Market Snapshot
| Dow | 41859.09 | -1.35 | (0.00%) | | Nasdaq | 18925.73 | +53.09 | (0.28%) | | SP 500 | 5842.01 | -2.60 | (-0.04%) | | 10-yr Note |
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| | NYSE | Adv 1290 | Dec 1422 | Vol 1.07 bln | | Nasdaq | Adv 2192 | Dec 2184 | Vol 8.32 bln |
Industry Watch
| Strong: Technology, Communication Services, Consumer Discretionary |
| | Weak: Utilities, Energy, Health Care, Real Estate, Consumer Staples |
Moving the Market
-- Continued focus on Treasury yields, which have reversed from higher levels
-- House passes large reconciliation bill
-- Leadership from mega-cap stocks
-- Late sell program
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Closing Stock Market Summary
22-May-25 16:20 ET
Dow -1.35 at 41859.09, Nasdaq +53.09 at 18925.73, S&P -2.60 at 5842.01
[BRIEFING.COM] Today's session started on a delicate note, as there was some nervous tension emanating from the Treasury market following the news that the House passed the reconciliation bill early this morning in a 215-214 party-line vote.
That bill, among other things, raises the SALT deduction cap to $40,000 (from $10,000), moves up the Medicaid work requirement date to December 2026 from 2029, and increases the debt ceiling by $4 trillion. The Tax Foundation estimates that it will increase long-run GDP by 0.6% and add $3.3 trillion to deficits over the next 10 years.
There was some knee-jerk selling in the Treasury market that took the 10-yr note yield up to 4.63% and the 30-yr bond yield up to 5.15%. Those moves triggered some added weakness in the equity futures market, but they started to reverse following a jobless claims report at 8:30 a.m. ET that showed a 36,000 increase in continuing jobless claims to 1.903 million for the week ending May 10. Yields then took another turn lower after the Existing Home Sales Report for April at 10:00 a.m. ET produced the slowest annualized pace of sales for that month (4.00 mln) since 2009.
By the time the Treasury market's cash session settled at 2:00 p.m. ET, the 10-yr note yield had retraced to 4.55%, while the 30-yr bond yield backed down to 5.06%. That improvement coincided with a pickup in the U.S. Dollar Index (+0.4% to 99.91) and fostered a recovery move by the stock market, which started the session on a softer note.
The recovery in the stock market was paced by the mega-cap stocks and the growth stocks, with names like Alphabet (GOOG 171.98, +1.92, +1.1%), NVIDIA (NVDA 132.83, +1.03, +0.8%), and Snowflake (SNOW 203.18, +24.06, +13.4%), which reported earnings and a reassuring outlook, exhibiting relative strength.
The major indices were plodding along with modest gains, but most of those gains were relinquished in a sell program that hit the market in the last 30 minutes of trading.
The consumer discretionary (+0.6%), communication services (+0.3%), and information technology (+0.1%) sectors, all of which house mega-cap constituents, were the lone sectors to end the session in positive territory. The industrials sector was flat, and the other seven sectors sported losses ranging from 0.1% (materials and financials) to 1.4% (utilities).
- DJIA: -1.6% YTD
- S&P 500: -0.7% YTD
- Nasdaq: -2.0% YTD
- S&P 400: -4.4% YTD
- Russell 2000: -8.3% YTD
Reviewing today's economic data:
- Initial jobless claims for the week ending May 17 decreased by 2,000 to 227,000 (Briefing.com consensus 232,000), while continuing jobless claims for the week ending May 10 increased by 36,000 to 1.903 million.
- The key takeaway from the report is that initial jobless claims are running steady at levels that are well below recession-type readings; moreover, this report covered the period in which the survey for the May employment report was conducted and should contribute to expectations that nonfarm payrolls will again show a relatively solid print.
- Preliminary May S&P Global US Manufacturing PMI (Actual 52.3; prior 50.2) and Services PMI (Actual 52.3; prior 50.8).
- Existing home sales decreased 0.5% month-over-month in April to a seasonally adjusted annual rate of 4.00 million (Briefing.com consensus 4.15 million) from an unrevised 4.02 million in March. Sales were down 2.0% from the same period a year ago.
- The key takeaway from the report is that the median existing home price reached an April record of $414,000, putting the spotlight on affordability constraints as prices rise alongside mortgage rates.
Stocks take their cue from bonds
22-May-25 15:30 ET
Dow +222.62 at 42083.06, Nasdaq +173.19 at 19045.83, S&P +31.85 at 5876.46
[BRIEFING.COM] The major indices are near their best levels of the day as the final thirty minutes of trading await.
Today's gains are more modest in scope but welcome nonetheless on the heels of yesterday's large losses. Growth stocks have held an edge over value stocks today, supported by leadership from the mega-cap space and a healthy gain in Snowflake (SNOW 202.69, +23.57, +13.2%) following its earnings report and reassuring outlook, which helped set the tone for today's outperformance.
Notably, the dollar took a better turn today against other major currencies following the House's passage of the reconciliation bill. The reversal in Treasury yields today coincided with the turn in the dollar, suggesting perhaps that market participants are attracted more so at the moment to the pro-growth potential of the reconciliation bill than its deficit impact.
That view is subject to change, but it is fair to say that the stock market took its cue today from the Treasury market.
Stocks liking movement in bonds
22-May-25 14:55 ET
Dow +170.02 at 42030.46, Nasdaq +161.98 at 19034.62, S&P +25.77 at 5870.38
[BRIEFING.COM] There has been a nice turn in the stock market from earlier, which has coincided with an even nicer turn in the Treasury market from earlier.
The 10-yr note yield kissed 4.63% at today's high, while the 30-yr bond yield climbed to 5.15%. Both have backed down noticeably, with some short-covering activity presumably helping in the effort.
The 10-yr note yield is currently at 4.55%, down five basis points from yesterday's settlement, and the 30-yr bond yield is at 5.06%, down three basis points from yesterday's settlement.
Stocks have drawn support from those moves and from the leadership of the mega-cap stocks. Market breadth, which was negative earlier, has flipped in favor of advancing stocks, which outnumber decliners by a narrow margin at the NYSE and by a 4-to-3 margin at the Nasdaq.
S&P 500 hits highs but lags peers; COIN, UAL, PANW lead while ENPH slides on policy risks
22-May-25 14:30 ET
Dow +199.51 at 42059.95, Nasdaq +160.40 at 19033.04, S&P +26.88 at 5871.49
[BRIEFING.COM] The S&P 500 (+0.46%) is at HoDs, but ultimately hosts the shallowest advance among the major averages on Thursday afternoon.
Briefly, S&P 500 constituents Coinbase (COIN 272.03, +13.04, +5.03%), United Airlines (UAL 75.74, +2.41, +3.29%), and Palo Alto Networks (PANW 186.91, +5.65, +3.12%) dot the top of the standings. COIN is benefiting from a continued rise in bitcoin prices, while UAL and PANW advance despite a dearth of corporate news.
Meanwhile, Enphase Energy (ENPH 38.00, -9.29, -19.64%) is firmly lower as the House-passed reconciliation bill eliminates key solar tax credits and accelerates restrictions on China-linked components -- both of which disproportionately hurt ENPH due to its international supply chain and reliance on U.S. residential demand.
Gold pulls back from two-week high as dollar gains, fiscal worries lend support
22-May-25 14:00 ET
Dow +140.84 at 42001.28, Nasdaq +126.68 at 18999.32, S&P +17.08 at 5861.69
[BRIEFING.COM] With about two hours to go on Thursday the tech-heavy Nasdaq Composite (+0.67%) is in first place, up more than 125 points.
Gold futures settled $18.50 lower (-0.6%) at $3,295/oz, retracing after reaching a two-week high earlier in the session. Despite this dip, underlying support for gold remains due to ongoing fiscal concerns. The U.S. House of Representatives' narrow passage of President Trump's tax bill, projected to add $3.8 trillion to the national debt, has heightened worries about fiscal sustainability.
Meanwhile, the U.S. Dollar Index is up about +0.4% to $100.03.
Advance Auto soars as turnaround shifts to higher gear, driving surprise Q1 EPS blowout (AAP)
Advance Auto (AAP) reported surprisingly strong 1Q25 results, crushing EPS expectations and edging past revenue estimates, igniting a skyrocket move higher for the stock. The huge gains also reflect low expectations amid a multi-year turnaround plan involving a massive store optimization program that includes closing over 500 corporate stores and exiting more than 200 independently owned locations. Furthermore, a relatively high short interest, estimated at 10–12% of the float, has amplified today’s rally through a short squeeze as bearish investors cover positions amid the unexpected beat.
Historically, AAP has underperformed competitors O'Reilly Automotive (ORLY) and AutoZone (AZO), which have consistently delivered operating margins of 18–20% compared to AAP’s low-to-mid single digit range, hampered by self-inflicted wounds such as supply chain inefficiencies, chronic out-of-stock issues, a higher cost structure, and the poor integration of past acquisitions (Carquest in 2013, General Parts Intl in 2014).
- The turnaround plan, initiated under CEO Shane O’Kelly in 2023, focuses on three pillars: store operations, merchandise, and supply chain, with key actions including the $1.5 bln sale of Worldpac to streamline the business and a multiyear supply chain consolidation to address inefficiencies. Until 1Q25, the plan showed limited progress, with prior quarters reflecting weak comps of -1.0% in 4Q24 and -2.3% in 3Q24, alongside disappointing earnings due to bloated expenses and soft demand.
- AAP's Q1 EPS beat stems from early benefits of supply chain improvements, cost reduction initiatives, and the completed store optimization program, which was executed ahead of schedule, reducing 727 locations to standardize operations and boost labor productivity. Still, AAP continues to face industry headwinds, including soft demand for DIY projects and discretionary items like performance parts and accessories, which have weighed on sales as consumers prioritize essential repairs.
- Q1 comps of -0.6% outperformed guidance of -2.0%, while also marking an improvement from recent quarters. The positive trend is primarily driven by strength in the Pro business, which saw eight consecutive weeks of U.S. Pro comp sales growth. The Pro segment, serving professional installers, benefited from improved inventory management and expanded hub store distribution, enhancing product availability. Strength was evident in core categories like brakes, filters, and batteries, which align with essential repair needs.
- AAP reaffirmed its FY25 guidance, projecting adjusted EPS of $1.50–$2.50, net sales of $8.40–$8.60 bln, with comparable store sales expected to range from +0.5% to +1.5%, signaling a return to positive growth. This reaffirmation bolsters investor confidence, as it suggests management’s belief in sustained progress despite prior skepticism about the turnaround’s viability. Before Q1, analysts and investors doubted AAP’s ability to close the performance gap with competitors, given its lower margins, but the reaffirmation, coupled with the Q1 beat, signals that supply chain and cost-cutting measures are gaining traction.
In conclusion, AAP's Q1 outperformance reflects notable success in its turnaround plan, driven by supply chain improvements, store optimization, and Pro segment strength, amplified by a short squeeze. However, risks persist, including ongoing DIY weakness, competitive pressures from ORLY and AZO.
Analog Devices lower despite solid beat-and-raise; believes revs bottomed in 2024 (ADI)
Analog Devices (ADI -5%) is heading lower despite reporting upside for its Q2 (Apr) report last night. It beat handily on EPS and revenue rose a healthy 22.3% yr/yr to $2.64 bln, which was above expectations. ADI also guided nicely above analyst expectations for Q3 (Jul). ADI said on the call that it believes its revenue bottomed in 2024. Customer inventories are lean, and ADI is in a cyclical upturn.
- Revenue growth was broad-based with double-digit yr/yr growth across all end markets. While ADI believes the evolving tariff situation is impacting customer decision making, the cyclical and ADI-specific tailwinds highlighted last quarter continued and ADI is even more confident than when revenue bottomed in 2020. This means ADI expects a return to top line growth in FY25.
- Importantly, ADI noted that it invested substantial cap-ex in recent years, despite the downturn, to scale its hybrid manufacturing model. ADI expanded capacity at its existing fabs in the US and Europe and added commensurate capacity in its back-end facilities. Furthermore, ADI deepened partnerships with trusted foundries around the world. In short, customers now enjoy greater supply optionality and resilience.
- An important point ADI made on the call is that advances in automation within the industrial market have created tremendous opportunity for ADI. The progression of robotics requires ever greater quantities and integrations of sensing, edge computing, connectivity and energy management. The could drive ADI's content from hundreds of dollars in fixed robots today to potentially thousands in autonomous and humanoid robots in automotive.
- ADI conceded that buying behavior was a bit choppier than normal as ADI saw some increased activity around the tariff announcements. This was short lived, and orders have returned to more normalized levels. Overall, Q2 bookings grew sequentially across all end markets and all geographies, and its backlog entering Q3 is higher than a quarter ago.
In terms of why the stock is lower, the quarter was actually quite strong with solid guidance. Importantly, ADI reiterated that it believes its revenue bottomed in 2024 and that ADI is in a cyclical upturn. It comments about recent choppiness may be weighing on shares a bit. Also, the stock has rallied 40% from its early April lows, so we may be seeing some sell-the-news reaction.
Urban Outfitters surges to new all-time high; namesake brand finally returns to positive comps
Urban Outfitters (URBN +21%) is surging to a new all-time high on Q1 (Apr) results. Its Anthropologie and Free People segments have been driving growth in recent quarters while its namesake Urban Outfitters segment has been struggling but showing improvement lately. A key takeaway is that the UO segment comps returned to growth for the first time in three years. This meant all three brands had positive retail comps for the first time in a long time.
- Total Retail segment sales increased 6.4% yr/yr to $1.13 bln, with comparable Retail segment sales increasing +4.8%. The increase in Retail segment comps was driven by mid single-digit growth in both retail store sales and digital channel sales. Anthropologie, its largest segment by far, posted huge retail comps of +6.9% while Free People came in at +3.1% and UO came in at +2.1%. URBN also has a sizeable Subscription segment, where sales jumped 59.5% to $124.4 mln.
- Anthropologie has now posted positive comps every quarter for the past four years. The brand saw strong performance across all apparel categories in addition to shoes, accessories, beauty and home accessories. Anthropologie has done an excellent job of expanding its product offering to fit their customers' full lifestyle. The brand recently launched Celandine, an exclusive in-house resort wear label that offers year-round vacation-ready styles. Celandine has exceeded expectations.
- Free People, a women's clothing brand known for its bohemian-inspired fashion, saw positive comps across all major categories, while also boasting robust total Retail and Wholesale segment sales growth of 29%, including explosive 78% growth in FP Movement Wholesale segment revenue. The company believes Free People could post a mid-single-digit positive comp in Q2 (Jul), up from +3.1% in Q1.
- Investors are celebrating the long-awaited return to positive comps for its Urban Outfitters brand. North America recorded a negative -4% Retail segment comp, but Europe had an exceptionally strong +14% Retail segment comp. The digital business in North America continues to lap heavy promotional activity from the prior year, which will begin to abate after Q2. UO has been evolving its product assortment which has led to a significant reduction in markdowns. Denim, lounge, accessories and home sales all comped positive in Q1. Notable market brands have been added to the assortment, including a successful BAGGU collaboration and the recent addition of the Nike brand.
Urban Outfitters deserves a lot of credit for turning around its business. Anthropologie and Free People have been doing well for a while. These brands have been on trend and branching into new areas. It was great to see UO finally turn the corner and get back into positive comp territory. It has done so by improving its assortment and expanding its name brand offerings. What is really impressive is that URBN is doing all of this despite macro headwinds and investors are rewarding them for that.
Snowflake posts strong beat-and-raise Q1 report fueled by robust demand for its AI Data Cloud (SNOW)
Snowflake (SNOW) delivered robust 1Q26 results, surpassing EPS and product revenue expectations, reflecting increased enterprise adoption, robust demand for SNOW's AI Data Cloud, and expanding customer metrics, including a 27% yr/yr increase in customers with over $1.0 mln in trailing 12-month product revenue. The company's upbeat Q2 product revenue guidance of $1.035-$1.040 bln, which also exceeded expectations, and its raised FY26 product revenue guidance to $4.325 bln, has lit a fire under the stock as this outlook signals sustained momentum in its AI-driven growth trajectory.
- The 26% yr/yr product revenue growth in Q1 underscores SNOW's ability to capitalize on the accelerating demand for cloud-based data platforms, particularly those enabling AI and analytics workloads. SNOW's AI Data Cloud which integrates data management with AI capabilities, benefits from broader tailwinds impacting the cloud analytics sector, such as the exponential growth in data volumes and the need for real-time analytics, also propelling competitors like Datadog (DDOG), which thrives on observability and monitoring for cloud-native environments.
- SNOW's newer products, Snowpark and Cortex AI, are gaining traction but remain in early monetization stages. Snowpark, a developer platform for building data-intensive applications, and Cortex AI, a fully managed service for deploying secure AI models, enhance SNOW’s appeal by simplifying AI integration and enabling predictive analytics. While management highlighted robust adoption trends for these products, their direct contribution to Q1’s outperformance was not explicitly quantified, but they are clearly a key component of SNOW's long-term growth strategy.
- The net revenue retention rate (NRR) of 124% reflects strong customer loyalty and expansion within its existing base, though it represents a slight decline from 128% in 1Q25. This high NRR is driven by increasing customer consumption of SNOW’s platform, particularly among large enterprises, while strategic partnerships with companies like ServiceNow (NOW) and Salesforce (CRM) enable seamless data integration, further bolstering upsell opportunities as customers deepen their reliance on SNOW as a central data repository.
- SNOW’s upside Q2 product revenue guidance and its raised FY26 product revenue guidance signal confidence in sustained demand, which is particularly notable given SNOW’s history of conservative guidance. This pattern of under-promising and over-delivering enhances the significance of the upside guidance, suggesting strong visibility into enterprise demand and AI-driven workloads, despite potential headwinds like customer budget rationalization or seasonal consumption patterns.
In conclusion, SNOW’s Q1 results highlight its leadership in the AI-driven cloud data market, fueled by robust enterprise adoption, expanding customer metrics, and a compelling AI Data Cloud narrative. However, its premium valuation, with a price-to-sales ratio among the highest in software infrastructure at approximately 11x on a 1-year forward basis, and potential macroeconomic uncertainties impacting its consumption-based model warrant caution.
TJX posts solid Q1 results, highlighted by comps beat, but lukewarm Q2/FY26 outlook weighs (TJX)
TJX (TJX) delivered a modest $0.01 EPS beat for 1Q26, which is less pronounced than in prior quarters, reflecting pressures from ongoing tariff-related costs. The company achieved comparable store sales growth of +3%, hitting the high end of its guidance range, underscoring the resilience of TJX’s off-price retail model and its treasure-hunt shopping experience. However, this positive comp performance is overshadowed by TJX’s downside EPS and revenue guidance for Q2 and FY26, driven by persistent tariff pressures, FX headwinds, expected gross margin contraction, and a cautious view, expressed through a reaffirmation of its FY26 comp guidance of 2-3%, despite the upside Q1 result.
- TJX's better-than-expected comp of +3% was driven by strong customer traffic across its divisions, with Marmaxx US posting +2% comp growth and HomeGoods achieving a standout +4%.
- Marmaxx, encompassing T.J. Maxx, Marshalls, and Sierra, benefited from solid demand for apparel and accessories, particularly in value-driven categories like casual and athletic wear, though home furnishings within the segment saw softer performance amid macroeconomic pressures on discretionary spending.
- HomeGoods’ robust +4% comp growth was fueled by strong sales in decorative accessories, tabletop, and cookware, as consumers gravitated toward refreshing home aesthetics at discounted prices, though furniture lagged due to higher price points and reduced big-ticket purchases.
- Macroeconomic factors, including persistent inflation and high interest rates, have driven value-conscious consumers to TJX’s off-price model, while company-specific initiatives—such as sharp inventory management, opportunistic buying, and an engaging in-store experience—continue to support comp growth. These trends reflect TJX’s ability to capture market share in a retail landscape where full-price competitors struggle to maintain foot traffic.
- TJX's gross profit margin declined by 50 bps yr/yr to 29.5%, a notable contraction that reflects several headwinds. The primary driver was the impact of tariffs on imports, particularly from China, which increased merchandise costs and squeezed margins. Additionally, incremental freight costs, though less severe than in prior years, continued to pressure profitability, as did a slight uptick in markdowns to maintain competitive pricing in a value-sensitive market.
- For Q2 and FY26, TJX’s downside EPS guidance signals caution, reflecting ongoing tariff pressures, which TJX assumes will remain at current levels through FY26. Historically, TJX has a track record of conservative guidance, often exceeding expectations, suggesting potential for upside if tariff impacts are mitigated or consumer spending stabilizes. TJX also reaffirmed its FY26 comp guidance of +2–3%, with management noting that Q2 is off to a strong start, driven by continued customer traffic and robust apparel and home category performance. The Q2 comp guidance of +2–3%, aligning with consensus estimates, appears achievable given TJX’s operational momentum and ability to source compelling merchandise.
In summary, TJX’s 1Q26 results highlight the strength of its off-price model, with +3% comps reflecting robust customer traffic and category resilience. However, the company’s cautious EPS guidance for Q2 and FY26, driven by tariff pressures and gross margin contraction, tempers optimism, signaling near-term profitability challenges despite a favorable sales outlook.
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