Market Snapshot
| Dow | 42343.65 | +740.58 | (1.78%) | | Nasdaq | 19199.16 | +461.96 | (2.47%) | | SP 500 | 5921.54 | +118.72 | (2.05%) | | 10-yr Note |
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| | NYSE | Adv 2395 | Dec 382 | Vol 1.15 bln | | Nasdaq | Adv 3203 | Dec 1265 | Vol 8.94 bln |
Industry Watch
| Strong: Technology, Consumer Discretionary, Communication Services |
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Moving the Market
-- Extra 50% tariff on imports from the EU to be delayed until July 9
-- Treasury yields drop with Japan considering reduction of ultra-long bonds
-- Leadership from mega-cap stocks and small-cap stocks
-- Fear of missing out on further gains
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Closing Stock Market Summary
27-May-25 16:20 ET
Dow +740.58 at 42343.65, Nasdaq +461.96 at 19199.16, S&P +118.72 at 5921.54
[BRIEFING.COM] There was hardly any interference from sellers today, as the stock market rallied around a confluence of supportive developments. Stocks began on a high note and steadily added to their gains as the session carried on, benefiting from sidelined investors getting squeezed back into the action by a fear of missing out on further gains. The indices closed near their highs for the day.
There were three primary catalysts behind today's advance:
- President Trump announced that he will be delaying the implementation of his recommended 50% tariff rate for the EU until July 9 to allow more time to negotiate a deal. This decision followed a phone call with European Commission President von der Leyen, who is reportedly wanting to accelerate trade talks now.
- Treasury yields took a welcome step back, bolstered by reports that Japan is considering reducing its issuance of ultra-long bonds. The 10-yr note yield fell eight basis points to 4.43%, cutting below the closely watched 4.50% level, and the 30-yr bond yield dropped 10 basis points to 4.94%, moving below the closely watched 5.00% level.
- The Consumer Confidence Index for May showed a solid jump to 98.0 (Briefing.com consensus 87.0) from a downwardly revised 85.7 (from 86.0) for April, as average 12-month inflation expectations eased from 7.0% to 6.5%.
These were the primary catalysts, but the consumer discretionary (+3.0%), information technology (+2.6%), and communication services (+2.1%) sectors were the main drivers of a broad-based rally effort that included the outperformance of the mega-cap stocks and small-cap stocks.
All 11 S&P 500 sectors finished higher, but only the three sectors mentioned above had a better return than the S&P 500. The smallest gainers were the utilities (+0.8%) and energy (+0.8%) sectors.
With the tariff temperature cooling for now, efforts to hedge for downside protection were tapered. The CBOE Volatility Index fell 13.6% to 19.25.
Today's session was controlled by buyers, evidenced by an A-D line that favored advancers by a better than 6-to-1 margin at the NYSE and by a better than 2-to-1 margin at the Nasdaq.
In other developments, the Treasury market digested a $69 billion 2-yr note auction in decent shape. The high yield of 3.955% stopped through the when-issued yield of 3.965% by a basis point, albeit on slightly weaker-than-average dollar demand. The U.S. Dollar Index was up 0.5% to 99.59.
- S&P 500: +0.7% YTD
- DJIA: -0.4% YTD
- Nasdaq: -0.6% YTD
- S&P 400: -2.5% YTD
- Russell 2000: -6.3% YTD
Reviewing today's economic data:
- Total durable goods orders decreased 6.3% month-over-month in April (Briefing.com consensus -8.1%) following a downwardly revised 7.6% increase (from 9.2%) in March, with a 17.1% decline in transportation equipment orders acting as the key drag. Excluding transportation, durable goods orders rose 0.2% month-over-month (Briefing.com consensus 0.0%) following a downwardly revised 0.2% decline (from 0.0%) in March.
- The key takeaway from the report is that there was a big dropoff in business spending, evidenced by the 1.3% decline in new orders for nondefense capital goods excluding aircraft.
- March FHFA Home Price Index -0.1% month-over-month (Briefing.com consensus 0.2%) following a downwardly revised 0.0% (from 0.1%) in February.
- March S&P Case-Shiller Home Price Index increased 4.1% yr/yr (Briefing.com consensus 4.4%) following an unrevised 4.5% increase in February.
- The Conference Board's Consumer Confidence Index jumped to 98.0 in May (Briefing.com consensus 87.0) from a downwardly revised 85.7 (from 86.0) in June, breaking a string of five consecutive months of decline.
- The key takeaway from the report is that there was a clear connection between the increase in consumer confidence and the pause in the reciprocal tariff rates, which triggered a material rally in stock prices and improved forecasts for the economic outlook. Note: roughly half of the responses came after the May 12 news that the U.S. and China were pausing their respective reciprocal tariff rates.
Buyers in control
27-May-25 15:25 ET
Dow +703.41 at 42306.48, Nasdaq +433.52 at 19170.72, S&P +113.97 at 5916.79
[BRIEFING.COM] There has been no real challenge from sellers today, who have been overwhelmed by the prevailing price action. The stock market started strong, enthused by lower interest rates and the pause on the onerous 50% tariff rate the president recommended on Friday, and it has remained strong.
It has certainly helped that some of its largest sectors by weight are also its best-performing sectors. The consumer discretionary sector (+2.7%) is leading the charge, followed by the information technology (+2.4%) and communication services (+2.0%) sectors.
Interestingly, those three sectors are the only sectors outperforming the market cap-weighted S&P 500 (+1.9%). There is still some decent strength in many other sectors, yet they aren't keeping pace fully with "the market."
Breadth figures denote today's broad-based buying interest. Advancers lead decliners by a better than 6-to-1 margin at the NYSE and by a better than 2-to-1 margin at the Nasdaq.
Market action squeezing sidelined participants
27-May-25 15:00 ET
Dow +711.04 at 42314.11, Nasdaq +436.43 at 19173.63, S&P +114.34 at 5917.16
[BRIEFING.COM] The stock market has been rock-steady today with a bullish-minded bias. The indices are all at or near their best levels of the session on some "squeezing action" of sidelined participants motivated by a fear of missing out on further gains.
At its current level, the S&P 500 is up 22.4% from its April 7 low and sits just 3.7% below its all-time high hit on February 19. Notably, the S&P 500 tested key support at its 200-day moving average on Friday and found it, which is to say there is some technical thrust in today's gains as well.
Seeing some otherwise healthy gains all around today, with the Russell 2000, Nasdaq Composite, S&P 500, and S&P 400 all up at least 2.0%. The S&P 500 for its part is back in positive territory on a year-to-date basis (+0.6%), trailing the equal-weighted S&P 500 (+1.3%) by a slim margin.
S&P 500 gains 2% as Hologic soars on buyout buzz; FICO tanks on regulatory risk
27-May-25 14:30 ET
Dow +715.30 at 42318.37, Nasdaq +449.29 at 19186.49, S&P +116.36 at 5919.18
[BRIEFING.COM] The S&P 500 (+2.01%) is in second place on Tuesday afternoon, up about 115 points.
Briefly, S&P 500 constituents Hologic (HOLX 61.81, +7.53, +13.87%), Super Micro Computer (SMCI 42.55, +2.46, +6.14%), and Teradyne (TER 81.42, +4.44, +5.77%) pepper the top of the standings. HOLX jumps following a Financial Times report that TPG (TPG 48.09, +1.10, +2.34%) and Blackstone (BX 139.15, +3.03, +2.23%) made a buyout offer valuing the company at $16.3B–$16.7B, or $70–$72 per share
Meanwhile, Fair Isaac (FICO 1492.72, -201.64, -11.90%) is today's worst-performing constituent after the FHFA Director suggested upcoming decisions that could reduce or eliminate FICO's role in mortgage underwriting, raising serious regulatory risk. Heavy institutional selling followed the comments, overshadowing the company's new AWS partnership announcement.
Gold drops nearly 2% as dollar gains and fiscal jitters weigh ahead of inflation data
27-May-25 14:00 ET
Dow +701.18 at 42304.25, Nasdaq +457.94 at 19195.14, S&P +116.76 at 5919.58
[BRIEFING.COM] With about two hours left on Tuesday the tech-heavy Nasdaq Composite (+2.44%) leads the market rally.
Gold futures settled $65.40 lower (-1.9%) at $3,300.40/oz, pressured by a strengthening greenback and investor caution ahead of key inflation data and Fed commentary. The decline also followed fiscal concerns after the CBO projected a $3.8 trillion debt increase tied to the new tax-cut bill, weighing on market sentiment.
Meanwhile, the U.S. Dollar Index is up +0.6% to $99.54.
Salesforce climbs higher as Informatica acquisition sets clear path for more scalable AI (CRM)
Before the open, Salesforce.com (CRM) announced a definitive agreement to acquire Informatica (INFA) for approximately $8.0 bln, driving shares of INFA sharply higher. However, INFA had already surged last Friday, following a Bloomberg report indicating that CRM was in advanced talks to acquire the data management firm. Still, shares of INFA are trading moderately below the $25/share acquisition price, which represents a premium of approximately 30% over the unaffected price from Thursday, May 22. This suggests that while the market views the deal positively, some investors may be factoring in risks such as integration challenges or potential regulatory scrutiny.
CRM's stock is also trading higher on the acquisition news, an uncommon reaction for an acquiring company, signaling market confidence in the deal’s strategic fit and valuation. The company has a well-established history of transformative M&A, including its $27.7 bln acquisition of Slack in 2021, $15.7 bln purchase of Tableau in 2019, and $6.5 bln deal for MuleSoft in 2018, demonstrating its expertise in integrating large businesses to expand its ecosystem.
- The $8 bln price tag for INFA, equating to a multiple of 4.5x expected FY26 sales, appears reasonable to investors, particularly when compared to CRM’s historical deals and the strategic value INFA brings to its AI and data management capabilities. This modest multiple likely contributes to the positive market response.
- Strategically, the acquisition of INFA, a leader in enterprise AI-powered cloud data management, enhances CRM’s ability to deliver a unified data architecture critical for its AI-driven solutions. INFA’s platform, which includes data integration, governance, quality, metadata management, and Master Data Management (MDM), serves over 5,000 organizations, including major clients like Unilever and Deloitte. This complements CRM’s Data Cloud and Customer 360 platform by enabling seamless data connectivity across enterprise systems, a key enabler for deploying responsible and scalable AI agents, such as CRM’s Agentforce.
- By integrating INFA’s capabilities, CRM can enhance its AI offerings, allowing customers to leverage cleaner, more accessible data to power generative AI applications, thereby strengthening its competitive position against rivals like Snowflake (SNOW) and positioning it to capitalize on the growing demand for AI-driven CRM solutions.
- Financially, the acquisition is expected to bolster CRM’s revenue by expanding its data management offerings and creating cross-selling and up-selling opportunities across its customer base. INFA’s subscription-based revenue model also aligns well with CRM’s recurring revenue streams. For some context, INFA generated $1.64 bln in total revenue in FY24, which is a drop in the bucket compared to the near $35.0 bln in revenue that CRM generated.
- Key drivers of accretion include enhanced AI-driven product offerings, increased adoption of CRM’s Data Cloud, and operational efficiencies from streamlined data management processes.
The market’s favorable reaction to CRM’s acquisition of INFA stems from the strategic alignment of INFA’s data management capabilities with CRM’s AI and CRM ecosystem, coupled with a reasonable valuation. The potential for revenue growth through cross-selling and AI-driven innovation further supports investor optimism. Nevertheless, risks such as integration complexities and potential regulatory challenges do exist.
AutoZone can't steer around strong FX headwinds as it falls short on EPS again (AZO)
AutoZone's (AZO) 3Q25 earnings report continues a recent trend of falling short of EPS expectations as significant foreign exchange (FX) headwinds continue to negatively impact the company's results. Additionally, a 77-bps yr/yr decline in gross margin further pressured profitability, driven by a mix toward lower-margin commercial sales and rising supply chain costs. The disappointing performance contrasts with Advance Auto Parts’ (AAP) vastly improved Q1 report from last week, which showcased better-than-expected EPS, revenue, and comps, signaling that AAP is narrowing the competitive gap with AZO and O’Reilly Automotive (ORLY) in the aftermarket auto parts industry.
- AZO's Q3 comps rose 3.2% overall, or 5.4% in constant currency, reflecting solid underlying demand despite currency challenges. Domestic comps grew a robust 5.0%, driven by strong performance in commercial sales, which increased 7.3% yr/yr, particularly in hard parts like batteries, brakes, and engine components, fueled by an aging vehicle fleet and steady repair demand. However, international comps fell 9.1% due to significant FX headwinds, primarily from currency depreciation in Mexico and Brazil, though they achieved an impressive 8.1% growth in constant currency, indicating strong market penetration in these regions.
- Weakness in discretionary categories, such as accessories and appearance products, persists as inflation-conscious consumers prioritize essential repairs over non-essential purchases, a trend also noted in AZO’s domestic retail segment, which saw softer growth compared to commercial channels.
- The 77-bps decline in gross margin to 52.7% was primarily driven by a shift in sales mix toward lower-margin commercial business, which grew faster than the higher-margin retail segment, alongside increased supply chain costs due to investments in distribution and mega-hub networks. Furthermore, AZO experienced a negative 21-bps ($8 mln net) non-cash LIFO impact in Q3, contributing to a decrease in gross margin.
- Operating expenses rose to 33.3% of sales from 32.2% a year ago, reflecting deleverage from higher self-insurance expenses, driven by increased claims costs, and ongoing investments in growth initiatives, including technology upgrades and store expansions. These cost pressures highlight the trade-off between short-term profitability and long-term strategic positioning, as AZO prioritizes market share gains and operational enhancements.
- AZO’s growth initiatives, particularly its aggressive store expansion in Mexico and Brazil, are pivotal to its long-term strategy. In Q3, the company added 30 new international stores (25 in Mexico and 5 in Brazil), bringing its international store count to 979, with plans to open 100 more in fiscal 2025. These expansions are enhancing AZO’s presence in high-growth markets, where rising vehicle ownership and less mature aftermarket competition offer significant opportunities.
AZO’s Q3 EPS miss, driven by FX headwinds and gross margin compression, continues a concerning trend of underperformance relative to expectations, compounded by rising operating expenses. Nevertheless, the company’s strong domestic commercial growth, international expansion in Mexico and Brazil, and favorable trends in the auto repair market, driven by an aging vehicle fleet, position it for potential recovery and sustained long-term growth.
PDD Holdings under pressure today on top line miss and profitability concerns (PDD)
PDD Holdings (PDD -16%) is under pressure today after the Chinese ecommerce giant reported Q1 results this morning. PDD, which operates the Chinese social commerce platform Pinduoduo and the global e-commerce marketplace Temu, posted 10% yr/yr revenue growth at US$13.18 bln, but that was below analyst expectations.
- The top line miss was not the only worrisome metric. Despite 10% revenue growth, PDD posted a pretty large decline in profitability. Non-GAAP operating profit in Q1 fell 36% yr/yr to US$2.52 bln and non-GAAP net income fell 45% yr/yr to US$2.33 bln. Part of the profitability declines are attributable to PDD making what it characterized as "substantial investments" in its platform ecosystem to support merchants and consumers amid rapid changes in the external environment.
- These investments weighed on short-term profitability but PDD sees enhanced merchant support as essential to building a healthy merchant ecosystem. These ecosystem investments are expected to help drive sales and reduce costs for a broader base of SME merchants.
- Circling back to the top line, Q1's 10% yr/yr revenue growth was its lowest of any quarter in the past five years. PDD has warned about this before, saying that a slowdown in its revenue growth rate was to be expected as its business scales and challenges emerge. This trend has been further accelerated by the changes in what PDD calls the external environment. We assume this means tariffs and trade tensions generally between China and the US.
- However, it is not just that. On the call, PDD said that competition in Chinese e-commerce sectors has further intensified. As a third-party marketplace, PDD says it faces limitations when it comes to passing on policy incentives to consumers, which puts its merchants at a clear disadvantage compared to competitors that operate a first party business.
- Also, since the second half of last year, PDD has significantly expanded its fee reduction program for merchants. And this year, PDD says merchants are expecting to face further pressure, which has spurred PDD to commit significant resources to support a profitable ecosystem through uncertain times. PDD says this effort will likely weigh on profitability in the short term and even for a considerable period of time to come.
While we think PDD's slowing top line growth and its top line miss are concerns for investors, we suspect the bigger concern relates to PDD's decision to make large investments in its merchant platform ecosystem. That impacted profitability pretty substantially in Q1 and PDD's comments about this weighing on profitability for some time in the future are concerning as well. Trade war tensions are clearly a factor as well, but these investments are giving investors pause.
Intuit surges on Q3 report on strong tax season, Credit Karma was a standout as well (INTU)
Intuit (INTU +9%) is sharply higher today after reporting a huge EPS beat with its Q3 (Apr) earnings report last night. It also guided above expectations for Q4 (Jul). Q3 is always a critical quarter for Intuit. It's the largest revenue quarter of the year for them because tax season triggers a lot of sales of Turbo Tax. INTU focuses on small businesses and consumers (QuickBooks, TurboTax, Credit Karma, Mailchimp).
- Consumer Group segment (TurboTax, both DIY and assisted) revenue grew a healthy 11% yr/yr to $4.0 bln. Intuit says it made significant progress in terms of disrupting the assisted tax category and winning in the DIY category. Intuit saw strong monetization across simple and complex tax filers, driving an expected 13% increase in average revenue per return (ARPR), as more customers choose its assisted offerings and faster access to refunds.
- Intuit expects pay-nothing customers to decline to 8 mln from 10 mln, as Intuit shifts its focus towards disrupting assisted tax, which resulted in yielding share with lower quality ARPR customers. Intuit expects Consumer Group revenue to grow 10% this year, driven by 24% growth in TurboTax Live customers, resulting in 47% growth in TurboTax Live revenue, well above its long-term expectation of 15-20%. ProTax (used by tax pros, accountants) revenue grew 9% in Q3.
- Outside of tax season, its largest segment is usually its Global Business Solutions Group (mostly QuickBooks and Mailchimp). GBSG revenue jumped 19% yr/yr to $2.8 bln. Its robust growth was largely consistent with prior quarters and broad-based across online accounting and online services. QuickBooks Online Accounting revenue grew 21% in Q3, driven by higher prices, customer growth, and mix shift. Intuit continues to prioritize disrupting the mid-market. Mailchimp has been a bit of a drag on GBSG segment revs. Mailchimp's revenue was flat in Q3 and Intuit continues to expect it will take several quarters to deliver improved outcomes at scale.
- Its Credit Karma segment was a laggard in FY23, but recovered nicely in FY24 and that has continued in FY25. Credit Karma revenue in Q3 grew 31% to $579 mln, driven by strength in credit cards, personal loans, and auto insurance. What makes the growth more impressive is that Intuit is lapping strong growth in auto insurance that began in Q3 last year.
Overall, this was a great quarter. Tax season is always critical for Intuit. What stood out to us is that the company made surprisingly strong inroads in terms of scaling up its higher margin assisted tax service. Also, more generally, its overall business sounds stable despite the macro/inflation pressures, which was evident with its upside Q4 guidance. What helps Intuit is that most of its customers are on the service side and not the product side, so there is some insulation from tariffs. Credit Karma was a another bright spot and its integration with Turbo Tax added to growth for its Consumer segment.
Deckers Outdoor getting decked as slowing growth, lack of FY26 guidance spooks investors (DECK)
Staying true to form, Deckers Outdoor (DECK) cruised past 4Q25 EPS expectations, continuing a five-year trend of consistent EPS beats. However, the footwear maker's yr/yr revenue growth sharply decelerated to 6.5% from the high-teen/low-twenty percent level it had been recently achieving. Making matters worse, DECK issued downside guidance for 1Q26 and opted to withhold FY26 guidance due to macroeconomic uncertainties and anticipated tariff impacts of up to $150 mln in cost of goods sold (COGS). Tariffs are expected to pressure gross margins by approximately 250 bps yr/yr without immediate mitigation from price increases or cost-sharing, contributing to investor concerns about future profitability.
- The slowdown in revenue growth, particularly for HOKA, marks a shift from DECK’s recent trajectory. HOKA’s 10% net sales increase to $586 mln in Q4 compares unfavorably to its 24% growth in Q3, 35% in Q2, and 30% in Q1. This deceleration stems from several factors, including model changeovers for key products like the Bondi 9 and Clifton 10, which led to increased price promotions and impacted average selling prices, though unit volumes remained strong. Additionally, a strategic shift toward wholesale expansion diluted direct-to-consumer (DTC) performance. DECK's DTC net sales decreased by 1.2% in Q4, while wholesale net sales for the company (which HOKA heavily contributes to) increased by 12.3% in the same quarter.
- Meanwhile, UGG Brand grew net sales by just 3.6% to $374.3 mln in Q4, a significant step down from 16% growth in Q3 and 13% in Q2. UGG’s slower growth reflects inventory constraints heading into Q4, limiting sales potential despite strong demand, particularly in international markets. Both brands face challenges from tougher yr/yr comparisons and macroeconomic pressures, including cautious U.S. consumer spending.
- DECK's downside 1Q26 guidance further disappointed investors. This outlook reflects post-tariff impacts without mitigation from planned price adjustments or cost-sharing with partners, which are not expected until after Q1. The company anticipates HOKA growth of at least low-double digits and UGG growth of at least mid-single digits, signaling continued moderation in growth rates.
- The decision to withhold FY26 guidance, citing trade uncertainty and potential tariff-related COGS increases, has heightened market unease. This lack of forward visibility, combined with concerns about U.S. consumer spending and potential margin compression, has spooked investors, as it deviates from DECK’s historical practice of providing clear annual guidance.
- DECK’s Q4 report showcased some notable positives, particularly in profitability. The company achieved a gross margin of 56.7% for Q4, up 50 bps from the year-earlier period, driven by DECK's disciplined inventory management and favorable product mix as it shifted toward higher-margin products, especially within HOKA’s premium offerings, despite some promotional activity tied to model changeovers.
DECK’s stock plunge reflects investor concerns over decelerating revenue growth, particularly HOKA’s slowdown to 10% in Q4, and disappointing Q1 guidance, which incorporates unmitigated tariff impacts. The decision to withhold FY26 guidance due to trade and macroeconomic uncertainties has amplified market fears, overshadowing a strong EPS beat and improved margins.
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