Market Snapshot
| Dow | 39669.39 | -699.57 | (-1.73%) | | Nasdaq | 16307.15 | -516.01 | (-3.07%) | | SP 500 | 5275.72 | -120.91 | (-2.24%) | | 10-yr Note | +5/32 | 4.28 |
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| | NYSE | Adv 1001 | Dec 1654 | Vol 1.0 bln | | Nasdaq | Adv 1456 | Dec 2883 | Vol 7.9 bln |
Industry Watch
| Strong: Energy |
| | Weak: Technology, Communication Services, Consumer Discretionary, Financials |
Moving the Market
-- Big loss in NVDA after announcing impact of export restrictions
-- Responding to Fed Chair Powell remarks indicating he doesn't think the Fed will make progress on its dual mandate goals this year and that there isn't a "Fed put."
-- Still grappling with tariff worries
-- Digesting this morning's data
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Closing Summary
16-Apr-25 16:30 ET
Dow -699.57 at 39669.39, Nasdaq -516.01 at 16307.15, S&P -120.91 at 5275.72
[BRIEFING.COM] Stocks struggled under selling activity, leading the major indices to close sharply lower. The S&P 500 dropped 2.2%, the Nasdaq Composite fell 3.1%, and the Dow Jones Industrial Average declined 1.7%.
There was a negative bias through the entire session following NVIDIA's (NVDA 104.49, -7.71, -6.9%) announcement that it expects Q1 results to include up to $5.5 billion of charges associated with H20 products due to export restrictions for China. AMD (AMD 88.29, -7.00, -7.4%) also announced an expected impact of $800 million.
Selling increased noticeably in the afternoon following remarks from Fed Chair Powell, who appeared at an event in Chicago, indicating that he doesn't think the Fed will make progress on its dual mandate goals this year and that there isn't a "Fed put."
This morning's economic data also contributed to the downside bias despite solid headline numbers in the retail sales report. Total retail sales increased 1.4% month-over-month in March (Briefing.com consensus 1.3%) following an unrevised 0.2% increase in February. Excluding autos, retail sales rose 0.5% month-over-month (Briefing.com consensus 0.2%) following an upwardly revised 0.7% increase (from 0.3%) in February.
The negative takeaway related to the belief that last month's data may have been inflated by buying activity ahead of the tariff impacts and may decrease in the future.
Mega caps and semiconductor shares led the downside charge amid ongoing uncertainty on the tariff front and related to growth concerns. The Vanguard Mega Cap Growth ETF (MGK) dropped 3.3% and PHLX Semiconductor Index (SOX) fell 4.1%.
The technology sector registered the largest decline by a decent margin, falling 3.9%. The next worst performing sector was consumer discretionary (-2.7%) and communication services (-2.5%).
- Dow Jones Industrial Average: -6.8% YTD
- S&P 500: -10.3% YTD
- S&P Midcap 400: -12.8% YTD
- Nasdaq Composite: -15.6% YTD
- Russell 2000: -16.4% YTD
Reviewing today's economic data:
- Weekly MBA Mortgage Applications Index -8.5%; Prior 20.0%
- March Retail Sales 1.4% (Briefing.com consensus 1.3%); Prior 0.2%, March Retail Sales ex-auto 0.5% (Briefing.com consensus 0.2%); Prior was revised to 0.7% from 0.3%
- The complicated element -- and key takeaway from the report -- is that the strength has a lot to do ostensibly with getting ahead of the tariff actions, which is to say the strength may not be sustained. If there is a counterargument to that point, it is that sales at food services and drinking places were up a robust 1.8% in March after declining 0.8% in February.
- March Industrial Production -0.3% (Briefing.com consensus -0.3%); Prior was revised to 0.8% from 0.7%, March Capacity Utilization 77.8% (Briefing.com consensus 77.9%); Prior 78.2%
- The key takeaway from the report is that the large decline in the output of utilities overshadowed the increase in manufacturing output and mining output, so the headline decline isn't as bad as it looks at first blush.
- February Business Inventories 0.2% (Briefing.com consensus 0.3%); Prior 0.3%
- April NAHB Housing Market Index 40 (Briefing.com consensus 39); Prior 39
Thursday's economic calendar includes:
- 8:30 ET: March Housing Starts (Briefing.com consensus 1.418 mln; prior 1.501 mln), Building Permits (Briefing.com consensus 1.455 mln; prior 1.456 mln), weekly Initial Claims (Briefing.com consensus 225,000; prior 223,000), Continuing Claims (prior 1.850 mln), and April Philadelphia Fed Survey (Briefing.com consensus 10.0; prior 12.5)
- 10:30 ET: Weekly natural gas inventories (prior +57 bcf)
Selling interest draws in more selling interest
16-Apr-25 15:30 ET
Dow -929.56 at 39439.40, Nasdaq -709.67 at 16113.49, S&P -164.41 at 5232.22
[BRIEFING.COM] Losses are accelerating ahead of the close. The S&P 500 is 3.2% lower than yesterday's close.
Market breadth was mixed earlier with advancers leading decliners at the NYSE and decliners leading at the Nasdaq. Now, decliners have a roughly 5-to-2 lead over advancers at both the NYSE and at the Nasdaq.
Downside action became its own catalyst as the session progressed, drawing in additional selling.
Afternoon decline following Fed Chair comments
16-Apr-25 15:05 ET
Dow -755.56 at 39613.40, Nasdaq -665.86 at 16157.30, S&P -147.54 at 5249.09
[BRIEFING.COM] The market remains in a steady decline. The Dow Jones Industrial Average is more than 750 points lower. The S&P 500 is about 150 points lower.
Only one S&P 500 sector sits in positive territory -- energy (+1.1%) -- while ten sectors show declines ranging from 0.3% (real estate) to 5.2% (technology).
The afternoon leg lower coincided with Fed Chair Powell saying the Fed is "well positioned to wait for greater clarity before considering any adjustments in policy stance." When asked if there could be a Fed put, he said, "No."
S&P 500 slips 2.1% as Meta drags on tech; Abbott rallies on strong earnings
16-Apr-25 14:30 ET
Dow -543.29 at 39825.67, Nasdaq -536.15 at 16287.01, S&P -113.17 at 5283.46
[BRIEFING.COM] The S&P 500 (-2.10%) is in second place on Tuesday afternoon, sitting just a bit off session lows.
Briefly, S&P 500 constituents Carmax (KMX 64.26, -3.47, -5.12%), Warner Bros. Discovery (WBD 7.90, -0.35, -4.24%), and Meta Platforms (META 501.75, -19.77, -3.79%) pepper the bottom of the average. KMX and WBD fall despite a dearth of corporate news, while META's losses reflect a broad tech sell-off after new US chip export curbs, compounded by fears of slowing ad-spend, heavy AI/Reality Labs outlays, and revived FTC breakup risk.
Meanwhile, Abbott Labs (ABT 131.04, +4.82, +3.82%) is holding gains atop the standings as Q1 earnings topped estimates and management reaffirmed its full-year guidance, signaling resilience amid tariff headwinds.
Gold surges to record high as Fed caution, trade tensions spark flight to safety
16-Apr-25 14:00 ET
Dow -629.80 at 39739.16, Nasdaq -557.71 at 16265.45, S&P -122.19 at 5274.44
[BRIEFING.COM] The major averages have peeled off, now at session lows with the tech-heavy Nasdaq Composite (-3.32%) down 557 points; the market is down in reaction to comments from Fed Chair Powell, who struck a cautious tone in his comments at the Economic Club of Chicago, warning that rising tariffs and global supply chain disruptions could lead to more persistent inflation than previously expected. While the labor market remains solid and wage growth is sustainable, Powell noted growing downside risks to growth and sentiment, suggesting the Fed is prepared to wait for greater clarity before adjusting policy.
Gold futures settled $106 higher (+3.3%) at $3,346.40/oz, reaching a new record high. The rally comes as trade tensions between the U.S. and China continue to escalate, including fresh U.S. export restrictions on AI chips and China's retaliatory suspension of Boeing aircraft deliveries, which have heightened investor anxiety and driven demand for safe-haven assets like gold. Additionally, a weakening U.S. dollar has made gold more attractive to international investors.
Meanwhile, the U.S. Dollar Index is now down about -0.7% to $99.47.
J.B. Hunt Transport at 52-week lows despite Q1 EPS beat; uncertainty keeps sellers in control (JBHT)
J.B. Hunt Transport (JBHT -7%) hits fresh 52-week lows today despite delivering narrow earnings and sales beats in Q1. The intermodal trucking company has been caught amid unfavorable trade policies and a sluggish economic recovery. The stock was already turning lower before "Liberation Day" earlier this month, weighed down by what management has called a "freight recession." Pricing has remained weak as too much capacity chases too few goods, eroding JBHT's margins and profits.
- JBHT conceded that its Q1 results were not up to par, displeased with its returns and efforts to eliminate costs. Last quarter, JBHT accentuated that its top priorities were repairing its margins and improving financial performance. However, operating income contracted by 8% yr/yr in Q1, leading to operating margins of 6.1%, a 50 bp drop yr/yr. Meanwhile, sales fell by 0.8% yr/yr to $2.92 bln; JBHT has not registered yr/yr sales growth since 4Q22. JBHT cited seasonally lower volume, rate pressures, and ongoing hikes in insurance premiums as culprits.
- CEO Shelley Simpson remarked that the executive team explored options it can implement to more aggressively eliminate costs in some scenario planning analyses, stressing the need to stay fluid amid a dynamic economic environment filled with inflationary pressures, depressed consumer spending, and changing tariff policies.
- On the bright side, Intermodal volume jumped by 8% yr/yr, 3 pts higher than last quarter, supported by a 4% and 13% increase in transcontinental and eastern network loads, respectively. Management mentioned that customer demand trended in line with normal seasonality. In Dedicated Contract Services (DCS), JBHT's second-largest segment behind Intermodal, revenue edged 4% lower yr/yr. The company noted that some customers are taking longer than usual to execute contracts, employing a wait-and-see approach due to market uncertainty.
- JBHT stated that within DCS, it anticipates a return to net fleet growth this year but cautioned that the timing of deals will largely influence its ability to return to positive revenue and operating income growth.
- Across JBHT's other segments, including Integrated Capacity Solutions (ICS), Final Mile Services (FMS), and Truckload (JBT), revenue fell across the board. In ICS, its customer count jumped by 20% yr/yr. In FMS, big and bulky product demand remained muted, a concerning trend for furniture retailers like Wayfair (W) and La-Z-Boy (LZB). Conversely, demand in JBHT's fulfillment network was positive, supported by off-price retail trends, a good sign for TJX (TJX), Ross Stores (ROST), and their peers. In JBT, service levels were strong, resulting in additional bid opportunities.
- Regarding tariffs, JBHT does not yet have a complete picture. Management stated that customers are planning for multiple scenarios, ultimately waiting for the dust to settle before changing their short and long-term business strategies.
Bottom line, JBHT's Q1 earnings beat was a pleasant surprise but insufficient to offset the overarching concerns related to tariffs, the economy, and the heightened uncertainty surrounding how everything will play out, keeping bears in the driver's seat today.
Abbott Labs' Medical Devices and Nutrition segment lead Q1 outperformance (ABT)
Fueled by strong performances from its Medical Devices and Established Pharmaceuticals segments and an ongoing recovery in Nutrition, Abbott Labs (ABT) delivered solid 1Q25 results and reaffirmed its EPS and organic sales growth outlook for FY25. The strong growth across these businesses helped to offset ongoing softness in a Diagnostics segment that continues to be impacted by lower COVID-19 testing revenue. Furthermore, ABT is removing tariff-related risks by investing in new manufacturing facilities in the U.S. -- including $500 mln for facilities in Illinois and Texas -- which are expected to go live by the end of 2025.
- Once again, the Medical Devices segment was a standout, delivering double-digit organic revenue growth for the eighth consecutive quarter. For Q1, organic sales grew by 12.6%, driven by ongoing strength in diabetes care via ABT's FreeStyle Libre continuous glucose monitoring system. FreeStyle Libre generated $1.7 bln in sales, pushing U.S. diabetes sales higher by 27%. Structural Heart was another source of strength, generating organic growth of nearly 15%.
- Established Pharmaceuticals, ABT's branded generic medicines unit, achieved healthy organic sales growth of 7.8% with balanced growth across geographies and product lines. Emerging Markets have shown resilient demand as illustrated by organic growth of 9.3%. Key products driving growth in this segment include treatments across therapeutic areas such as gastroenterology, women’s health, pain management, cardiovascular, respiratory, and metabolic disorders.
- In Nutrition, the supply chain disruptions (raw materials shortages, logistics delays, manufacturing constraints) that created headwinds have eased, thanks to ABT's mitigation efforts, such as its investments in manufacturing capacity. Additionally, a move towards premiumization and product innovation in adult nutrition, alongside a continued recovery in U.S. infant formula, are supporting growth. Following last quarter's increase of 7.1%, organic revenue for Nutrition grew by 6.8% in Q1.
- Diagnostics remains the laggard with sales decreasing by 4.9% on an organic basis. When excluding COVID-19 testing related sales, the base Diagnostics business has consistently delivered mid- to high-single-digit organic growth, including growth of 6.1% in 4Q24 and 5.9% in 3Q24. In 1Q25, however, COVID-19 impacts fully cycled through and base business growth became the primary driver, causing organic growth to slip to 0.5% for the core lab business.
ABT delivered a strong Q1, led by double-digit growth in Medical Devices (especially Diabetes Care), robust recovery in Nutrition, and steady gains in Established Pharmaceuticals. Margin expansion was notable as adjusted gross margin expanded by 140 bps yr/yr to 57.1%, aided by product mix and cost control. The company reaffirmed its FY25 outlook, supported by innovation, geographic diversification, and operational execution, positioning it well for continued growth in a dynamic healthcare landscape.
United Airlines flies past Q1 EPS expectations, driven by premium and international demand (UAL)
United Airlines (UAL) is flying higher after reporting strong 1Q25 earnings that easily beat expectations, even as domestic travel demand softened considerably during the quarter. Driving the better-than-expected EPS was a 9.2% increase in high margin premium cabin revenue, which outpaced Delta Airlines' (DAL) Q1 premium cabin revenue growth of 4%, and a sharp decline in fuel expense (-12.2% yr/yr). Encouragingly, UAL also stated that booking trends have been stable despite the rising macroeconomic concerns surrounding tariffs, making its initial FY25 EPS guidance range of $11.50-$13.50 the base case scenario.
Given the unpredictability of the macro environment, UAL also provided guidance for a recessionary scenario in which operating revenue incrementally decreases by five points in 2Q25-4Q25. The decline in revenue, combined with further capacity reductions and no additional cost relief from fuel, would result in FY25 EPS of $7.00-$9.00.
- As anticipated, the domestic business was a weak spot in Q1 with revenue falling by 3.8%, marking a sharp drop from last quarter's growth of 11%. UAL and its competitors are seeing weakness among more price-sensitive customers, prompting capacity cuts, particularly in off-peak flights.
- Still, capacity rose by nearly 5% for UAL in Q1, outpacing DAL's increase of 4.2%. Thanks to enduring strength for higher-priced international flights, RASM edged higher by 0.5% despite the capacity increase and sluggish domestic travel demand. Like last quarter, Pacific was the standout performer with RASM up 8.5%, followed by Atlantic at 4.7%.
- Starting in 3Q25, UAL will begin capacity reductions, including a 4% domestic capacity cut. This move will help to rebalance supply with demand, supporting pricing and margins. On a yr/yr basis, UAL's adjusted pre-tax margin was already strong in Q1, improving to 3.6% compared to (0.6)% in the year-earlier quarter.
- A key component of UAL's strategy to drive margin and profit growth is to focus on its premium business, especially through the development of its Polaris business class. The company is enhancing Polaris with new Polaris Plus suites that have sliding doors, more spacious seats, and exclusive amenities such as private check-in, priority boarding, and upgraded bedding. Additionally, UAL is investing in technology and customer experience improvements, including faster WiFi via Starlink installation and new features on the United app.
UAL's 1Q25 results demonstrate solid operational resilience and margin expansion in a tough business climate, driven by strong premium and international demand. While the company remains optimistic for FY25 under stable demand conditions, macroeconomic uncertainties necessitate cautious capacity management and scenario planning, including the issuance of guidance under a recessionary environment.
Interactive Brokers sharply lower as investors expected big Q1 upside given market volatility (IBKR)
Interactive Brokers (IBKR -10%) is heading sharply lower following a Q1 EPS miss with in-line revenue. It also announced a 4-for-1 stock split and boosted its dividend by 28%, although the yield remains below 1%.
- Q1 was a pretty wild ride in the stock market. After a solid January, buoyed by post-US election enthusiasm, market indexes surged to peaks in mid-February. However, cracks soon began to show. DeepSeek and its less capital-intensive AI caused jitters in surging tech stocks. Then talk about tariffs further accelerated the decline in March.
- The S&P 500 ended the quarter down 5%, but it was off 9% from its February highs. Also, six of the Mag 7 stocks that dominated investor attention, fell significantly more than the market. However, Interactive Brokers noted that it does not need up markets to generate revenue. Of its 25 most active names, 22 saw net buying activity.
- In terms of products, IBKR noted that options were popular in Q1 with contract volumes up 25% to a quarterly record. Futures volumes were up 16%, which also was a record. Volume growth rates were ahead of industry volumes.
- IBKR also saw global interest from investors, both institutional and individual, in opening accounts. In Q1, IBKR added 279,000 new accounts, a record that well surpassed even the meme stock days of 1Q21. Total account growth was 32%, with even faster growth internationally.
So why is the stock sharply lower? While the EPS miss was a letdown, IBKR is known to have volatile earnings. It does not guide and its performance relies heavily on trading volumes, and that is difficult to predict. Also, IBKR has missed on EPS in three of the past six quarters. As such, we do not think the miss by itself was unusual.
We suspect the problem was that investors were looking for a massive Q1 given the huge volatility in the markets. The stock had been rising heading into this report, up about 30% from its roughly $135 low on April 7 to its $173.43 close yesterday. We think investors were looking for big Q1 upside given the market volatility and it did not materialize. The stock split and dividend hike were welcome news, but clearly investors were looking for more in Q1.
NVIDIA sinks after disclosing a $5.5 billion charge related to China export restrictions (NVDA)
NVIDIA (NVDA -7%) sinks today following a surprise hit to Q1 numbers. The AI titan and chip designer disclosed last night that its Q1 (Apr) results are expected to include up to around $5.5 bln in charges, or roughly 14% of the company's total Q4 (Jan) revs after the U.S. government informed the company earlier this month that exports to China, including Hong Kong and Macau, need a license. As a one-time charge, the impact will not necessarily affect non-GAAP earnings and revenue; instead, it will clip GAAP EPS in Q1.
While the restriction builds upon the Biden administration's export curbs targeting advanced AI chip exports from 2022, the dollar value is likely higher than the market anticipated. The $5.5 bln is associated with inventory and other charges, indicating that NVDA may not feel as though licenses will be easy to come by, writing down its inventory as a result.
- Sales to China had already been materially affected before the U.S. government informed NVDA of the license requirement. In Q4, as a percentage of total Data Center revenue, sales in China remained considerably below levels before the onset of export curbs. NVDA commented that it did not expect China shipments to change much, adding that conditions in the region are becoming increasingly more competitive.
- With NVDA forced to reconfigure its flagship AI platform to meet the restriction requirements to ship to China, it was already delivering chips with performance below its actual capability. Management commented in March that with the H20's performance being about 25x lower than that of Blackwell, it faced a difficult situation as these chips were only good for simple models. With NVDA now writing down $5.5 bln in inventory, it appears that it may fall further behind in an intensifying competitive landscape in China.
- Adding to NVDA's headwinds is the AI Diffusion rule that took effect on January 13 but does not require compliance until May 15. The regulations aim to curb the deployment of advanced AI chips, limiting their use by entities deemed to pose a national security threat. NVDA warned in a blog post on the effective date that the rule threatens to derail innovation and economic growth, adding that it would control technology globally. The degree to which the rule will impact NVDA's financials remains unclear but adds another layer of uncertainty.
Before last night's surprise inventory write-down, NVDA already had plenty on its plate. The tariffs announced earlier this month pushed the stock down to lows not seen since May 2024 before catching a bounce. With further headwinds facing NVDA surrounding its presence in China, its fourth-largest market by revenue, investors are steering clear for now, creating a ripple effect across semiconductors today, with peers AMD -6.7%, INTC -2.9%, and AVGO -2.5%, suffering moderate losses. NVDA remains a solid play on the long-term prospects of AI. However, the next several months may see increased volatility as investors deal with dynamic trade policies.
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