Market Snapshot
| Dow | 40212.71 | +619.05 | (1.56%) | | Nasdaq | 16724.45 | +337.14 | (2.06%) | | SP 500 | 5363.36 | +95.31 | (1.81%) | | 10-yr Note |
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| | NYSE | Adv 1976 | Dec 815 | Vol 1.25 bln | | Nasdaq | Adv 2958 | Dec 1484 | Vol 9.51 bln |
Industry Watch
| Strong: Materials, Information Technology, Consumer Staples, Industrials, Health Care, Financials, Energy, Consumer Discretionary, Utilities, Communication Services, Real Estate |
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Moving the Market
--Relative strength in mega-cap stocks
--Better than expected Q1 results from several major financial institutions
--Tariff angst as China announces 125% retaliatory tariff for imported U.S. goods
--Dollar weakness drives concerns about foreign investors pulling money from U.S. assets
--Treasury yields jump as inflation expectations soar (seen in Univ. of Michigan Index of Consumer Sentiment), but 10-yr backs down from 4.58% to below 4.50%
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Closing Stock Market Summary
11-Apr-25 16:30 ET
Dow +619.05 at 40212.71, Nasdaq +337.14 at 16724.45, S&P +95.31 at 5363.36
[BRIEFING.COM] It took a little bit, but the stock market finally found some footing and managed to put together a nice rebound effort on the heels of Thursday's broad-based losses, wrapping up what can best be described as a frenetic week of trading.
Today's action began on a soft note despite some better-than-expected Q1 earnings results from JPMorgan Chase (JPM 236.20, +7.78, +3.4%), Wells Fargo (WFC 62.51, -2.85, -4.5%), Morgan Stanley (MS 108.12, -1.49, -1.4%), BlackRock (BLK 878.78, +7.16, +0.8%), and Bank of New York Mellon (BK 77.67, +1.06, +1.4%). Market participants were pre-occupied with the ongoing weakness in the dollar, rising Treasury yields, a dour consumer sentiment reading for the month of April that saw the highest year-ahead inflation expectations (6.7%) since November 1981, and China countering the U.S's 145% tariff rate on imports from China with a 125% tariff rate on imports from the U.S.
For good measure, China added that it will be ignoring any further tariff actions by the U.S.
Those issues notwithstanding, stocks regrouped around mid-morning and continued on a higher path into the close. That regrouping coincided with the 10-yr note yield backing down from a high of 4.58% to 4.45%. It settled the session up 10 basis points at 4.49%.
Other supportive influences included the leadership of the mega-cap stocks, a reiteration by the White House Press Secretary that the president hopes to make a deal with China, and an FT report that suggested the Fed stands ready to stabilize financial markets if conditions become disorderly. The latter two items, while largely known, were market-friendly reminders that the "Trump put" and the "Fed put" are still on the table.
The major indices settled the session at, or near, their highs for the day. Notably, the Russell 2000 overcame an early 1.6% decline to finish with a 1.6% gain. That trailed the market cap-weighted S&P 500 (+1.8%) but was slightly ahead of the 1.5% gain logged by the equal-weighted S&P 500.
While the mega-cap stocks were an influential source of support throughout the session, buying interest turned into a broad-based affair as the session carried on. All 11 S&P 500 sectors finished with a gain of at least 1.1%. The biggest winners were the materials (+3.0%), information technology (+2.6%), and energy (+2.5%) sectors.
Market breadth reflected the positive turn. Advancers led decliners by a better than 2-to-1 margin at the NYSE and by a 2-to-1 margin at the Nasdaq.
- Dow Jones Industrial Average: -5.3% YTD
- S&P 500: -8.8% YTD
- S&P Midcap 400: -12.8% YTD
- Nasdaq Composite: -13.4% YTD
- Russell 2000: -16.6% YTD
Reviewing today's economic data:
- The Producer Price Index for final demand decreased 0.4% month-over-month in March (Briefing.com consensus 0.1%) following an upwardly revised 0.1% increase (from 0.0%) in February. The Core Producer Price Index for final demand, which excludes food and energy, decreased 0.1% month-over-month (Briefing.com consensus 0.3%) following an upwardly revised 0.1% increase (from -0.1%) in February. On a year-over-year basis, the index for final demand was up 2.7% versus 3.2% in February, and the index for final demand, less food and energy, was up 3.3% versus 3.5% in February.
- The key takeaway from the report is that inflation for wholesalers was suppressed in March; however, that good news is being discounted as temporary (like yesterday's CPI report was) given that tariff actions are taking root in supply chains and are expected to lead to higher prices at least in the short term.
- The preliminary April Univ. of Michigan Index of Consumer Sentiment checked in at 50.8 (Briefing.com consensus 54.8) versus the final reading of 57.0 for March. In the same period a year ago, the index stood at 77.2.
- The key takeaway from the report is manifold: the decline in consumer sentiment is broad-based; expectations for unemployment to rise are at their highest since 2009; and inflation expectations are surging. This is a terrible mix that will foment concerns about future consumer spending strength.
Long bond bounces off January low; more bank earnings on tap for Monday
11-Apr-25 15:30 ET
Dow +702.19 at 40295.85, Nasdaq +348.43 at 16735.74, S&P +103.92 at 5371.97
[BRIEFING.COM] The major averages have consolidated near highs, little changed in the last half hour with the tech-heavy Nasdaq Composite still in the lead (+2.13%).
A few banks kicked off earnings season this week, but be on the lookout for Goldman Sachs (GS 497.12, +7.32, +1.49%) on Monday (4/14) and Citigroup (C 62.20, +0.61, +0.99%) and Bank of America (BAC 36.09, +0.24, +0.67%) ahead of the open on Tuesday.
Recently, the 10-yr yield settled up 10 bps to 4.49% (up 50 bps this week), while this week's underperformance in longer tenors expanded the 2s10s spread by 22 basis points to 54 bps.
Stocks rebound sharply despite trade jitters; Nasdaq +6.9% WTD, chip stocks surge over 10%
11-Apr-25 15:00 ET
Dow +509.49 at 40103.15, Nasdaq +249.83 at 16637.14, S&P +74.89 at 5342.94
[BRIEFING.COM] A volatile week shows the major averages poised to end higher as we approach the final stretch of trading on Friday; trade tensions between the U.S. (and the rest of the world) and China had the S&P 500 down -4.7% at one point this week, though the average is now on pace to end almost +5.6% higher now. The tech-heavy Nasdaq Composite leads the way, up +6.9% week-to-date, while the Dow Jones Industrial Average holds gains just under +5.0%.
Outperformance in chip stocks, evidenced by the +10.2% gains in the PHLX Semiconductor Index, have aided the Nasdaq rally.
Relatively underperforming though still higher on the week, the Invesco S&P 500 Equal Weight ETF (RSP) is closing in on a +2.8% advance since last Friday.
S&P 500 rallies led by Newmont, Monolithic Power, and Mosaic; Texas Instruments drops on China risk
11-Apr-25 14:30 ET
Dow +523.97 at 40117.63, Nasdaq +253.79 at 16641.10, S&P +75.29 at 5343.34
[BRIEFING.COM] The S&P 500 (+1.43%) is in second place on Friday afternoon, up about 75 points.
Briefly, S&P 500 constituents Newmont Corporation (NEM 55.85, +4.91, +9.64%), Monolithic Power (MPWR 524.58, +39.87, +8.23%), and Mosaic (MOS 25.73, +1.53, +6.32%) dot the top of the standings. NEM caught a UBS upgrade to Buy this morning, while MPWR and MOS enjoy gains as their sectors outperform the broader market.
Meanwhile, Texas Instruments (TXN 147.41, -9.19, -5.87%) falls to the bottom of the average, mostly due to reports that China's new tariff rules would classify chips based on the location of their fabrication plants. This could impact TI, which manufactures many of its chips in the U.S., making their products more expensive in the Chinese market.
New session highs
11-Apr-25 13:55 ET
Dow +768.88 at 40362.54, Nasdaq +355.78 at 16743.09, S&P +109.15 at 5377.20
[BRIEFING.COM] A headline-driven market saw a few headlines in the past half hour that catalyzed a quick spike to new session highs; however, it was more of a gratuitous spike considering the headlines didn't convey information the market didn't already believe.
To wit: White House Press Secretary Leavitt said President Trump hopes to make a deal with China, while FT reported that the Fed would be prepared to stabilize financial markets if conditions become disorderly.
Some nice reminders, but nothing new from a qualitative standpoint. Still, both serve as friendly reminders in the market's mind that the "Trump put" and the "Fed put" remain on the table.
Separately, the Vanguard Mega-Cap Growth ETF (MGK), up 2.0%, is at session highs.
Follow-Up on FDA decision to reduce animal testing, winners and losers
Late yesterday, the FDA announced plans to replace animal testing in the development of monoclonal antibody therapies and other drugs with human-relevant methods. The FDA's animal testing requirement will be reduced, refined, or potentially replaced using a range of approaches, including AI-based computational models of toxicity and cell lines and organoid toxicity testing in a laboratory setting (so-called New Approach Methodologies or NAMs data).
The FDA said implementation of the regimen will begin immediately for investigational new drug (IND) applications, where inclusion of NAMs data is encouraged.
We posted an InPlay comment last night on names being impacted, but now that we have had time to digest the news a bit, we wanted to provide more color.
News is seen as Positive for:
- Certara (CERT +19%) is seen as a key player in the shift toward reducing animal testing in drug development, particularly through its biosimulation and AI-driven modeling platforms.
- Recursion Pharma (RXRX +25%) provides an AI-driven drug discovery platform which should reduce reliance on animal studies. It uses machine learning to identify drug targets and optimize molecules.
- Simulations Plus (SLP +27%) is a leader in the biosimulation market by providing software and consulting services supporting drug discovery, development, research, and regulatory submissions. It is advancing alternatives to traditional animal testing through its computational modeling and simulation technologies.
- Schrodinger (SDGR +23%) is a leader in computational drug discovery and is actively working to reduce reliance on animal testing through AI and physics-based simulations.
- Absci corp. (ABSI +14%) focuses on AI-driven drug discovery with a focus on reducing reliance on animal testing through computational and high-throughput wet lab methods.
News is seen as negative for:
Charles River Labs (CRL +2.2%): CRL is a major supplier of animals used in testing. CRL dropped 28% as the news hit the wires late yesterday but it is recovering a bit today.
TreeHouse Foods issues solid outlook and takes another step forward in streamlining operations (THS)
TreeHouse Foods (THS), a manufacturer of private label snacks and beverages, is building upon its recent efforts to improve margins and profitability, announcing organizational changes that include the departure of its EVP, Business President and Chief Commercial Officer, and the elimination of approximately 150 roles. The company also issued upside Q1 guidance for revenue of at least $792 mln and reaffirmed its FY25 adjusted revenue and adjusted EBITDA outlook, reflecting the resiliency in the private label category and the positive effects from improving its supply chain and prioritizing gross profit dollars through margin management.
- Rewinding to THS's Q4 earnings report in mid-February, in which the company handily beat EPS estimates on nearly flat sales, the impact of its strategy to focus on margins and gross profit dollars was already evident. Gross profit margin expanded by 2.8 percentage points to 19.5%, mainly due to supply chain initiatives, reduced commodity costs, and operational efficiencies. Additionally, THS reduced its capital expenditures by 22% yr/yr to $28.7 mln in 4Q24.
- With today's announcement, THS is taking another step forward in this strategy, specifically targeting corporate overhead reductions, leadership restructuring, and additional cost efficiencies. Once completed, the restructuring is expected to enhance decision-making speed while simplifying the organizational structure.
- In today's press release, THS also sought to ease investors' concerns surrounding tariffs, noting that only 5% of its sales come from customers outside of the U.S., with almost all of those sales occurring in Canada. The limited exposure to tariffs and modest international footprint minimizes risks associated with trade-related disruptions and additional costs from tariffs on imported goods. The downside is that the limited international exposure constrains its sales growth opportunities.
- In terms of the bigger picture, THS's organizational changes should position it to better capitalize on rising consumer demand for private label products. The affordability and improved quality of private label food brands make them ideally suited to perform well during economic downturns. In fact, reports show that 53% of consumers now prefer private label products, citing affordability and comparable quality to branded options.
THS's strategy to prioritize margins and gross profit reached a higher gear with today's announced organizational changes. These efforts, which are already paying dividends, as illustrated by THS's blowout Q4 EPS result, will help the company navigate through an increasingly challenging macro backdrop.
Morgan Stanley posts strong Q1 results, driven by record equity trading revenue, but risks grow (MS)
Backed by record equity trading revenue, healthy net new asset accumulation, and solid cost control, Morgan Stanley (MS) comfortably beat 1Q25 EPS and revenue estimates, displaying its resiliency and the advantages of its diversified revenue streams. There were pockets of weakness, though, including an equity underwriting business that saw a deceleration in IPO activity towards the end of the quarter. Furthermore, while MS didn't provide formal guidance for FY25, it warned that an already murky dealmaking climate has been exacerbated by trade tensions and weak IPO debuts, dampening IPO and advisory pipelines in the near term. The company also noted that tariff-induced inflationary pressures could lead to steeper yield curves, which would push borrowing costs higher, reduce confidence levels, and lead to fiscal strains.
- The clear standout in Q1 was the equity trading business as revenue surged by 45% yr/yr to a record $4.13 bln. The unit benefitted from heightened volatility triggered by President Trump's tariffs, and to a lesser degree, China's launch of its GenAI model, DeepSeek. These events led to increased trading activity as investors rebalanced their portfolios and hedged against economic uncertainty.
- Staying in the Institutional Securities segment, which accounts for approximately 40% of total revenue, Advisory was also strong with revenue up 22.1% to $563 mln. MS benefitted from a resurgence in M&A activity, especially in the technology and industrial sectors as companies sought consolidation and strategic partnerships. However, with interest rates rising and with inflationary pressures intensifying amid a trade war, it's likely that dealmaking will slow in the coming quarters.
- Unsurprisingly, MS's equity underwriting business experienced a slowdown as IPO activity decelerated late in the quarter. Equity underwriting revenue fell by nearly 26% to $319 mln, after showing impressive growth of 102% last quarter.
- An important competitive advantage that MS holds, especially during times of high volatility and economic stress, is its diversified revenue streams. In particular, the company's Wealth Management segment (about 35% of total revenue) provides stability and is less capital-intensive than the investment banking arm. In Q1, Wealth Management generated net new assets of $94.0 bln, pushing total client assets higher by 10% yr/yr to $7.7 trillion. Over time, MS aims to grow client assets to $10.0 trillion as it leverages its strong client trust and diversified services.
- On the cost side, MS's expense efficiency ratio improved to 68% compared to 69% last quarter and 71% in the year-earlier quarter. Compensation expense rose by only 12.3%, reflecting a disciplined approach to costs.
MS reported strong Q1 results, driven by outstanding equity trading performance, strong Wealth Management flows, and a rebound in advisory revenue. The company's diversified revenue streams are a key advantage during times of economic uncertainty, but it still faces considerable risks from the fallout of a global trade war, leading to weakness in dealmaking activity.
JPMorgan higher on solid Q1 results, but says economy is facing considerable turbulence (JPM)
JPMorgan Chase (JPM +2.5%) is trading higher following its Q1 earnings report this morning. The company reported another healthy beat on EPS, its fifth consecutive EPS beat of at least $0.24. Revenue grew 8.0% yr/yr to $45.3 bln, which was a good bit better than expected.
- Net interest income was $23.4 bln, up 1%. Noninterest revenue was $22.6 bln, up 17%. Net interest income, excluding Markets, was $22.6 bln, down 2%, driven by lower rates and deposit margin compression as well as lower deposit balances in Consumer & Community Banking (CCB). JPM reported a consolidated provision for credit losses of $3.3 bln. Net charge-offs were $2.3 bln, up $376 mln, predominantly driven by Card Services.
- CCB segment revenue grew 4% yr/yr to $18.31 bln. Banking & Wealth Mgmt revenue was $10.25 bln, down 1%, driven by lower net interest income on lower deposit balances. Home Lending revenue grew 2% to $1.2 bln, driven by higher net interest income. Card Services & Auto revenue grew 12% to $6.9 bln, up 12%, predominantly driven by higher Card Services net interest income on higher revolving balances as well as higher auto operating lease income.
- JPM said that it did notice some front loading where consumers are buying items ahead of tariff price increases. Also, some retailers talk about weakness, especially on the lower income segment. JPM says this is also evident in its credit card data and the cash buffers in people's checking accounts. However, JPM says it is not seeing signs of distress in the lower income segment.
- In its Commercial & Investment Bank (CIB) segment, revenue rose 12% yr/yr to $19.67 bln. Markets revenue rose to $9.7 bln, an exceptionally strong quarter with record revenue in Equities. However, tariffs have caused clients to shift focus away from strategic priorities to more short terms concerns like supply chain optimization. This has lowered JPM's investment banking pipeline outlook.
- In terms of the macro view, CEO Jamie Dimon says the economy is facing considerable turbulence (including geopolitics), with the potential positives of tax reform and deregulation and the potential negatives of tariffs and "trade wars," ongoing sticky inflation, high fiscal deficits and still rather high asset prices and volatility.
JPM posted a solid Q1 report all around. We think the strong results were tempered by Dimon's cautious comments about the economy. The uncertainty created by tariff issues has slowed decision making by companies, both large and small. However, Dimon's cautious comments were not a big surprise and follows pretty closely to what he said in his shareholder's letter this week and in press interviews. Getting some trade agreements in place as quickly as possible would remove a lot of uncertainty.
Also, we think Dimon's comments about lower income consumers not showing signs of distress has reassured investors. We think this report bodes fairly well for other banks set to report in the coming days. One thing that stood out to us was Dimon saying that he expects many companies will remove guidance when they report earnings in the coming weeks.
Costco's strong March comps underscore its resilience and strong competitive positioning (COST)
Costco's (COST) value proposition through offering products in bulk and through its Kirkland Signature private label continues to resonate with budget-conscious consumers as reflected by its strong March adjusted comparable sales growth of 9.1%. A favorable calendar shift related to the timing of Easter added approximately 1.5% to the comp growth, but the underlying performance is still impressive.
Similar to competitor Walmart (WMT), which reaffirmed its 1Q26 sales growth guidance and annual sales growth outlook yesterday, COST's business tends to strengthen relative to other retailers during economic downturns. In fact, COST has even outperformed price-focused WMT and Target (TGT), thanks to its resilient membership model, higher exposure to food and essentials, and a more affluent customer base.
- On that note, COST's foot traffic increased by 7.5% in March, compared to declines of 3.8% at WMT and 6.5% at TGT. Once again, strong performance in food, fresh produce, and household essentials drove the healthy foot traffic and comp growth. However, non-food categories such as electronics and seasonal goods also positively contributed.
- COST's e-Commerce channel continued to shine as adjusted comps jumped by 16.2% yr/yr, indicating robust momentum heading through 3Q25, which ends on May 11. Unlike Amazon's (AMZN) pure-play e-Commerce model, COST's omnichannel strategy combines the strengths of its physical warehouse locations with digital convenience, providing it with a competitive edge. Also, the company's expansion into "big and bulky" items, like appliances and furniture, has been a significant contributor to e-Commerce sales. COST logistics has streamlined delivery for these items, adding another layer of convenience.
- Relative to many other retailers, COST is also more insulated from tariffs -- particularly on China. Only about one-third of COST's U.S. sales are imported with less than half of those imports coming from China. In comparison, WMT sources approximately 60% of its products from China, which now faces the stiffest tariffs with a 125% duty charged on Chinese imports. TGT has reduced its reliance on Chinese manufacturing in recent years, lowering its exposure to 30% from 60%, but that is still substantially higher than COST's exposure.
- Like WMT, COST is pressuring suppliers to absorb some tariff costs, leveraging its scale and strong supplier relationships. The company has also accelerated inventory purchases and plans to replace less competitive imported items with better-value alternatives.
COST demonstrated remarkable resilience in March, achieving strong comparable sales growth, driven by robust U.S. sales and significant e-commerce gains of 16.2%. This performance underscores COST's ability to thrive during economic uncertainty, leveraging its membership model and value-driven offerings to attract and retain customers seeking convenience and savings in a challenging retail environment.
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