cannot be compared to the March deficit of $160.5 billion.
The key takeaway from the report is that there was some relief on the deficit side of things with tax receipts swelling in April; however, the budget deficit at this point in the fiscal year is still 22% greater than in fiscal 2024.
Gold falls 3.5% to $3,228 as trade truce eases safe-haven demand, lifts dollar
12-May-25 14:00 ET
Dow +1064.30 at 42313.68, Nasdaq +747.19 at 18676.11, S&P +171.69 at 5831.60
[BRIEFING.COM] With about two hours to go on Monday the tech-heavy Nasdaq Composite (+4.17%) holds a decent lead among the major averages.
Gold futures settled $116 lower (-3.5%) at $3,228/oz, mostly driven by a notable easing in U.S.-China trade tensions. Following productive negotiations in Geneva, both nations agreed to a temporary 90-day reduction in reciprocal tariffs, with the U.S. lowering tariffs on Chinese goods from 145% to 30%, and China reducing tariffs on U.S. imports from 125% to 10%. This development diminished the demand for gold as a safe-haven asset, as investors' concerns over a potential trade war and global economic slowdown subsided. The positive shift in trade relations also bolstered the greenback, further exerting downward pressure on gold prices.
Meanwhile, the U.S. Dollar Index is up +1.5% to $101.87.
Chewy slides lower as CFO exit and unchanged Q1 guidance stir growth concerns (CHWY)
Chewy (CHWY) is trading lower, driven by the surprise departure of CFO David Reeder, and a reaffirm of 1Q25 guidance that's stirring up some disappointment following the company's stellar Q4 earnings report in late March. Mr. Reeder, who joined CHWY in March 2023 after serving as CFO of Global Foundries, is stepping down to assume a CEO role in the semiconductor industry, with his exit slated for after the 1Q25 results on June 11, 2025. The departure of a seasoned CFO -- particularly one who has overseen a period of robust financial performance -- introduces some uncertainty around CHWY's ability to sustain its momentum.
- Investors often view executive turnover as a potential risk to operational stability, particularly for a company navigating a competitive e-Commerce landscape and macroeconomic headwinds like tariff concerns and inflation. The absence of a named successor amplifies these worries as CHWY has only indicated that a search for Reeder's replacement is underway, leaving a leadership gap that could unsettle the market.
- Additionally, Reeder's recent stock sales -- totaling around $16 mln across February transactions -- may signal a lack of long-term commitment, further eroding investor confidence.
- In the same press release, CHWY reaffirmed its Q1 guidance, projecting net sales of $3.06-$3.09 bln and EPS of $0.30-$0.35. By failing to deliver an upward revision of its outlook, CHWY likely added to the negative sentiment, especially with shares up by 146% on a yr/yr basis. The decision to maintain guidance, despite a robust 4Q24 earnings report in which CHWY easily beat EPS expectations and returned to double-digit revenue growth for the first time since 2Q24 at +15%, suggests possible caution around consumer spending softness in discretionary pet categories.
- CHWY's improved growth in Q4 was underpinned by a return to active customer growth and enhanced customer loyalty through its Autoship program. Autoship customer sales, a cornerstone of CHWY’s recurring revenue model, surged 21% in Q4 to $2.62 billion, representing 80.6% of net sales. The reaffirmed Q1 guidance, while solid, may be perceived as conservative, failing to capitalize on the Q4 beat’s momentum.
The departure of CFO David Reeder, coupled with his significant stock sales and the lack of a named successor, has rattled investors, raising concerns about CHWY’s ability to maintain its strong financial trajectory amid a competitive and uncertain macro environment. The decision to merely reaffirm Q1 2025 guidance, despite a robust Q4 earnings beat, has further disappointed investors expecting a more bullish outlook, contributing to today’s stock price decline. While CHWY’s operational momentum remains intact, the leadership transition and conservative guidance signal near-term risks.
Monday.com crushes Q1 estimates on robust enterprise adoption, but guidance limits rally (MNDY)
Project management software company Monday.com (MNDY) has a strong track record of surpassing quarterly expectations, though it has occasionally tempered investor enthusiasm by offering conservative guidance. That trend continued today as MNDY easily beat 1Q25 EPS and revenue estimates, driven by robust demand for its multi-product platform, while its in-line Q2 revenue guidance and modestly improved revenue forecast for FY25 looks underwhelming.
Strategic investments in AI-driven features, such as the GenAI chatbot that's resolving a high percentage of customer service tickets, and a scalable MondayDB 2.0 infrastructure, are laying the foundation for MNDY's consistent top and bottom-line beats.
- Key metrics, such as net dollar retention (NDR) rate and total number of paid customers, highlight the platform's stickiness and ability to drive customer expansion. NDR for customers with more than $100,000 in ARR reached an impressive 117%, illustrating healthy upsell and cross-sell activity particularly among larger accounts. Relatedly, the total number of paid customers grew to 57,203, up 15% yr/yr, with 1,328 customers contributing over $100,000 in ARR, a 46% increase from the prior year.
- These metrics were bolstered by MNDY's multi-product strategy, which integrates work management, CRM, service management, and software development tools into a unified platform. New product launches, including MondayDB 2.0, enabling boards with up to 100,000 items, and AI advancements, like AI Assistant, have enhanced scalability and user engagement, driving higher ARR and retention by addressing diverse enterprise needs.
- Profitability continued its upward trajectory in 1Q25, with adjusted EPS soaring 80% yr/yr to $1.10 and non-GAAP operating income reaching a record $41.0 mln with non-GAAP operating margin improving by 400 bps yr/yr to 14%. These gains were driven by disciplined cost management and operating leverage, despite hefty investments in R&D (+56% yr/yr) to fuel AI and product innovation. The company’s ability to balance growth-oriented investments with profitability stems from its high gross margin of approximately 90% and a scalable SaaS model, which minimizes incremental costs as revenue expands.
- For Q2, MNDY issued revenue guidance of $292-$294 mln, aligning closely with analysts' estimates, suggesting a cautious outlook amid macroeconomic uncertainty. MNDY nudged its FY25 revenue outlook modestly higher to $1.22-$1.23 bln from its prior guidance of $1.21-$1.22 bln, but its adjusted free cash flow guidance was notably strong at $286-$289 mln, driven by robust operating cash flow and minimal capital expenditures. This outlook is further supported by MNDY’s high retention rates, growing enterprise customer base, and efficient cash conversion cycle.
MNDY's 1Q25 beat-and-raise performance was driven by strong enterprise adoption, AI-driven product enhancements, and operational efficiency. The company's resiliency and scalability were once again on display amid a volatile macroeconomic backdrop, although its conservative revenue guidance is keeping a lid on shares.
Stocks sharply higher as US and China make progress; tariff reductions greater than expected
Stocks are trading sharply higher across many sectors to start today's session following positive developments on the trade front with China. The two sides held talks in Geneva over the weekend. The broad result is that both sides have agreed to de-escalate for now as discussions are expected to continue in the coming weeks.
- The White House announced that China agreed to remove the retaliatory tariffs it announced since April 4 and will also suspend or remove the non-tariff countermeasures taken against the US since April 2. China will also suspend its initial 34% tariff on the US it announced on April 4 for 90 days, but will retain a 10% tariff during the period of the pause. The key takeaway is that China agreed to cut its retaliatory tariffs on US goods to 10% from 125%.
- On the US side, it agreed to remove the additional tariffs it imposed on China on April 8 and April 9, but will retain all duties imposed on China prior to April 2. The US will suspend its 34% reciprocal tariff imposed on April 2 for 90 days, but retain a 10% tariff during the period of the pause. The White House says the 10% tariff continues to set a fair baseline. Basically, the US will reduce its so-called Liberation Day "reciprocal" tariffs on China to 10% from 125%.
Granted, these are not final agreements and a lot can change in the next 90 days. However, the overall sentiment strikes us as the two sides making more progress than expected and the tariff reductions were more substantial than expected, especially considering this was more of a preliminary meeting.
There was real concern that the two sides would not make progress. This was not a given. There were reports last week that China was holding firm and willing to wait the US out. Also, this was only the first in-person talks between the two countries since the tariffs were announced. As such, it was difficult to gauge what might happen.
In addition to just the tariff numbers, another benefit is that the agreement provide some clarity for businesses. A common theme we heard on many Q1 earnings calls was that companies and/or their clients were pausing on investment decisions until we had more clarity on trade. While not final numbers, this deal and the UK deal last week provides a framework and we suspect it will convince business leaders that a final deal is going to be reached at some point. This should allow them to make investment/spend decisions. On a final note, it is not just stock trading higher today. The dollar is up today and gold is down sharply.
Lyft shares surge on solid guidance, buyback expansion, and proxy battle resolution (LYFT)
Lyft (LYFT) is surging to multi-month highs, driven by a confluence of positive developments despite missing 1Q25 EPS and revenue expectations. The rally is fueled by Engine Capital's withdrawal of its board nominations, ending a contentious proxy battle, LYFT's expanded $750 mln share buyback program, and a better-than-expected Q2 forecast for gross bookings and adjusted EBITDA. LYFT's downside Q1 results also come against low expectations following Uber's (UBER) disappointing Q1 earnings report on May 7 that included a slight gross bookings miss, putting U.S. demand concerns under the spotlight.
- In Q1, gross bookings reached $4.16 bln, up 13.5% yr/yr and slightly exceeding expectations, while rides hit a record 218.4 mln, up 16% yr/yr, reflecting strong demand across commute, weekend, evening, and airport trips. Enhanced driver retention via LYFT's 70% fare guarantee and rider-focused features like faster ETAs, which reduced wait times by 10% yr/yr, supported the outperformance for these metrics.
- LYFT's competitive pricing strategy, including a reduction in base fares to align with UberX pricing, boosted ride volume and active riders, indicating market share gains in key U.S. cities. However, this pricing pressure modestly crimped revenue per ride ($6.64 vs. $6.80 in 1Q24), contributing to the small revenue miss.
- Profitability continues to improve significantly for LYFT with adjusted EBITDA jumping by 59% yr/yr to $106.5 mln. The company also guided to Q2 adjusted EBITDA of $115-$130 mln, essentially matching analysts' expectations, and implying yr/yr growth of 26% at the high end of the range. Key drivers for the enhanced profitability include reduced insurance costs, higher driver hours and a healthy driver base, and cost discipline, as reflected by a manageable 10% increase in total costs and expenses.
- From a long-term perspective, LYFT's robotaxi progress remains a cornerstone of its growth strategy, although the company surprisingly didn't emphasize its robotaxi partnerships (Mobileye, May Mobility) during last night's earnings call. Instead, LYFT focused on its Q1 performance and highlighted its recent acquisition of FREENOW, a European multi-mobility app that marks the company's most significant expansion to date outside of North America. The addition of FREENOW, which has a taxi offering as its core service, will nearly double LYFT's total addressable market to more than 300 bln personal vehicle trips per year.
LYFT’s better-than-expected Q2 guidance, expanded $750 mln share repurchase program, and the resolution of Engine Capital’s proxy battle are propelling its stock sharply higher, reflecting renewed investor confidence. These tailwinds, alongside healthy gross bookings and profitability gains, position LYFT to navigate competitive pressures and capitalize on long-term opportunities like robotaxis.
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