Market Snapshot
| Dow | 44041.15 | +17.86 | (0.04%) | | Nasdaq | 20720.68 | +42.88 | (0.21%) | | SP 500 | 6261.73 | +17.97 | (0.29%) | | 10-yr Note |
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| | NYSE | Adv 1649 | Dec 1033 | Vol 496.70 mln | | Nasdaq | Adv 2699 | Dec 1490 | Vol 7.65 bln |
Industry Watch
| Strong: Health Care, Real Estate, Financials, Industrials, Materials, |
| | Weak: Energy, Consumer Discretionary, |
Moving the Market
June PPI and Core PPI unchanged month-over-month in June
Earnings reports from several big banks before the open
Volatility surrounding headlines that President Trump intended to fire Fed Chair Jerome Powell, which President Trump later dismissed in a press conference
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Just below session highs
16-Jul-25 15:30 ET
Dow +17.86 at 44041.15, Nasdaq +42.88 at 20720.68, S&P +17.97 at 6261.73
[BRIEFING.COM] The S&P 500 (+0.3%) trades just a handful of points off its session highs and 60 points higher than its session low around 11:30 ET.
The financials sector (+0.7%) is once again among the top performers, recapturing its early gains after some midday volatility saw it slip beneath its opening values.
The energy sector (-0.5%) is the only real laggard today, with just five of its 23 constituents currently posting a gain today.
More sectors displaying strength
16-Jul-25 15:00 ET
Dow +207.81 at 44231.10, Nasdaq +44.79 at 20722.59, S&P +19.16 at 6262.92
[BRIEFING.COM] The major averages have steadily ticked upwards towards their best levels of the day, with support coming across multiple sectors.
Eight sectors trade in the green, a complete reversal from just several hours ago when all but the health care (+1.3%) and real estate (+0.9%) sectors were in negative territory.
These two defensive sectors still post the highest gains, but their leadership margin has been slimmed noticeably.
The information technology sector (+0.1%) now trades in the green after trailing this morning, though chip stocks are still underperforming and have the PHLX Semiconductor Index down 1.0%.
Economic activity edges up, but Fed districts flag rising costs and pessimism ahead
16-Jul-25 14:30 ET
Dow +128.72 at 44152.01, Nasdaq +19.27 at 20697.07, S&P +9.51 at 6253.27
[BRIEFING.COM] The broader market held its ground following the release of the Fed's Beige Book, published at the bottom of the hour; the report found that economic activity increased slightly from late May through early July. Five Districts reported slight or modest gains, five had flat activity, and the remaining two Districts noted modest declines in activity. Uncertainty remained elevated, contributing to ongoing caution by businesses. Currently, the S&P 500 (+0.15%) is in second place, up about 10 points.
- Among other notable points from the report, employment increased very slightly overall, with one District noting modest increases, six reporting slight increases, three no change, and two noting slight declines. Hiring remained generally cautious, which many contacts attributed to ongoing economic and policy uncertainty.
- Although reports of layoffs were limited in all industries, they were somewhat more common among manufacturers. Looking ahead, many contacts expected to postpone major hiring and layoff decisions until uncertainty diminished.
- Prices increased across Districts, with seven characterizing price growth as moderate and five characterizing it as modest, mostly similar to the previous report. In all twelve Districts, businesses reported experiencing modest to pronounced input cost pressures related to tariffs, especially for raw materials used in manufacturing and construction. Rising insurance costs represented another widespread source of pricing pressure.
- Looking ahead, the outlook was neutral to slightly pessimistic, as only two Districts expected activity to increase, and others foresaw flat or slightly weaker activity.
Currently, the yield on the benchmark 10-yr treasury note is down about two and a half basis points at 4.462%.
Gold gains as dollar slides, yields dip amid trade tensions and Fed uncertainty
16-Jul-25 13:55 ET
Dow +121.30 at 44144.59, Nasdaq +11.92 at 20689.72, S&P +8.87 at 6252.63
[BRIEFING.COM] The tech-heavy Nasdaq Composite (+0.06%) is retreating back to flat lines, up now just 12 points as we approach the Fed's Beige Book at the top of the hour.
Gold futures settled $22.40 higher (+0.7%) at $3,359.10/oz, supported by a weaker U.S. dollar and declining Treasury yields, which boosted demand for non-yielding assets. The move also reflected investor caution amid renewed trade tensions, particularly U.S. tariff threats toward Mexico and the EU, and market jitters following reports of potential friction between President Trump and the Federal Reserve.
Meanwhile, the U.S. Dollar Index is down about -0.5% to $98.17.
Dow gains over 150 points as Johnson & Johnson leads; AMZN, MCD, HD lag
16-Jul-25 13:25 ET
Dow +153.73 at 44177.02, Nasdaq +31.69 at 20709.49, S&P +12.46 at 6256.22
[BRIEFING.COM] The Dow Jones Industrial Average (+0.35%) is in first place on Wednesday afternoon, up more than 150 points.
A look inside the DJIA shows that Amazon (AMZN 223.30, -3.05, -1.35%), McDonald's (MCD 298.11, -1.51, -0.50%), and Home Depot (HD 357.15, -1.49, -0.42%) are underperforming.
Meanwhile, Johnson & Johnson (JNJ 164.72, +9.55, +6.15%) is today's top gain getter.
The DJIA is now down only -0.44% week-to-date.
ASML facing heavy pressure on weak guidance, dragging down industry peers
ASML (ASML -9%) is sharply lower today after releasing its Q2 results. This manufacturer of semiconductor equipment reported revenue growth of 23.2% yr/yr to €7.7 bln, which was a slight beat on expectations primarily due to one-time revenue recognition and business upgrades. The company handily beat on Q2 EPS expectations, its largest in over five years.
While the Q2 results were impressive, investors were clearly disappointed that ASML guided well below analyst expectations for both Q3 and FY25.
- In terms of why the guidance was weak, ASML said that customers are facing macro and geopolitical headwinds. Specifically, some customers are navigating specific challenges that may impact the timing of their cap-ex spend. Tariffs seem to have an impact on timing as well.
- These concerns prompted management to state, "while we are still praying for growth in 2026, we cannot confirm it at this stage." This comment seems to be adding to investors' concerns.
- Specifically, ASML now expects Q3 revenue between €7.4-7.9 bln and FY25 revenue to grow 15%, both are a good bit below expectations.
- ASML's weak guidance and cautious commentary is clearly raising concerns among investors about the semi cap equipment space heading into earnings season. As a result we are seeing some selling pressure in some of its peers like Applied Materials (AMAT -3%), LAM Research (LRCX -2%), and KLA Corporation (KLAC -2%).
While ASML's Q2 results were impressive, the cautious guidance/commentary for Q3 and FY25 are overshadowing the Q2 results. Investors appear concerned that other semi cap equipment names may have cautious outlooks as well when they report in the next few weeks.
Morgan Stanley posts solid Q2, but results overshadowed by Goldman's investment banking surge (MS)
Morgan Stanley's (MS) 2Q25 earnings report showcased a solid performance with both EPS and revenue surpassing analysts' expectations, but compared to rival Goldman Sachs (GS), which reported a 26% yr/yr surge in investment banking revenue, MS’s results were less impressive, particularly in its investment banking business. This divergence in performance has pressured MS shares, despite the company’s positive steps to enhance shareholder value, including a reauthorized $20.0 bln stock repurchase program and a dividend increase of $0.075 per share to $1.00.
- The Institutional Securities segment, MS’s largest revenue driver, generated $7.6 bln in net revenues, reflecting an 8.5% yr/yr increase. However, investment banking revenue disappointed, falling 5% to $1.54 bln, with Advisory revenue dropping 14% to $508 mln, a stark contrast to GS's 71% Advisory revenue surge to $1.17 bln. This decline was attributed to a slowdown in midsize M&A and sponsor activity, compounded by market uncertainties around U.S. tariffs and geopolitical tensions, which have caused some transactions to pause.
- On a positive note, equity underwriting was a bright spot, with revenues rising 42% to $500 mln, driven by strong activity in follow-on offerings, convertible securities, and a rebound in IPOs, reflecting MS’s role as a lead underwriter in high-profile deals like CoreWeave’s (CRWV) $1.5 bln IPO.
- On the trading side, the unit delivered solid but less robust results compared to GS. Equity trading revenues grew 23% yr/yr to $3.7 bln, driven by strong client activity in prime brokerage and derivatives, particularly in Asia, where market share gains were notable. This growth, while impressive, trailed GS’s 36% increase in equities revenue to $4.3 bln, reflecting GS’s stronger positioning in intermediation and financing amid volatile market conditions.
- Fixed Income, Currency, and Commodities (FICC) trading revenues matched GS’s performance, rising 9% to $2.18 bln, fueled by heightened client demand for hedging in macro and FX products as investors adjusted portfolios in response to tariff-related stagflation concerns.
- The Wealth Management segment was a standout, with net revenues increasing 14.7% yr/yr to $7.8 bln, surpassing estimates of $7.35 bln. This growth was driven by a 16% rise in asset management revenues, supported by record client assets under management of $6.5 trillion and $59 bln in net new assets, reflecting strong fee-based flows. Transaction revenues also rose 17%, propelled by broad-based increases in client activity across equities, fixed income, and structured products, particularly in technology and industrial stocks.
MS’s Q2 results were solid, with strong contributions from Wealth Management and trading, but they paled in comparison to GS’s exceptional performance, particularly in investment banking. This divergence has driven capital flows from MS to GS shares, as investors favor GS’s superior growth in Advisory and equities trading.
Johnson & Johnson nicely higher on healthy beat, acceleration from Q1, tariff impact waning (JNJ)
Johnson & Johnson (JNJ +6%) is trading nicely higher after reporting strong upside results for Q2 for both EPS and revs. Revenue grew 5.8% yr/yr (+4.6% operational growth) to $23.74 bln. It also raised FY25 EPS and revenue guidance. JNJ saw yr/yr growth in both its Innovative Medicine (formerly known as Pharma) and MedTech segments.
- Innovative Medicine segment sales in Q2 grew 4.9% yr/yr (+3.8% operational) to $15.20 bln, topping $15 bln for the first time ever. JNJ noted that no other healthcare company has grown through the loss of exclusivity of a multi-billion dollar product in the first year. In JNJ's case, it was STELARA (psoriasis, psoriatic arthritis, Crohn's disease) as several biosimilars have been approved. And yet, overall segment sales still grew nicely. Segment performance was driven by double digit growth across 13 brands, including Darzalex.
- JNJ says it has a bold vision to eliminate cancer. It has more than ten products on the market across 26 approved indications and over 25 in late stage development. For example, in multiple myeloma, JNJ has treatments in every line of therapy. Approximately 80% of myeloma patients today receive a JNJ medicine. JNJ expects to become the #1 oncology company by 2030, with sales of more than $50 bln.
- Turning to its MedTech segment, reported sales grew 7.3% yr/yr (+6.1% operational) to $8.54 bln, a pretty significant acceleration from Q1's +2.5%/+4.1%. Growth was driven by three focus areas: cardiovascular, surgery, and vision. The acceleration relative to Q1 was driven by strong performances in its cardiovascular portfolio, surgical vision and wound closure in surgery. JNJ remains focused on higher growth markets. In cardiovascular specifically, JNJ is a leader in heart recovery, circulatory restoration and electrophysiology. Cardiovascular has some of the largest unmet needs in healthcare and is one of the fastest growing spaces in MedTech.
- JNJ continues to expect both its IM and MedTech segments will see higher operational sales growth in 2H25 relative to 1H25. For IM, JNJ assumes that Stelara's biosimilar competition will accelerate throughout the year. On the MedTech side, JNJ sees an acceleration in growth to be driven by increased adoption of newly launched products in cardiovascular surgery and vision. JNJ remains excited about pipeline progress in the remainder of 2025.
Overall, this was a good quarter for JNJ. It reported a large EPS beat and it rebounded from slow top line growth in Q1 to post strong growth in Q2. Clearly, losing exclusivity for Stelara, a multi-billion dollar product, will continue to be a headwind to top line growth in 2025, but JNJ seems to be managing it well. Also, we were pleased to see the raised FY25 guidance, which tells us 2H is going to see acceleration from 1H. What also stood out was JNJ lowering its estimate for the impact of tariffs on its MedTech segment to $200 mln from $400 mln, with no impact on the IM side. We think this is adding to today's gain in the stock price.
Goldman Sachs continues impressive EPS winning streak as Advisory shines with 71% surge in revs (GS)
Goldman Sachs (GS) delivered a robust performance in 2Q25, reporting net revenues of $14.58 bln, reflecting a strong 14.5% yr/yr increase that comfortably surpassed the FactSet consensus estimates of $13.51 bln. EPS came in at $10.91, also easily beating analyst expectations of $9.65, marking the fourth consecutive quarter where GS has crushed earnings estimates. The standout performers were the Advisory and equity trading businesses, which drove significant top-line growth. Adding to the positive takeaways, GS announced a 33% increase in its quarterly dividend to $4.00 per share, signaling confidence in its strong cash flow generation and commitment to returning capital to shareholders.
- The Global Banking & Markets (GBM) segment, GS’s largest revenue driver, posted a remarkable 24% yr/yr revenue increase to $10.12 bln, accounting for approximately 69% of the firm’s total revenue. Within this segment, investment banking fees surged 26% to $2.19 bln, with Advisory services emerging as the clear standout, generating $1.17 bln in net revenues, a 71% yr/yr increase.
- This exceptional growth was fueled by GS’s continued dominance in mergers and acquisitions (M&A), where it maintained its position as the #1 advisor in completed M&A transactions in Q2. The surge in Advisory revenue reflects heightened client activity in a favorable dealmaking environment, supported by improving CEO confidence and a robust backlog of transactions, particularly in North America.
- The trading unit within the GBM segment also contributed significantly to the quarter’s strength. Equities trading revenue soared 36% yr/yr to a record $4.3 bln, driven by strong performance in both intermediation and financing activities. This growth was propelled by turbulent market conditions, partly attributed to U.S. trade policy shifts, which increased client demand for risk management and portfolio adjustments.
- Fixed Income, Currency, and Commodities (FICC) trading revenue posted solid growth of 9% to $3.47 bln, with higher revenues in financing activities serving as the primary driver. While FICC growth was more modest compared to equities, it reflects GS’s ability to navigate volatile markets effectively, leveraging its position as a top-tier player in FICC.
- In contrast, the Asset & Wealth Management (AWM) segment was a relative laggard, with revenues declining 3% yr/yr to $3.78 bln. This decrease was entirely attributable to a 72% plunge in debt investments, which weighed heavily on the segment’s overall performance. However, other areas of AWM showed resilience, with asset management fees rising 10% to $1.2 bln and wealth management fees increasing 11% to $1.59 bln.
- The growth in asset management fees was driven by record Assets Under Supervision (AUS) of $3.29 trillion, reflecting GS’s ability to attract and retain institutional and high-net-worth clients. Wealth management fee growth was supported by strong demand for GS’s premier ultra-high-net-worth services, bolstered by its client-centric approach and diversified offerings in alternatives.
GS’s Q2 results reaffirm its status as a top-flight financial bellwether, driven by exceptional performance in its Global Banking & Markets segment, particularly in Advisory and equities trading. The firm’s ability to consistently surpass EPS expectations, coupled with robust revenue growth and a significant dividend increase, underscores its financial strength and strategic focus on high-value, client-driven businesses.
Albertsons sharply lower today following narrower-than-usual EPS beat (ACI)
Albertsons (ACI -5%) is trading sharply lower today after reporting its Q1 (May) results. The grocery store giant reported revenue growth of 2.5% yr/yr to $24.89 bln, which was a slight beat and was driven by a healthy increase in identical sales growth of +2.8%. The company beat by only a penny on the EPS line. Besides a rare miss in Q1 of last year, this was its most narrow EPS beat in over five years. On the positive side, ACI raised its guidance for identical sales growth to +2.00-2.75% from +1.50-2.50%.
- Revenue in Q1 continues to remain strong for ACI, which can be attributed to strong identical sales growth driven by its digital platforms. Two of its four platforms stand out above the rest. E-commerce grew 25% yr/yr and now totals 9% of total grocery revenue, while its pharmacy and health platform grew 20%.
- What stood out to us is that ACI raised identical sales guidance very early in its fiscal year. To do so is a sign of confidence for ACI. Typically, companies tend not to raise full year guidance this early to give them a little wiggle room in case the next quarter is weak. It feels its investments in its customer experience and digital growth platforms are driving sales.
- The increase in identical sales guidance can also be attributed to its productivity agenda, which helps fuel growth and offset inflationary headwinds, a main concern of its consumers. Management expects $1.5 bln in productivity savings through FY25-27.
- Despite the increase in FY25 identical sales guidance, management did caution that Q2 (Aug) identical sales could be towards the lower end of guidance, with gradual acceleration in 2H25.
- In terms of its competitive landscape, management is seeing continued promotional investment from competitors, while they are leaning more heavily on loyalty (grew 14% yr/yr) and personalized deals. However, ACI continues to see pressure from mass club stores like Costco (COST) and Walmart (WMT).
Despite reporting solid identical sales growth and raising its guidance, the stock is trading sharply lower today. We think the narrow beat on EPS is weighing more heavily on investors compared to the positives. Also, it sounds like ACI's mass club store competitors are being aggressive on lowering prices, so we wonder if that will affect ACI down the road.
The Big Picture
Last Updated: 11-Jul-25 12:10 ET | Archive
Earnings beats coming - but what's next?
Briefing.com Summary:
*A lowered earnings bar sets the stage for widespread Q2 earnings beats.
*The market's premium valuation is riding on the guidance heard from the mega-cap stocks.
*The market is priced for positive outcomes on all fronts, which is why there is little room for reporting error.
The second-quarter earnings reporting period is upon us, and, well, what a difference a quarter makes.
Heading into the first-quarter earnings reporting period in mid-April, the world was awash in growth concerns linked to the D.O.G.E. cost-cutting campaign in the U.S., President Trump's reciprocal tariff announcements, and a cold trade war with China.
There was ample concern that companies would either be slashing their full-year guidance or pulling their full-year guidance, citing a lack of visibility. There was some of that, but it wasn't the universal message.
As it turned out, the first quarter results were much better than expected, and the guidance, which many companies still gave, was much better than feared. The added benefit is that it also coincided with the D.O.G.E. effort fading into the background, the president declaring a 90-day pause on the reciprocal tariff rates, and the U.S. and China thawing out their trade relationship.
Bingo, presto, bammo... the S&P 500 and Nasdaq Composite hit new record highs, rallying as much as 30% and 40%, respectively, from their April 7 lows. Ironically, they did so as second-quarter earnings estimates got slashed.
According to FactSet, the blended second-quarter earnings growth rate for the S&P 500 stands at 4.6% today versus 9.2% on March 31. Cue the second-quarter earnings beats.
A Few Questions
The earnings bar has been lowered, and there is no reason to think, if history is any precedent, that it won't be hurdled. The only question is, by how much? Okay, maybe that isn't the only question. The other pressing question is, what will the guidance look like?
The table below shows the blended growth estimate for the second quarter for the 11 S&P 500 sectors and the blended growth estimate for the third quarter based on FactSet consensus estimates.
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| Communication Services | 29.3% | 1.4% | | Consumer Discretionary | -5.6% | -2.9% | | Consumer Staples | -3.3% | 0.1% | | Energy | -26.3% | -9.3% | | Financials | 2.5% | 7.9% | | Health Care | 3.2% | 7.5% | | Industrials | -1.0% | 13.7% | | Information Technology | 16.0% | 15.8% | | Materials | -3.6% | 20.3% | | Real Estate | 1.1% | 3.2% | | Utilities | 4.5% | 16.3% |
SectorQ2Q3Source: FactSetFor the second quarter, two sectors—information technology and communication services—will be largely responsible for the earnings growth. Those sectors house Apple (AAPL), Microsoft (MSFT), NVIDIA (NVDA), Alphabet (GOOG), Meta Platforms (META), and Netflix (NFLX).
Room to Run
Although second-quarter earnings per share estimates have been revised lower, the forward twelve-month earnings per share estimates have been revised higher. That estimate bottomed at $275.08 on April 24, and it sits at $281.64 today.
A weaker dollar, the persistence of a generally solid labor market, the framework trade agreement between the U.S. and China, the rollback in tariff rates, an expectation of lower interest rates, and the passage of the "One Big, Beautiful Bill" contributed to the inflection point.
And what an inflection point it has been for the market. A fear of recession quickly got supplanted by renewed growth optimism, which in turn took some foreboding thoughts about the earnings outlook and turned them into a ray of sunshine. That has been a significant catalyst for the recovery rally.
But herein lies another question. Has the market, at 22.3x forward twelve-month earnings, a 21% premium to the 10-year average, already priced in the good earnings news? We would posit that, yes, it has, which is why the guidance during the June quarter reporting period will be key.
There is room to run for companies that raise their guidance, room to consolidate for companies that reiterate their guidance, and room for sharp declines for companies that lower their guidance. What that means for the stock market will depend in large part on what companies are sending those messages.
It is one thing if Helen of Troy (HELE), a small-cap consumer products company, cuts its guidance, and quite another if NVIDIA (NVDA) disappoints with its guidance. The messaging risk and/or opportunity for the stock market is the same as it has been for more quarters than we can count, and it resides with the mega-cap stocks.
That's just a fact for a market cap-weighted index that has a small cohort of stocks (NVDA, MSFT, AAPL, AMZN, GOOG, META, AVGO, TSLA, BRK.B, and LLY) accounting for approximately 40% of its total market capitalization.
Where they go, the market cap-weighted S&P 500 will follow. That could mean good things, but at this juncture we see a better risk-reward dynamic for passive investors in the equal-weighted S&P 500, which also has a less demanding valuation at 17.1x forward twelve-month earnings, a slight premium to its 10-year average of 16.5x.
Briefing.com Analyst Insight
Companies were given a pass of sorts in the first quarter reporting period when it came to guidance, because everything then was so opaque. It is much less opaque now, not that it is entirely clear. A ratcheting up of tariff rates for most countries starting August 1 has been advertised, although the market has not been buying what the president has been selling, thinking for the most part that it is just negotiating leverage to extract better terms for the U.S.
This stock market, which sits near record highs, is priced for positive outcomes when it comes to tariffs, interest rates, the economy, and inflation, all of which feed into earnings.
Although earnings estimates for the second quarter have been lowered, expectations with respect to the earnings outlook are high. The calendar year 2026 EPS estimate of $298.97 translates to 13.8% year-over-year growth versus the calendar year 2025 estimate. We think the market has turned its eyes to the 2026 outlook to deflect some of the concern about trading at 22.3x forward twelve-month earnings, which encapsulates the remainder of 2025.
If the market cap-weighted S&P 500 is going to retain its premium multiple, the guidance coming out of the second-quarter reporting period needs to be optimal, particularly from the market's premium companies.
Let the reporting begin.
-- Patrick J. O'Hare, Briefing.com
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