Market Snapshot
| Dow | 45010.29 | +507.85 | (1.14%) | | Nasdaq | 21018.64 | +127.33 | (0.61%) | | SP 500 | 6358.91 | +49.29 | (0.78%) | | 10-yr Note |
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| | NYSE | Adv 1855 | Dec 879 | Vol 1.18 bln | | Nasdaq | Adv 3119 | Dec 1373 | Vol 11.04 bln |
Industry Watch
| Strong: Industrials, Health Care, Energy, Financials |
| | Weak: Utilities, Consumer Staples |
Moving the Market
Fresh wave of earnings data with several mega-cap names set to report after the close
Chipmakers facing pressure following Texas Instruments (TXN) earnings report
Continued strong performance in small-cap and mid-cap stocks
Reports that the U.S. and EU are nearing a trade deal capping tariffs at 15%
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Trade developments and earnings propel to record highs
23-Jul-25 16:30 ET
Dow +507.85 at 45010.29, Nasdaq +127.33 at 21018.64, S&P +49.29 at 6358.91
[BRIEFING.COM] The stock market had its strongest session of the week today, with earnings report optimism and the announcement of trade deals with the EU and Japan propelling the S&P 500 (+0.8%) to a new all-time intraday (6,360.64) and closing (6,358.91) high.
Equity futures were higher in response to President Trump's announcement of a finalized trade deal with Japan, which featured a 15% tariff on Japanese imports, an investment of $550 billion into the U.S., and an opening of Japan's markets to rice and auto imports from the U.S.
Stocks got off to a decent start in response but rose precipitously around 12:00 ET when Financial Times reported that the U.S. and the EU were close to finalizing a trade agreement, also with a 15% tariff.
Increased buying activity following the report reflected the market's comfort with the 15% tariff rates for key trade partners, which are notably lower than the 30% proposed tariffs that were to go into effect August 1.
The trade news was enough to reverse a second consecutive day of early sluggishness in the technology sector (+0.7%), with its early losses limiting gains in the major averages for most of the morning.
The sector faced early pressure in its chipmaker components following Texas Instruments (TXN 186.25, -28.67, -13.3%) earnings report after the close yesterday, which saw the company beat EPS expectations, though uncertainty around future growth prompted management to speak in a more cautious tone during the earnings call.
While the sector shed its early losses, chipmakers remained a point of relative weakness, with the PHLX Semiconductor Index finishing flat for the day.
There were some notable beneficiaries in the wake of earnings, however. The health care sector (+2.0%) was today's top performer and widened its gains to 3.3% week to date.
Thermo Fisher (TMO 466.53, +38.91, +9.1%) beat EPS expectations by $0.13, and added to yesterday's strong performance among CRO services companies.
The Industrials sector (+1.8%) also finished among the top, as GE Vernova (GEV 629.56, +80.57, +14.7%) and Lennox Int'l (LII 661.51, +41.54, +6.7%) both captured nice gains today after beating EPS expectations and issuing upside guidance.
In total, nine sectors finished in positive territory, with only the defensive utilities (-0.8%) and consumer staples (-0.1%) ending the day with losses.
Buying activity was notably prevalent across stocks of all sizes.
Small-cap and mid-cap stocks widened their gains from yesterday, with Russell 2000 (+1.5%) and S&P Mid Cap 400 (+0.9%) outperforming.
Mega-cap stocks improved their position, with the Vanguard Mega Cap Growth ETF closing with a gain of 0.7%, after a 0.6% loss yesterday.
If yesterday's trade marked a rotation into value stocks from growth stocks, today's session reflected a more bullish attitude that saw the market emboldened by earnings data and trade developments alike.
U.S. Treasuries retreated on Wednesday, snapping their streak of three consecutive days of gains. Treasuries ranged near their opening lows during the first couple hours of action, slipping to fresh lows in the wake of reports about the impending deal with the EU.
The selling was met with an afternoon bounce, which followed the completion of a strong $13 billion 20-year bond reopening. Late trade saw a fresh low in the 2-yr note, while longer tenors finished a bit above their worst levels of the session, with the 10-yr yield back above its 50-day moving average (4.411%).
The 10-year note yield settled up five basis points to 4.39%.
- Nasdaq Composite: +8.9% YTD
- S&P 500: +8.1% YTD
- DJIA: +5.8% YTD
- S&P 400: +3.12% YTD
- Russell 2000: +2.38% YTD
Reviewing today's data:
- Existing home sales decreased 2.7% month-over-month in June to a seasonally adjusted annual rate of 3.93 million (Briefing.com consensus 4.00 million) from a revised 4.04 million (from 4.03 million) in May. Sales were unchanged on a year-over-year basis.
- The key takeaway from the report is that the median home sales price continued growing in June even though sales decelerated, which puts the spotlight on housing affordability at a time when mortgage rates remain high.
- The weekly MBA Mortgage Index rose 0.8% after falling 10.0% a week ago. The Purchase Index was up 3.5% while the Refinance Index fell 2.6%.
- Weekly crude oil inventories decreased by 3.17 million barrels after decreasing by 3.86 million barrels a week ago.
Major averages near session high
23-Jul-25 15:25 ET
Dow +455.15 at 44957.59, Nasdaq +108.31 at 20999.62, S&P +43.62 at 6353.24
[BRIEFING.COM] Strong buying interest throughout the day has the major averages seated near their best levels entering the final half hour of trading.
The market has responded positively to today's trade developments, which included the announcement of 15% tariffs for the EU and Japan.
Earnings reports will likely continue to be a key catalyst, with Alphabet (GOOG 191.47, -0.64, -0.3%) and Tesla (TSLA 333.18, +1.07, +0.3%) kicking off mega-cap earnings after the close today.
A Bloomberg report states that Tesla is in preliminary talks with the state of Nevada to expand its robotaxi service.
Major averages near session highs
23-Jul-25 15:00 ET
Dow +467.13 at 44969.57, Nasdaq +110.41 at 21001.72, S&P +44.02 at 6353.64
[BRIEFING.COM] The major averages continue a steady upward tick that has the S&P 500 (+0.7%) setting fresh record highs and the Nasdaq Composite (+0.5%) within 70 points of its own all-time high mark.
Only the utilities (-0.9%) and consumer staples (-0.2%) sectors trade in negative territory.
Meanwhile, the health care sector (+1.8%) has continued its impressive run this week, leading all sectors with a current week-to-date gain of 3.1%. Today's gains have been bolstered by Thermo Fisher (TMO 473.88, +46.26, +10.8%) beating EPS expectations by $0.13 and reporting positive revenues.
U.S. Treasuries have inched up off their lows in the wake of a strong $13 billion 20-year bond reopening. Treasuries added to their starting losses in late morning trade, but recent action has seen an uptick off lows after the U.S. Treasury reopened $13 billion in 20-year bonds.
The sale drew a high yield of 4.935%, which stopped through the when-issued yield by 1.6 basis points with an above-average bid-to-cover ratio (2.79x vs 2.57x average), while indirect takedown (67.4% vs 68.4% average) was a bit shy of average.
The 10-year note yield is currently up five basis points to 4.39%.
S&P 500 hits new highs; Lamb Weston, TEL, TMO surge on earnings, Fiserv drops on guidance cut
23-Jul-25 14:30 ET
Dow +464.10 at 44966.54, Nasdaq +128.57 at 21019.88, S&P +47.24 at 6356.86
[BRIEFING.COM] The S&P 500 (+0.75%) is making new highs in recent trading, up now more than 47 points.
Briefly, S&P 500 constituents Lamb Weston (LW 57.32, +8.15, +16.58%), TE Connectivity (TEL 200.74, +20.27, +11.23%), and Thermo Fisher (TMO 473.74, +46.12, +10.79%) pepper the top of the average all following earnings reports.
Meanwhile, Milwaukee-based fintech firm Fiserv (FI 140.14, -25.84, -15.57%) is today's worst laggard as investors react to lowered revenue guidance, an aggressive capital return plan seen as signaling slower growth, and a TD Bank (TD 75.44, +0.34, +0.45%) deal viewed as strategically positive but modest in scale.
Gold falls as U.S.-Japan trade deal curbs safe-haven demand; weaker dollar limits losses
23-Jul-25 14:00 ET
Dow +453.44 at 44955.88, Nasdaq +67.62 at 20958.93, S&P +36.87 at 6346.49
[BRIEFING.COM] The tech-heavy Nasdaq Composite (+0.32%) is in last place on Wednesday, up about 67 points.
Gold futures settled $46.10 lower (-1.3%) at $3,397.60/oz, as a U.S./Japan trade deal boosted risk appetite and dampened safe-haven demand. The decline was partially cushioned by a weaker dollar and ongoing expectations for Fed rate cuts.
Meanwhile, the U.S. Dollar Index is down less than -0.1% to $97.32.
GE Vernova soars after Q2 beat-and-raise, fueled by strong power and electrification demand (GEV)
GE Vernova (GEV) delivered an impressive beat-and-raise performance in 2Q25 fueled by robust demand for power and grid infrastructure systems, with CEO Scott Strazik characterizing the backdrop as an “investment supercycle” into reliable baseload power, grid infrastructure, and decarbonization solutions. The strong results, outlook, and bullish commentary have sent shares of GEV soaring higher.
Furthermore, the company’s backlog grew by a substantial $5.2 bln sequentially to $128.7 bln, primarily driven by rising orders for gas power equipment, reflecting strong market demand for reliable energy solutions. Gas power equipment backlog and slot reservation agreements expanded from 50 to 55 gigawatts, with 9 gigawatts of new gas equipment contracts signed in the quarter. This growth highlights GEV’s ability to capture demand from data centers, industrial electrification, and global power needs, particularly in markets like the U.S., Japan, and Romania, positioning the company for sustained revenue visibility.
- The Power segment was a standout, with orders surging 44% organically to $7.1 bln, led by robust demand for gas power equipment and services, including a notable contract for three H-class gas turbines for Japan’s Nanko power station. Segment revenue increased 6.8% to $4.76 bln, and EBITDA margin expanded 260 bps to 16.2%, driven by higher volume, improved pricing, and productivity gains, though partially offset by tariff-related costs.
- GEV also raised its FY25 Power segment guidance to 6-7% organic revenue growth (from mid-single digits) and 14-15% EBITDA margin (from 13-14%), reflecting confidence in sustained demand and operational efficiencies, particularly as gas turbine utilization rises to meet baseload power needs.
- The Electrification segment also performed strongly, with revenue jumping 23% (20% organically) to $2.2 bln, driven by Grid Solutions’ growth in high-voltage direct current (HVDC), switchgear, and transformer volumes, fueled by global grid modernization efforts. Segment EBITDA margin nearly doubled to 14.6%, up 740 bps, propelled by higher volume, favorable pricing, and productivity improvements, despite investments in capacity expansion. The equipment backlog grew by $2 bln, reflecting robust demand in North America, Europe, and Asia, while the segment’s outlook was upgraded to ~20% organic revenue growth and 13-15% EBITDA margin for FY25, underscoring its role as a key growth driver amid rising grid infrastructure investments.
- The Wind segment, a persistent laggard due to regulatory headwinds and tariff impacts, showed mixed results. Revenue increased 9% to $2.2 bln, driven by higher onshore wind deliveries, but segment EBITDA losses widened to $(165) mln from $(117) mln a year earlier, primarily due to elevated onshore wind services costs and tariffs affecting offshore wind. The company invested over $100 mln to improve its ~57,000 wind turbine installed base, aiming to enhance performance, but offshore wind challenges, including prior blade manufacturing issues, continue to weigh on profitability.
- Management noted that FY25 EBITDA losses are trending toward the lower end of the $200-$400 million range, with onshore wind margins expected to improve to high single digits, signaling cautious optimism for recovery.
GEV’s Q2 results highlight robust demand in its Power and Electrification segments, driven by global electrification and decarbonization trends. The company’s ability to grow its backlog and expand margins despite tariff pressures positions it as a leader in the energy transition, with strong growth prospects in gas power and grid infrastructure.
Texas Instruments under pressure despite upside Q2 results, tone seemed more subdued (TXN)
Texas Instruments (TXN -12.5%) is under pressure today despite reporting upside Q2 results last night and guiding in-line for Q3. The issue was not so much in the numbers, we think investors are more concerned about the more cautious tone on the earnings call last night. In fact, management fielded some questions directly related to the change in tone.
- Let's dig into the quarter a bit. This semiconductor giant posted Q2 revs of $4.45 bln, which was up 16.4% yr/yr, and was at the high end of $4.17-4.53 bln prior guidance. This was TXN's strongest yr/yr growth since 3Q21. Analog revenue grew 18% yr/yr while Embedded Processing grew 10%.
- TXN continues to see two distinct dynamics at play: First, tariffs and geopolitics are disrupting and reshaping global supply chains. TXN is working closely with customers by leveraging its global manufacturing flexibility. Second, the semiconductor cycle is playing out. The cyclical recovery is continuing and customer inventories remain at low levels. In times like these, it is important to have capacity and inventory, and TXN feels well positioned.
- Breaking it down by end market, Industrial grew in the upper teens yr/yr and mid-teens sequentially, with recovery across all sectors. Automotive increased mid-single digits yr/yr, but was down low-single digits sequentially. Personal Electronics grew 25% yr/yr and upper single digits sequentially. Enterprise Systems grew about 40% yr/yr and 10% sequentially. And lastly, Communications Equipment grew more than 50% yr/yr and was up about 10% sequentially.
- On its Q1 call in April, TXN talked about seeing a recovery across its end markets with industrial showing broad recovery. It also said it felt it was at the bottom of the semiconductor cycle. However, in Q2, TXN saw a sequential decline in automotive. And on its Q2 call, while management said the cyclical recovery is continuing, it also said it was preparing for a range of scenarios.
- TXN responded saying that it continues to see a cyclical recovery. It said Industrial is already recovering and actually accelerated a bit. PE, Enterprise and Comms are also recovering. Regarding Automotive, TXN concedes it has not recovered yet. Overall, the call seemed a bit more subdued to us and some analysts noticed and asked about it.
The Q2 results and Q3 guidance was decent. However, we think two things are driving the stock lower today. First, the stock had rallied more than 50% from its April lows as concerns about the tariffs have faded somewhat. Second, TXN sounded more upbeat on the Q1 call in April. As such, we think sentiment was running high heading into this report. We think the perhaps the more subdued tone and the big run in the stock prompted investors to lock in some profits.
Intuitive Surgical reports solid Q2 procedure volume growth, signals margin improvement ahead (ISRG)
Intuitive Surgical (ISRG) delivered a solid performance in 2Q25, surpassing EPS and revenue expectations, propelled by a healthy 17% yr/yr growth in worldwide da Vinci procedures, reflecting sustained demand for its robotic-assisted surgical systems, and an improvement in non-GAAP gross margin to 67.9% from 66.4% in the prior-year period, driven by operational efficiencies and favorable product mix.
The company also provided an optimistic update to its FY25 guidance, nudging the lower end of its worldwide da Vinci procedure growth forecast higher to 15.5-17.0% from the prior 15-17%, signaling confidence in sustained demand despite macroeconomic headwinds. Additionally, ISRG raised its FY25 non-GAAP gross margin guidance to 66-67% from 65.0-66.5%, reflecting a smaller-than-expected impact from tariffs, which are now estimated to reduce margins by approximately 1% rather than the previously feared 1.7%. This adjustment highlights management’s proactive cost management and supply chain optimizations.
- Worldwide da Vinci procedure growth, a critical metric for ISRG as it drives recurring revenue from single-use instruments and accessories, remains a cornerstone of the company’s financial health. The 17% growth in Q2, consistent with 2024’s full-year growth, was fueled by strong performance in U.S. general surgery (19% growth) and robust international expansion, particularly in non-urology procedures (23% growth outside the U.S.).
- While FY25 guidance of 15.5-17.0% indicates a slight moderation from 2024’s 17%, it still reflects resilient demand, supported by the global installed base expansion to 10,189 systems (up 15% yr/yr) and increasing surgeon adoption of the da Vinci platform for its precision and minimally invasive benefits. However, a modest decline in U.S. bariatric procedures, influenced by the rise of GLP-1 medications, slightly tempered overall growth, underscoring the need for diversification across procedure types.
- System placements, another key growth driver, saw significant momentum with 395 da Vinci systems installed in Q2, up 15.8% from 341 in 2Q24, including 180 next-generation da Vinci 5 systems compared to 70 in the prior-year period. This uptick reflects strong hospital demand for advanced surgical technology, particularly the da Vinci 5, which offers enhanced visualization and dexterity, driving upgrades and new installations. The increasing adoption of da Vinci 5 highlights its competitive edge and supports ISRG’s long-term strategy to expand its installed base.
- Non-GAAP gross margin expanded to 67.9% in Q2 from 66.4% in 2Q24, driven by a favorable product mix with higher da Vinci 5 system sales, improved manufacturing efficiencies, and reduced supply chain costs. Management noted that the margin improvement also benefited from lower-than-anticipated tariff impacts, as strategic sourcing adjustments mitigated cost pressures. Looking ahead, the raised FY25 gross margin guidance reflects confidence in sustaining these gains, though challenges such as increased depreciation from da Vinci 5 production and foreign exchange headwinds could temper further expansion.
ISRG’s Q2 results affirm strong demand for its da Vinci surgical systems, driven by robust procedure growth and accelerating da Vinci 5 placements. The company’s ability to raise guidance while mitigating tariff impacts highlights its operational resilience and positions it well for sustained growth, easing investor concerns about margin pressures and reinforcing its leadership in robotic-assisted surgery.
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.
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