Market Snapshot
| Dow | 44495.78 | +172.71 | (0.39%) | | Nasdaq | 20918.65 | -54.15 | (-0.26%) | | SP 500 | 6313.34 | +7.74 | (0.12%) | | 10-yr Note |
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| | NYSE | Adv 1919 | Dec 745 | Vol 533.11 mln | | Nasdaq | Adv 2640 | Dec 1557 | Vol 9.10 bln |
Industry Watch
| Strong: Health Care, Real Estate, Financials, Utilities, Energy, Materials, Consumer Discretionary, Consumer Staples, Industrials |
| | Weak: Information Technology, Communication Services |
Moving the Market
Sizable batch of earnings reports before the open
Early losses in the technology sector with chipmakers facing pressure
Outperformance in small-cap and mid-cap stocks while mega-cap names lag
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Health care sector maintains lead
22-Jul-25 15:25 ET
Dow +172.71 at 44495.78, Nasdaq -54.15 at 20918.65, S&P +7.74 at 6313.34
[BRIEFING.COM] The stock market trades in a relatively stable manner at this juncture, with the S&P 500 holding on to its modest 0.1% gain.
While sector strength has broadened throughout the day, the health care sector (+1.8%) has maintained its position as the day's best performer.
The sector has benefited from positive earnings reports from CRO companies today, as IQVIA (IQV 188.80, +29.84, +18.8%) is the top mover within the S&P 500.
Though not an S&P 500 constituent, Medpace (MEDP 484.11, +175.23, +56.7%), another CRO services company, surged following its earnings yesterday after the close.
Elsewhere in the sector, a majority of companies trade in positive territory today, including larger constituents such as Eli Lilly (LLY 777.13, +14.95, +2.0%) and Johnson & Johnson (JNJ 167.20, +2.84, +1.7%).
Improving from session lows
22-Jul-25 15:00 ET
Dow +158.64 at 44481.71, Nasdaq -51.02 at 20921.78, S&P +8.31 at 6313.91
[BRIEFING.COM] The major averages have steadily climbed from their early lows, with the DJIA (+0.4%) still out in front, the S&P 500 (+0.1%) now posting a slight gain, and the Nasdaq Composite (-0.2%) trimming its losses.
Nine sectors trade in positive territory, and breadth figures have steadily improved throughout the session. Advancers outpace decliners by a better than 2-to-1 ratio on the NYSE and a 5-to-3 ratio on the Nasdaq.
Only the technology (-0.9%) and communication services (-0.2%) sectors remain in negative territory, though both sectors have improved from early lows.
Within the communication services sector, Alphabet (GOOG 192.45, +1.30, +0.68%) has been able to turn early pressure into a modest gain ahead of its earnings report tomorrow.
Tesla (TSLA 334.62, +6.13, +1.9%) also reports after the close tomorrow. The stock's performance today has helped the consumer discretionary sector (+0.8%) capture a nice gain after a sluggish start.
S&P 500 flat as NVR, Enphase lead gainers ahead of earnings; MSCI slides post-report
22-Jul-25 14:30 ET
Dow +107.40 at 44430.47, Nasdaq -87.52 at 20885.28, S&P -0.91 at 6304.69
[BRIEFING.COM] The S&P 500 (-0.01%) is down less than a point on Tuesday afternoon.
Briefly, S&P 500 constituents Charles River (CRL 162.51, +12.72, +8.49%), NVR (NVR 7,914.69, +538.49, +7.30%), and Enphase Energy (ENPH 42.41, +2.75, +6.93%) pepper the top of the standings. NVR and ENPH both report earnings this week.
Meanwhile, MSCI (MSCI 531.13, -46.84, -8.10%) is at the bottom of the average following earnings.
Gold tops $3,440 as dollar slips, yields fall, and trade tensions stir safe-haven demand
22-Jul-25 14:00 ET
Dow +97.91 at 44420.98, Nasdaq -82.38 at 20890.42, S&P -0.56 at 6305.04
[BRIEFING.COM] The tech-heavy Nasdaq Composite (-0.39%) is today's worst-performing major average, down about 82 points.
Gold futures settled $37.30 higher (+1.1%) at $3,443.70/oz, reaching their strongest levels since mid-June. The move was driven largely by a weaker U.S. dollar and falling Treasury yields, making non-yielding gold more attractive. Additionally, investors sought safety amid growing trade tensions, particularly the looming U.S. tariff deadline on August 1 and the possibility of EU retaliatory measures, which increased safe-haven demand.
Meanwhile, the U.S. Dollar Index is down about -0.5% to $97.41
Dow outperforms as MRK, AMGN, and CAT lead; SHW lags
22-Jul-25 13:30 ET
Dow +103.02 at 44426.09, Nasdaq -84.43 at 20888.37, S&P -0.36 at 6305.24
[BRIEFING.COM] The Dow Jones Industrial Average (+0.23%) is in first place, the only major average in positive territory to this point on the session.
A look inside the DJIA shows that Merck (MRK 81.43, +2.12, +2.67%), Amgen (AMGN 302.76, +6.89, +2.33%), and Caterpillar (CAT 417.02, +6.95, +1.69%) are some of the best performers.
Meanwhile, Sherwin-Williams (SHW 333.15, -8.15, -2.39%) is today's top laggard.
The DJIA is now up approx. +0.75% month-to-date.
Sherwin-Williams' Q2 results disappoint amid restructuring costs and sluggish housing market (SHW)
Sherwin-Williams (SHW) delivered a disappointing 2Q25 earnings report, marking its steepest EPS miss in over five years, despite revenue of $6.31 bln aligning with analysts' forecasts. The miss was driven by elevated expenses tied to accelerated restructuring initiatives and persistent sluggish DIY demand in North America, further compounded by a lack of near-term catalysts to shift the trajectory. Management responded by issuing downside FY25 EPS guidance of $11.20-$11.50, down from the prior $11.65-$12.05 range, alongside a net sales outlook of up or down a low-single digit percentage, reflecting a cautious stance as they navigate a challenging demand environment.
- The company’s restructuring actions took center stage in Q2, with a significant acceleration leading to $59 mln in pre-tax expenses, doubling the scope of prior initiatives to streamline operations amid softer demand. Additionally, faster-than-anticipated progress on its new buildings project incurred $40 mln in pre-tax transition and related costs, adding to the quarter’s financial strain. While these moves have caused short-term pain by inflating expenses and pressuring profitability, they position SHW to enhance operational efficiency and strengthen its competitive stance over the long term, particularly as it targets market share gains in a recovering landscape.
- The Paint Stores Group (PSG) provided a bright spot, with sales rising 2.3% yr/yr, driven by mid-single digit price increases that offset a low-single digit decline in sales volume. Key factors influencing this segment include robust professional demand in areas like protective and marine coatings, alongside a modest uptick in residential repaint, though softer new residential activity and cautious consumer spending limited volume growth. This pricing discipline highlights the segment’s resilience, though it underscores the broader challenge of sustaining volume in a tepid housing market.
- Conversely, the Consumer Brands Group (CBG) faced headwinds, with sales declining approximately 4% due to soft DIY demand in North America, a trend that continues to weigh on the segment’s performance. This downturn reflects broader consumer discretionary spending constraints, exacerbated by high interest rates and economic uncertainty, leaving CBG vulnerable as DIY projects remain deferred by cost-conscious households.
- The Performance Coatings Group (PCG) saw sales remain essentially flat yr/yr, as incremental gains from recent acquisitions were neutralized by lower selling prices and an unfavorable product mix. Key factors impacting this segment include weakening demand in general industrial applications, partially offset by strength in packaging and coil coatings, though currency headwinds in Latin America and shifting customer preferences further complicated the picture. This stability suggests a mixed bag, with strategic acquisitions providing a buffer against underlying softness.
SHW’s substantial EPS miss in Q2, driven by heightened restructuring costs, accelerated building expenses, and sluggish DIY demand, underscores the challenging environment posed by a sluggish housing market and soft consumer discretionary trends. While the company’s restructuring actions should ultimately yield long-term dividends by bolstering its competitive edge, they amplified the headwinds in the current quarter, leaving investors to weigh short-term pain against future potential.
Coca-Cola posts decent Q2 results, but not quite as strong as PepsiCo
Coca-Cola (KO -1%) is trading modestly lower today after reporting its Q2 results this morning. Investors had high expectations going into the beverage giant's report, as main peer PepsiCo (PEP) reported impressive Q2 results last week. Although KO exceeded EPS expectations, revenue was roughly in line at $12.53 bln. Additionally, a slowdown in organic revenue growth and lackluster volume trends are likely prompting the slight pullback.
- KO continued to rely on pricing strength to help combat pressure from inflation and currency headwinds. Price/mix showed a modest improvement sequentially, which helped revenue return to yr/yr growth after a slight decline last quarter.
- Unit case volume declined 1% yr/yr following 2% growth in Q1. Growth in Central Asia, Argentina, and China was more than offset by declines in Mexico, India and Thailand, with management noting harsh weather events in June as a key factor. North America volume declined 1%, and although that is an improvement from Q1, it reflects continued uncertainty and subdued demand from customers.
- Despite a slight increase in price/mix, KO did see a volume decline that likely offset it. This resulted in a slowdown in organic revenue growth, which slipped to 5% from 6% in Q1. This is generally in line with what we saw with PEP's beverages segment.
- KO still has several bright spots in its beverage portfolio, including Coca-Cola Zero Sugar, Diet Coke, Bodyarmor, and Powerade. In particular, Coca-Cola Zero Sugar volume grew 14% driven by strength across all segments.
- Non-GAAP operating margin was a bright spot with a yr/yr increase of 190-bps to 34.7%, driven by underlying expansion partially offset by currency headwinds. Furthermore, a 63% increase in operating income suggests that KO is doing a good job at managing its costs.
Investors came into this report with high expectations following PEP's strong Q2 results last week. While KO exceeded EPS expectations and had several bright spots in its beverage portfolio, the results were overall not quite as strong as PEP's. An advantage that PEP has is that it has a growing snack business. As such, the comparison is not 100% apples-to-apples. Overall, it looks like investors were expecting perhaps a bit more bullish report from KO.
General Motors pulls back sharply despite Q2 upside; tariffs take a bite out of EBIT (GM)
General Motors (GM -7%) is lower despite reporting upside Q2 results this morning. GM posted upside for EPS. Revenue fell 1.8% yr/yr to $47.12 bln, but that was better than expected. Notably, this was GM's first yr/yr revenue decline since 4Q23. Importantly, GM reaffirmed FY25 guidance for adjusted EPS at $8.25-10.00 and adjusted EBIT of $10.0-12.5 bln. The guidance was lowered post-tariffs on May 1 and that was reaffirmed today, which was good to see.
- GM noted that its industry saw a spike in demand during Q2 due to tariff-related sales pull ahead, especially in April and May. Then in June and July, demand returned to levels that are in-line with its full year outlook of 16 mln units. Throughout 1H25, GM outperformed the market in total fleet and retail market share yr/yr and that is despite increased incentives from competitors. And it did this while still being able to lower dealer inventories almost 10% yr/yr at the end of Q2.
- Speaking of tariffs, they took a $1.1 bln bite out of GM's adjusted EBIT in Q2, which fell 31.6% yr/yr to $3.04 bln. In fairness, the tariffs are recent, so it will take time for GM to reconfigure its supply chain. As such, there were minimal mitigation offsets in Q2. GM said that mitigation efforts will take time to yield results, but it's still tracking to offset at least 30% of the $4-5 bln FY25 expected tariff impact. A clear priority is to grow its US manufacturing footprint and domestic supply chain.
- Tariffs were not the only issue. Warranty expenses have also been obscuring GM's otherwise strong performance, including a $300 mln yr/yr increase in Q2. The higher warranty expenses relate mostly to L87 (EcoTec3) engine issues used in various trucks and SUVs. There have been recent recalls and lawsuits due to potential engine failures. GM is pursuing multiple paths, including improving supplier quality and GM is engaging more on their critical component operations.
- The company noted that its incentives remained well below industry average for both ICE (internal combustion engines) and EVs, and its pricing has been relatively consistent. GM was particularly pleased that the performance of its crossovers. GM had 10 new or redesigned crossovers take huge leaps forward in design and technology, resulting in strong demand and revenue growth. Chevrolet Equinox alone gained nearly six points of retail market share.
- EV sales are growing. Five years ago, the EV market essentially had one player. Today there are 30 and Chevrolet is now the number two EV brand thanks to the success of the Blazer EV and the Equinox EV. And in Q2, Cadillac became the number five EV brand. Cadillac has also become the luxury EV leader, fueled by the launch of the Escalade IQ, Lyriq and Optiq. At the same time, electric road trips are getting easier thanks to fast charging collaborations.
Overall, this was not a bad quarter given the upside results, guidance reaffirm (we were fearful another guide down was possible) and China seems like it was a bit better than expected. However, we think investors are focusing on the $1.1 bln adjusted EBIT tariff impact is spooking investors. GM is taking steps to mitigate this, but it will take time. Also, the higher warranty expense was a disappointment as well. The stock has been in a narrow $43-54 trading range the past few months as investors await the tariff impacts. The Q2 report was GM's first since the reciprocal tariffs were announced, it was a bit of a letdown.
D.R. Horton defies housing woes with blowout Q3 results, outperforming rivals KBH and LEN (DHI)
D.R. Horton’s (DHI) is soaring this morning following the release of its blowout 3Q25 earnings report, a stark contrast to the muted expectations that had weighed on the shares heading into the event. The subdued sentiment was particularly pronounced after competitors KB Home (KBH) and Lennar (LEN) delivered disappointing results and guidance last month, raising concerns about the broader housing market’s resilience. The market’s enthusiastic response suggests that investors had braced for a weaker outcome, making DHI’s performance a pleasant surprise and underscoring a potential turnaround narrative for the sector.
- Delving into the operational metrics, homes closed -- or deliveries -- declined by 4% to 23,160 units, surpassing the company’s guidance range of 22,000-22,500 homes. This marks a significant improvement from the 15% drop seen in the prior quarter, reflecting a stabilization in demand despite ongoing challenges. Like its peers, DHI has ramped up incentives, including mortgage rate buydowns and price adjustments, to stimulate buyer interest amid persistent affordability constraints driven by elevated interest rates and economic uncertainty, a strategy that appears to have gained traction in the current environment.
- These incentives have undeniably pressured home sales gross margins, yet DHI managed a better-than-expected 21.8% margin, exceeding its guided range of 21.0-21.5%. Several factors likely contributed to this outperformance: disciplined cost management, a strategic focus on smaller, more affordable homes that align with current market demand, and possibly a favorable mix of higher-margin communities. Additionally, the company’s scale as the largest homebuilder in the U.S. may have provided leverage to negotiate better input costs, offsetting some of the incentive-related headwinds and showcasing operational efficiency under pressure.
- The company’s aggressive share repurchase program further bolstered the bottom line, with 9.7 mln shares repurchased during Q3, reducing the share count and enhancing earnings per share. Management’s commitment to returning capital to shareholders remains robust, with an expectation to repurchase $4.2-$4.4 bln in stock for FY25, signaling confidence in its cash flow generation and a strategic move to support stock valuation amid market volatility.
- Turning to guidance, DHI issued in-line FY25 revenue guidance of $33.7-$34.2 bln, a slight refinement after trimming its outlook last quarter, reflecting a cautious yet realistic stance. The company anticipates continued demand headwinds due to affordability constraints, expecting sales incentives to remain elevated in Q4 to sustain momentum. However, the revised FY25 homes closed guidance of 85,000-85,500, down marginally from 85,000-87,000, offers some relief to investors by indicating a controlled deceleration rather than a steep drop, balancing optimism with pragmatism.
DHI’s substantial EPS beat, coupled with in-line FY25 EPS guidance, is driving shares sharply higher today. This performance not only alleviates concerns from the sector’s recent struggles but also positions the company as a potential leader in navigating the challenging housing market, further supported by its shareholder-friendly policies.
Cleveland-Cliffs rolls higher as Q2 report reflect steel maker's vastly improved profitability (CLF)
Cleveland-Cliffs (CLF) delivered mixed 2Q25 results, easily surpassing EPS expectations, driven by a potent combination of higher qtr/qtr average net selling prices, improved shipment volumes, and significant steel unit cost reductions. Although CLF fell short of Q2 revenue estimates, the company's vastly improved profitability and its bullish outlook for Q3 and FY25 are more than offsetting the disappointment from the top-line miss. The company’s results reflect operational resilience amid a challenging steel demand environment, bolstered by the Trump Administration’s staunch support for domestic steel and automotive sectors.
- Recent tariff increases to 50% on steel imports from major countries have begun to shield domestic manufacturers from unfairly traded imports, creating a favorable tailwind for CLF and its peers. This policy-driven protection, coupled with improving automotive demand, is positioning CLF to capitalize on a strengthening manufacturing landscape.
- The average net selling price per ton of steel products in Q2 was $1,015, down approximately 10% yr/yr from $1,128, reflecting broader market pricing pressures and a higher mix of non-automotive sales. However, the 3.5% qtr/qtr increase from $981 in Q1 signals a recovery driven by several factors: stronger domestic steel pricing supported by tariff protections, a favorable shift toward higher-value automotive-grade steel, and reduced exposure to low-priced slab contracts.
- External sales volumes also rose impressively by 7.5% yr/yr to 4.29 mln net tons, a record for the company, reflecting resurgent macroeconomic activity and manufacturing demand, particularly in the automotive sector, which remains a cornerstone of CLF’s business.
- CLF's footprint optimization initiatives, announced in early 2025, have swiftly begun to yield tangible benefits to both costs and revenues. These initiatives include the full idling of the Minorca mine and partial idling of the Hibbing Taconite mine in Minnesota to reduce excess pellet inventory, the idling of the blast furnace, BOF steel shop, and continuous casting facilities at Dearborn Works in Michigan, and the full idling of facilities at Riverdale, Conshohocken, and Steelton due to uncompetitive cost structures.
- These actions are projected to deliver over $300 mln in annual savings, with $145 mln specifically from flat-rolled optimization and $165 mln from exiting non-core assets like rail, high-carbon sheet, and specialty plate products.
- Steel unit cost reductions were a standout in Q2, with a $15 per net ton decrease compared to Q1, contributing significantly to margin improvement. Key drivers include the aforementioned footprint optimization, which reduced fixed costs through facility idling and operational consolidation, alongside lower raw material costs, particularly for coal, and easing supply chain constraints. The strategic shift away from unprofitable contracts, such as the slab supply agreement set to expire by year-end, further alleviated cost pressures.
- The combination of higher average net selling prices, footprint optimization, and steel unit cost reductions drove a $271 million qtr/qtr improvement in adjusted EBITDA, reaching $97 mln in Q2. Management projects further EBITDA growth in Q3, underpinned by an anticipated additional $20 per net ton cost reduction and sustained shipment volumes of approximately 4.3 mln metric tons, in line with Q2’s record performance. The termination of the unprofitable slab contract, expected to add $500 mln to annualized EBITDA starting in 2026, and the ongoing benefits from tariff protections and automotive volume recovery, further enhance the company’s outlook.
CLF's Q2 results highlight a remarkable turnaround in profitability, driven by operational efficiencies and favorable market dynamics. The company’s bullish outlook is well-supported by the Trump Administration’s tariff policies, an improving macroeconomic environment, and the prospect of lower interest rates.
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