| | | Market Snapshot
| Dow | 42654.74 | +331.99 | (0.78%) | | Nasdaq | 19211.10 | +98.78 | (0.52%) | | SP 500 | 5958.38 | +41.45 | (0.70%) | | 10-yr Note |
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| | NYSE | Adv 1900 | Dec 794 | Vol 1.22 bln | | Nasdaq | Adv 2797 | Dec 1603 | Vol 10 bln |
Industry Watch
| Strong: Health Care, Communication Services, Consumer Staples, Consumer Discretionary, Financials |
| | Weak: Energy |
Moving the Market
-- Monthly options expiration day
-- Ongoing momentum after winning week
-- Losses in some mega caps and chipmakers limiting upside moves
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Closing Summary
16-May-25 16:30 ET
Dow +331.99 at 42654.74, Nasdaq +98.78 at 19211.10, S&P +41.45 at 5958.38
[BRIEFING.COM] The stock market closed a winning week on a high note. The Dow Jones Industrial Average (+0.8%) was more than 300 points higher than yesterday's close and turned positive for the year (+0.3%). The S&P 500 (+0.7%) and the Nasdaq Composite (+0.5%) also closed at session highs.
The session started slow, however, with major equity indices trading near, or below, the prior closing levels. The muted moves were driven in part by a consumer sentiment report for May that was low on sentiment and high on inflation expectations. Year-ahead inflation expectations increased from 6.5% to 7.3% and the headline number sank to 50.8 from 52.2.
The preliminary May report was conducted between April 22 and May 13, which was two days after the de-escalation in the trade war with China, so it may not capture any sentiment changes resulting from the notable shift on the tariff front.
Buying picked up as the session progressed, driven by ongoing momentum and a fear of missing out on further gains. The positive skew was also helped by stocks showing early resilience to selling efforts.
Many stocks participated in upside moves, leading ten of the 11 S&P 500 sectors to close higher. Five sectors were more than 1.0% above their prior closing levels, including health care (+2.0%) and utilities (+1.4%).
Treasury yields moved up after this morning's survey data indicated higher inflation expectations. The 2-yr yield, which stood at 3.93% ahead of the 10:00 a.m. ET release, settled one basis point up from yesterday's settlement to 3.98%. The 10-yr yield, at 4.40% ahead of the release, was one basis point higher at 4.44%.
- S&P 500: +1.3% YTD
- Dow Jones Industrial Average: +0.3% YTD
- Nasdaq Composite: -0.5% YTD
- S&P Midcap 400: -1.1% YTD
- Russell 2000: -5.2% YTD
Reviewing today's economic data:
- April Housing Starts 1.361 mln (Briefing.com consensus 1.383 mln); Prior was revised to 1.339 mln from 1.324 mln, April Building Permits 1.412 mln (Briefing.com consensus 1.450 mln); Prior was revised to 1.481 mln from 1.467 mln
- The key takeaway from the report is the weakness in single-unit permits across all regions, as it speaks to cautious-minded consumers and builders dealing with higher prices, higher mortgage rates, and higher building costs.
- April Import Prices 0.1%; Prior was revised to -0.4% from -0.1%
- April Import Prices ex-oil 0.4%; Prior was revised to -0.1% from 0.1%
- April Export Prices 0.1%; Prior was revised to 0.1% from 0.0%
- April Export Prices ex-ag. 0.1%; Prior was revised to 0.1% from -0.1%
- May Univ. of Michigan Consumer Sentiment - Prelim 50.8 (Briefing.com consensus 55.0); Prior 52.2
- The key takeaway from the report is that it continues to reflect some deteriorating views among consumers about their personal finances and some alarming views about their inflation expectations. Note, this survey was conducted between April 22 and May 13, closing two days after the U.S.-China tariff de-escalation news, so it doesn't capture the full consideration of that pleasing news.
Looking ahead to next week, market participants receive some data on the labor market and on the housing market. Weekly jobless claims are out Thursday morning, along with April Existing Home Sales, and April New Home Sales are out Friday morning.
Treasuries settle little changed on the day
16-May-25 15:30 ET
Dow +302.90 at 42625.65, Nasdaq +84.46 at 19196.78, S&P +35.23 at 5952.16
[BRIEFING.COM] The market is holding near highs ahead of the final close of the week.
Treasuries settled little changed from yesterday. The 2-yr yield rose one basis point to 3.98%, and the 10-yr yield was one basis point higher at 4.44%.
Looking ahead to next week, market participants receive some data on the labor market and on the housing market. Weekly jobless claims are out Thursday morning, along with April Existing Home Sales, and April New Home Sales are out Friday morning.
Small and mid caps rise
16-May-25 15:05 ET
Dow +295.95 at 42618.70, Nasdaq +78.87 at 19191.19, S&P +34.58 at 5951.51
[BRIEFING.COM] The major equity indices are near session highs with one hour left in the week.
Small and mid cap stocks have participated in today's broad advance. The Russell 2000 is 0.9% higher and the S&P Mid Cap 400 is 1.0% higher.
The move has occurred without help from semiconductor stocks. The PHLX Semiconductor Index (SOX) is 0.3% higher.
S&P 500 rises; Moderna and Fiserv rebound, Eli Lilly gains on Novo Nordisk CEO exit
16-May-25 14:30 ET
Dow +265.65 at 42588.40, Nasdaq +61.93 at 19174.25, S&P +30.76 at 5947.69
[BRIEFING.COM] The S&P 500 (+0.52%) is in second place on Friday afternoon, up about 30 points.
Briefly, S&P 500 constituents Moderna (MRNA 25.15, +1.50, +6.34%), Fiserv (FI 166.07, +6.94, +4.36%), and Eli Lilly (LLY 757.74, +25.95, +3.55%) pepper the top of the standings. Shares of MRNA were down -43% YTD heading into today's session, investors perhaps using the stock's weakness to accumulate, while today's rebound in FI is seen as a relief rally triggered by supportive analyst commentary highlighting that Clover's slowdown is likely transitory, with LLY rising on investor rotation out of Novo Nordisk A/S (NVO 64.12, -2.03, -3.07%) after news that CEO Lars Fruergaard Jørgensen would step down.
Meanwhile, Hershey Foods (HSY 157.41, -4.91, -3.02%) is underperforming as cocoa prices hit a 3-month high of $11,000/ton, intensifying cost pressures. Analysts at Piper Sandler warned there's no near-term relief in sight and flagged risks to 2026 EPS, citing limited pricing power and increasingly price-sensitive consumers. Piper also sees potential valuation pressure if earnings growth is squeezed from a stressed P&L, contributing to negative sentiment around the stock.
Gold suffers worst week in six months as safe-haven demand ebbs on U.S.-China truce, stronger dollar
16-May-25 14:00 ET
Dow +207.48 at 42530.23, Nasdaq +42.18 at 19154.50, S&P +24.79 at 5941.72
[BRIEFING.COM] With about two hours to go on the week the tech-heavy Nasdaq Composite (+0.22%) is underperforming its major counterparts.
Gold futures settled $39.40 lower (-1.2%) at $3,187.20/oz, ultimately down -4.7% on the week, the yellow metal's worst weekly losses in six months. The fall was driven by easing geopolitical tensions after a U.S.-China tariff truce, which reduced safe-haven demand, alongside a stronger U.S. dollar and rising Treasury yields. While expectations for future Fed rate cuts persist, they were overshadowed by current macro headwinds. Still, long-term support remains intact, with continued central bank buying and revived demand in Asia following the price pullback.
Meanwhile, the U.S. Dollar Index is up +0.3% to $101.15.
Take-Two's Q4 EPS clouded by huge impairment charges, while Q1 guidance disappoints (TTWO)
Take-Two's (TTWO) 4Q25 earnings were clouded by significant non-cash impairment charges, rendering the GAAP EPS of ($21.08) incomparable to analysts' expectations. These charges, including $3.55 bln in goodwill impairments and $176.3 mln for acquisition-related intangible assets, significantly deepened TTWO's net loss, further souring sentiment around the company's lack of profitability. However, the focal point for most investors was Net Bookings, the key demand metric that reflects in-game purchases, subscriptions, and game sales.
For Q4, the company delivered Net Bookings of $1.58 bln, edging past the consensus estimate, driven by solid performances from key titles. Despite the modest beat, TTWO's in-line EPS and Net Bookings guidance disappointed investors, who had anticipated more robust forward-looking momentum given the gaming industry's tailwinds, such as the proliferation of high-performance smartphones, AI-driven content creation and personalization, and strong growth in eSports.
- Net Bookings growth was propelled by strong performances from flagship titles, notably NBA 2K25, Grand Theft Auto Online, and Sid Meier's Civilization VII. NBA 2K25 saw robust engagement, benefiting from new features and seasonal updates, while Grand Theft Auto Online continued to drive recurrent spending through fresh content drops, maintaining its status as a cash cow.
- Net Bookings from recurrent consumer spending, which includes in-game purchases, microtransactions, and subscriptions, rose 14% yr/yr and accounted for 77% of total Net Bookings, underscoring its critical role in TTWO’s revenue stability. This metric reflects the company’s ability to monetize engaged player bases over time, particularly through live-service models, and is vital for sustaining cash flow in a hit-driven industry.
- TTWO's in-line 1Q26 guidance was a source of disappointment as the outlook lacked the upside expected from a company with strong franchises. Looking ahead, the upcoming release of Borderlands 4 in 2026 could bolster Net Bookings. Longer-term, though, TTWO's growth catalysts look even more compelling with the highly anticipated Grand Theft Auto VI now confirmed for a fall 2027 release, expected to drive unprecedented Net Bookings and reshape the company’s financial trajectory.
- Additionally, TTWO’s mobile gaming segment, bolstered by Zynga’s portfolio, and its expanding pipeline of over 40 titles through 2027, position it for multi-year growth, though near-term profitability challenges and guidance conservatism is currently tempering enthusiasm for the stock.
TTWO's Q4 earnings showcased a modest Net Bookings beat, driven by NBA 2K25 and Grand Theft Auto Online, but massive impairment charges and an in-line Q1 guidance disappointed investors expecting more aggressive growth signals. The stock’s muted action reflects a market unconvinced by the performance, balancing near-term headwinds against the transformative potential of Grand Theft Auto VI in 2027.
Doximity heads lower on weak guidance following shift to multi-module offerings
Doximity (DOCS -11%) wrapped up FY25 on a solid note for Q4 (Mar). However, this operator of a digital platform for medical professionals disappointed investors with downside revenue guidance for both Q1 (Jun) and FY26.
- Let's start with the good news. Its unique active users on a quarterly, monthly, weekly, and daily basis all hit fresh highs in Q4. This growth was again led by its newsfeed product, which is both its most used and most monetized product. Its unique newsfeed users hit record highs in Q4 while articles read or tapped were up more than 30% yr/yr. Its workflow tools (telehealth, fax, scheduling, AI tools) also hit fresh highs in Q4, with over 620,000 unique active prescribers.
- DOCS noted that FY25 revenue benefited from its strategic shift to more multi-module integrated offerings. This not only drove larger deal sizes, but also enabled a greater share of annual programs to launch in January. Also, it ended the quarter with 116 customers contributing at least $500,000 each in subscription-based revenue on a trailing 12-month basis. This is a roughly 17% yr/yr increase.
- Turning to the guidance, it seems to have been partly impacted by DOCS' shift to more multi-module integrated offerings, which have allowed many customers to get their annual programs live in January. While DOCS expects these earlier launches to be the norm going forward, FY25 received the benefit of being the transition year, leading to a few points of revenue growth upside.
- However, this dynamic creates a tougher comparison for FY26. The company noted that these earlier launches allow its customers to maintain an uninterrupted presence on the Doximity platform, which helps drive ROI and should translate into even greater investment on Doximity over time. Another concern is visibility. As of today, Doximity has just under 70% of its initial subscription-based revenue guidance under contract.
- Another factor appears to be the macro view. DOCS says it has not seen any impact from macro uncertainty, however, it thought it would be prudent to assume the market growth rate could be on the lower-end of this range.
Overall, it's clear that investors are disappointed in the guidance. Whenever a company makes an important change to its model, as it recently has done here with its multi-module integrated offerings, there can be a period of adjustment in terms of expected financial performance. Doximity is likely learning as well as to what to expect. Doximity's revenue-generating customers are primarily drug manufacturers and health systems. We suspect the recent EO from President Trump is impacting guidance as well.
Applied Materials slides as Q2 sales fall a bit short and cautious Q3 outlook disappoints (AMAT)
Staying true to recent form, Applied Materials (AMAT) delivered upside 2Q25 earnings, driven by strong non-GAAP gross margin expansion of 170 bps yr/yr to 49.2% and resilient demand for advanced node technologies. However, AMAT is trading sharply lower, reflecting disappointment with the company's in-line Q2 revenue of $7.10 bln and cautious Q3 revenue guidance of $6.70-$7.70 bln, with the midpoint merely aligning with consensus. The negative reaction also stems from elevated expectations that were amplified by competitor Lam Research's (LRCX) strong earnings report on April 23. Investors were likely anticipating a more pronounced top-line beat and forward-looking optimism particularly given the AI-driven surge.
- The Semiconductor Systems segment -- AMAT's largest revenue driver -- posted Q2 revenue of $5.26 bln, up 7% yr/yr, but slightly below analysts' expectations. This segment, which manufactures equipment for wafer fabrication, including deposition, etching, and inspection tools, continues to benefit from the AI technology boom, particularly in foundry-logic applications. However, the segment faced headwinds from reduced spending in China, a key market, where DRAM and NAND investments slowed, partially offsetting AI-driven gains.
- The slight revenue shortfall in the Semiconductor Systems segment reflects supply chain constraints and geopolitical tensions impacting China exposure, which tempered the otherwise robust AI-fueled momentum. On the plus side, non-GAAP operating margin for the segment remained strong, expanding by 150 bps yr/yr to 36.4%, supported by a favorable product mix skewed toward high-margin advanced tools.
- The Applied Global Services segment, which provides aftermarket services, spare parts, and equipment upgrades for semiconductor manufacturing, experienced modest revenue growth of 2% to $1.57 bln. This segment serves a broad range of markets, including foundries, logic, and memory chipmakers, with products like preventive maintenance programs and yield optimization services. Growth was underpinned by higher equipment utilization rates at customer fabs and an expanding installed base, particularly for advanced nodes requiring intensive servicing.
- For Q3, AMAT issued cautious in-line revenue guidance, reflecting several factors, including ongoing softness in China, where reduced DRAM and NAND spending is expected to persist, and potential supply chain bottlenecks amid geopolitical uncertainties. Additionally, the company cited a normalization of demand following an AI-driven surge, suggesting a potential pause in customer capital expenditure as they digest recent investments. AMAT has a history of issuing conservative guidance, often setting a low bar to ensure achievable targets, as evidenced by its consistent EPS beats in prior quarters.
AMAT delivered a solid Q2 with a strong EPS beat, underscoring its operational strength and leadership in semiconductor equipment. However, the in-line revenue and cautious Q3 guidance, against a backdrop of heightened expectations fueled by AI demand and Lam Research’s (LRCX) stellar results, have overshadowed the earnings upside, driving a sharp sell-off in AMAT shares.
CAVA Group serves up a tasty Q1, but comps were not as strong as recent quarters (CAVA)
CAVA Group (CAVA -6%) is lower despite upside Q1 results last night. This Mediterranean fast-casual restaurant chain beat on EPS and revenue. CAVA also increased its FY25 adjusted EBITDA outlook a bit to $152-159 mln from $150-157 mln and reaffirmed FY25 same restaurant comps of +6-8%. However, Q1 comps were lower than Q4.
- CAVA has a history of reporting impressive comps. CAVA has been opening lots of new restaurants, but the comp number filters that out. These comps are solely from locations open a year or more. CAVA reported strong Q1 comps of +10.8%, comprised of guest traffic growth of +7.5% and +3.3% from menu price and product mix. These comps are down from +21.2% in Q4 and +18.1% in Q3 but are still quite impressive given the macro landscape.
- In terms of the menu, CAVA said it's leaning into flavor and relevance this summer with the launch of its Spice World campaign, a celebration of bold, spicy offerings. As part of this campaign, it debuted Hot Harissa Pita Chips, a bold, spicy take on its fan favorite chips. At the same time, it's launching two new chef-curated bowls, Steak + Harissa and Spicy Lamb + Avocado.
- CAVA opened 15 new locations in Q1, bringing its total to 382. It also increased its FY25 outlook to 64-68 from 62-66 and said it's well on its way to its goal of at least 1,000 restaurants by 2032. In Q1, it entered Indiana for the first time. It also deepened its presence in Florida, marking its entry into the Greater Miami area. Looking ahead, it plans to continue expanding across the Midwest to Mid-Atlantic with new market entries in Detroit and Pittsburgh.
- In terms of the macro, CAVA knows consumers are feeling pinched, but nothing in its data suggests that its consumer is challenged. Its premium attachment continues to be high. Pita chips, for example, continue to increase in incidence, as does some of its other premium items, including steak. Its per person average continues to increase and CAVA is seeing positive traffic across all geographies, all income strata, all formats and all dayparts.
In terms of why the stock is lower, there may be a little disappointment that Q1 comps were a good bit lower than Q4 and Q3. Also, CAVA did not raise full year comp guidance despite upside to the full year trend in Q1. However, CAVA will be lapping its popular steak launch in 2H25, so that will likely be a comp headwind.
More generally, and as we said in our preview, we were cautious going into this report considering the very weak results from Sweetgreen (SG) last week. Both restaurant chains are on the upper end of the price scale. However, CAVA was notably more positive than Sweetgreen, which surprised us. What really stands out is that CAVA's traffic comp was strong. Some chains boost comps with price increases, but we prefer to see traffic increases.
Deere's Precision Ag and pricing power fuel big Q2 beat, but guidance revision limits gains (DE)
While facing stiff headwinds like lower farm incomes and dealer destocking, Deere (DE) crushed analysts' muted 2Q25 EPS expectations, driven by effective cost management, lower production costs, and favorable price realization across segments. Although revenue dropped 18% yr/yr to $11.17 bln, due to lower shipment volumes, reflecting weaker demand in farming and construction markets, the decline was less severe than anticipated and marked an improvement relative to the past three quarters.
The sizable EPS beat, and stabilizing sales are encouraging signs -- especially after competitor AGCO (AGCO) delivered a beat-and-raise earnings report on May 1 -- but DE also reduced the low end of its FY25 net income guidance to $4.75 bln from $5.0 bln (high end remained at $5.5 bln). This adjustment reflects caution about the persistence of challenging market conditions, and aligns with DE's industry outlook for FY25, which anticipates a decline of about 30% for large ag and a decline of roughly 10-15% for small ag & turf.
- The Production & Precision Agriculture segment, which caters to farmers, manufacturing combines, loaders, and large-size tractors, generated net sales of $5.23 bln, down 21% yr/yr, driven by lower shipment volumes. While operating margin contracted by 310 bps yr/yr to 22.0%, on a qtr/qtr basis, operating margin improved significantly, rising from 11.0% in 1Q25. This sequential improvement was fueled by lower production costs, reduced SA&G expenses, and better price realization, which partially offset the negative impact of sales mix and currency effects.
- Small Agriculture & Turf delivered net sales of $2.99 bln, a 6% yr/yr decline, marking a major improvement from recent quarters. For context, in Q1, net sales for this segment had declined by 28% year-over-year. The improvement in Q2 was driven by better price realization and a more favorable sales mix, partially offsetting the impact of lower shipment volumes. Notably, this segment was the only one to see its operating margin improve on a yr/yr basis, rising to 19.2% from 17.9% in 2Q24. The margin expansion was fueled by lower production costs, reduced warranty expenses, and effective price realization.
- Meanwhile, Construction & Forestry experienced a steep revenue decline of 23% yr/yr, with Q2 net sales totaling $2.95 bln. This segment has continued to lag behind others, primarily due to lower shipment volumes, which reflect weaker demand in both construction and forestry markets, driven by economic fluctuations and higher interest rates. While the segment's operating margin improved substantially on a qtr/qtr basis -- from 3.3% in Q1 to 12.9% in Q2 -- this was still significantly below the 17.4% margin reported in the year-earlier period.
DE's Q2 earnings report presents a mixed picture of resilience and caution amid a challenging environment for the agricultural and construction equipment sector. Despite DE's cautious tone, as illustrated by its reduced FY25 net income guidance, the blowout EPS result and the relatively improved sales performance in Q2 suggest emerging green shoots, particularly in the Small Agriculture & Turf segment, which could provide a buffer against broader industry headwinds.
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