Market Snapshot
| Dow | 39186.98 | +1016.57 | (2.66%) | | Nasdaq | 16300.41 | +429.52 | (2.71%) | | SP 500 | 5287.78 | +129.56 | (2.51%) | | 10-yr Note |
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| | NYSE | Adv 2528 | Dec 251 | Vol 1.08 bln | | Nasdaq | Adv 3588 | Dec 814 | Vol 7.01 bln |
Industry Watch
| Strong: Utilities, Information Technology, Financials, Energy, Consumer Discretionary, Communication Services |
| | Weak: -- |
Moving the Market
--Buy-the-dip interest following Monday's steep losses
--Strength in mega-cap stocks
--Heightened levels of bearishness fuel some contrarian-minded buying interest
--Treasury Secretary Bessent expects China tariff situation to de-escalate - Bloomberg
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Closing Stock Market Summary
22-Apr-25 16:25 ET
Dow +1016.57 at 39186.98, Nasdaq +429.52 at 16300.41, S&P +129.56 at 5287.78
[BRIEFING.COM] The stock market entered today with a rebound on its mind, and that is precisely what it achieved, making up the entirety of yesterday's losses and then some. There wasn't a news trigger for the early gains, yet that changed in the early afternoon when Bloomberg reported that Treasury Secretary Bessent said he expects the China tariff situation to de-escalate.
That news fostered some hope that the current trade impasse between the U.S. and China will get resolved, although it would be remiss not to add that negotiations haven't even started and that there was no substance to today's comments. It was simply a change in tone that registered for a market that was already up sharply. In fact, the vast majority of today's gains were logged before the Bessent report.
The initial rally effort was aided by short-covering activity and contrarian-minded buying interest driven by reports of a pervasive bearish mindset. To that end, the level of bearish sentiment among individual investors has exceeded 50% for eight straight weeks, which is the longest such streak for records dating back to 1987, according to the American Association of Individual Investors.
The rebound bid also gathered momentum with the U.S. Dollar Index (+0.7% to 98.97) rallying and the 10-yr note yield sliding two basis points to 4.39% despite a weak 2-yr note auction. Those moves took a little of the edge off the "sell America" trade that seemingly undid the market in Monday's trade when the Dow, Nasdaq, and S&P 500 declined 971, 415, and 124 points, respectively.
The mega-cap stocks were key drivers of the broader market today, paced by Tesla (TSLA 237.97, +10.47, +4.6%) ahead of its earnings report after today's close. Notably, they weren't the only drivers -- far from it. Advancers trounced decliners by a nearly 9-to-1 margin at the NYSE and by a better than 4-to-1 margin at the Nasdaq.
The market cap-weighted S&P 500 and equal-weighted S&P 500 both finished up 2.5%. Moreover, all 11 S&P 500 sectors logged solid gains. Eight sectors were up at least 2.1%.
The biggest movers were the financial (+3.3%) and consumer discretionary (+3.2%) sectors. The industrials sector (+1.8%) was a relative laggard, held back somewhat by losses in Northrop Grumman (NOC 464.00, -67.33, -12.7%) and RTX Corp (RTX 113.90, -12.14, -9.6%) following their earnings reports.
There was no U.S. economic data of note today.
- Dow Jones Industrial Average: -7.6% YTD
- S&P 500: -10.1% YTD
- S&P Midcap 400: -11.9% YTD
- Nasdaq Composite: -15.6% YTD
- Russell 2000: -15.2% YTD
A look at Wednesday's economic data:
- 07:00 ET: Weekly MBA Mortgage Index (prior -8.5%)
- 09:45 ET: Flash April S&P Global US Manufacturing PMI (prior 50.2) and flash S&P Global US Services PMI (prior 54.4)
- 10:00 ET: March New Home Sales (Briefing.com consensus 684,000; prior 676,000)
- 10:30 ET: Weekly crude oil inventories (prior +515,000)
Waiting on Tesla
22-Apr-25 15:30 ET
Dow +904.73 at 39075.14, Nasdaq +331.81 at 16202.70, S&P +105.96 at 5264.18
[BRIEFING.COM] Heading into the home stretch and backing off just a bit amid some buyer exhaustion. This could also be a pivot to a wait-and-see trade with Tesla's (TSLA 235.40, +7.90, +3.5%) earnings report looming after the close.
As noted earlier, the numbers the company reports are important, but the focal point will be how the stock reacts to the news the company shares.
Altogether it has been a good day for the beaten-down mega-cap stocks. They are all higher, none more so than Tesla. Notably, Meta Platforms (META 495.60, +10.94, +2.3%) is on course for its first gain in eight sessions.
The Vanguard Mega-Cap Growth ETF (MGK) is up 2.1% today but down 15.4% for the year.
Riding contrarian wave
22-Apr-25 15:00 ET
Dow +1003.47 at 39173.88, Nasdaq +429.31 at 16300.20, S&P +126.09 at 5284.31
[BRIEFING.COM] The indices are off their highs for the day but still holding on to the vast majority of today's gains. Once again, trade-related headlines have acted as a catalyst for the market's movement, but they have not been the primary catalyst.
Frankly, the bulk of today's gains had been logged before reports circulated that Treasury Secretary Bessent said he expects the tariff issues with China to de-escalate. That news was simply a cherry on top of a market that had already been rallying on a belief that it was due for a rebound given the pervasive bearish sentiment (a contrarian indicator).
Granted, the 2-yr Treasury note auction could have gone better, but for today's effort, the movement of the 10-yr note has been the more influential driver. The 10-yr note yield is down three basis points to 4.38%.
The broad-based participation in today's equity rally is reflected in the fact that the market cap-weighted S&P 500 and equal-weighted S&P 500 are both up 2.4%.
S&P 500 up 2%, lags major averages; Equifax, First Solar, Invesco lead, Halliburton lags
22-Apr-25 14:30 ET
Dow +822.26 at 38992.67, Nasdaq +357.41 at 16228.30, S&P +102.97 at 5261.19
[BRIEFING.COM] The S&P 500 (+2.00%) is up a little over 100 points on Tuesday afternoon, now in last place among the major averages.
Briefly, S&P 500 constituents Equifax (EFX 243.62, +28.33, +13.16%), First Solar (FSLR 135.44, +12.99, +10.61%), and Invesco (IVZ 13.52, +1.06, +8.51%) pepper the top of the average. EFX and IVZ gain after earnings, FSLR jumps as reports circulate that the U.S. placed steep tariffs on Southeast Asian solar imports.
Meanwhile, Halliburton (HAL 20.57, -1.35, -6.16%) is one of today's top laggards following earnings.
Gold cools after blistering run as traders cash in amid Trump-Powell drama and dollar bounce
22-Apr-25 14:00 ET
Dow +681.57 at 38851.98, Nasdaq +302.72 at 16173.61, S&P +83.37 at 5241.59
[BRIEFING.COM] With about two hours to go on Tuesday the tech-heavy Nasdaq Composite (+1.91%) holds a modest lead atop the major averages.
Gold futures settled $5.90 lower (-0.2%) at $3,419.40/oz, as investors employ a bit of profit taking following the yellow metal's recent rally. The recent rise in gold prices was due in part to escalating concerns over U.S. political and economic stability, notably President Trump's public criticism of Federal Reserve Chair Jerome Powell and calls for immediate interest rate cuts. These actions have unsettled markets, leading to a weakened U.S. dollar and increased demand for gold as a safe-haven asset.
Meanwhile, the U.S. Dollar Index is now up about +0.4% to $98.77.
Verizon's connection with investors strengthening after reaffirming FY25 guidance (VZ)
Verizon's (VZ) weak connection with investors begins to strengthen as shares rebound from earlier lows of -2.7% following Q1 results today. There were not too many surprises surrounding VZ's headline results in Q1, reporting a slim earnings beat on relatively slow revenue growth. The telecom giant also reiterated its FY25 outlook despite warning of heightened macroeconomic uncertainty.
However, initially pinning the stock lower today was VZ's increasing postpaid phone losses, posting a net loss of 289,000 wireless subscribers, considerably higher than the 114,000 reported in the year-ago period. The massive uptick in losses reflects a rebuff from consumers over recent pricing actions. With many players in the telecom arena, such as Mobile Virtual Network Operators (MVNO) like Mint and Visible, who charge a fraction of the cost of major telecoms, VZ does not command significant price inelasticity, causing many users to flee its network.
Nevertheless, investors quickly shrugged off this blemish due to VZ's confidence in still achieving its financial targets for the year, including adjusted EPS growth of flat to +3%, total wireless service revenue growth of +2.0-2.8%, and free cash flow of $17.5-18.5 bln.
- As usual, VZ narrowly exceeded bottom-line estimates, delivering adjusted EPS of $1.19. Adjusted EBITDA expanded by 4% yr/yr, exceeding its FY25 forecast of +2.0-3.5%, to VZ's best figure ever. Part of VZ's success in growing adjusted EBITDA above its target for the year is its focus on growing its wireless portfolio, which commands more attractive margins than its other businesses. VZ is also making progress on its private networks business, closing over a dozen deals in Q1. Meanwhile, the company is continuing to take costs out.
- Revenue inched 1.5% higher yr/yr to $33.5 bln despite the sizeable postpaid phone net losses, illuminating the inflationary pricing gains. Revenue in wireless services climbed by 2.7% yr/yr, with wireless equipment revs ticking 0.7% higher. Weighing on this growth was Verizon Business, which saw a 1.2% drop in revenue.
- A clear highlight was within VZ's Broadband business, which boasted 339,000 net adds in Q1, with total fixed wireless access net adds of 308,000. The gains push the total base to over 4.8 mln fixed wireless access subs, placing VZ in a firm position to reach the next milestone of 8-9 mln by 2028.
- Several factors are underpinning VZ's confidence in hitting its goals this year. For one, the company expects to achieve higher volumes, a higher premium mix, and upgrade customers to myPlan (a new customized unlimited plan). Secondly, VZ is focused on better customer retention, making the necessary price adjustments which impacted churn but should begin improving through the year, especially as more customers turn to myPlan, which locks in rates for three years.
VZ's Q1 report was initially met with a cold reception as investors zeroed in on the alarming net losses number. However, as market participants digested the full report, which included many highlights, they began to warm up to VZ, helping push the stock into positive territory today.
3Ms margin expansion drives resilient Q1 performance in a challenging environment (MMM)
3M's (MMM) resiliency is on display after reporting upside 1Q25 earnings and reaffirming its FY25 EPS and organic sales growth outlook despite cautious spending behavior among some of its industrial customers. Productivity gains from manufacturing and supply chain improvements, combined with lower restructuring costs, are enabling MMM to achieve significant margin expansion, even as organic sales growth slowed to 1.5% from 2.1% in 4Q24. The company did state that tariffs could knock $0.20-$0.40 off its FY25 EPS guidance of $7.60-$7.90, but investors are taking that disclosure in stride as the underlying business continues to perform well.
- The Safety & Industrial segment was a standout, generating organic net sales growth of 2.5% with broad-based strength across most of its markets. In fact, five out of seven divisions experienced growth in Q1, led by the electrical and industrial adhesive markets, which posted high-single-digit growth. Softness in broader industrial production and a low-single-digit decline in auto aftermarket weighed on the segment's growth.
- Weakness around the automotive market extended into the Transportation & Electronics segment. Declining vehicle builds, particularly in the U.S. and Europe, pressured volumes, while a mixed electronics market kept a lid on the segment's growth. Organic net sales growth still edged higher by 1.1% as strength in the aerospace market (up low-double-digits) offset subdued demand in other areas.
- Persistent softness in U.S. consumer spending in discretionary categories, in addition to some destocking at retail partners, hindered growth in the Consumer segment. After rebounding into positive territory last quarter at +1.2%, organic sales growth slowed to just +0.3% in Q1. There were a few pockets of strength, including filters, respiratory products, and auto care.
- Despite the pullback in consolidated organic sales growth, MMM still reaffirmed its FY25 guidance for growth of 2-3%, signaling that it anticipates a pick-up in growth later this year. New product launches figure to play a key role in MMM's improved growth. Thanks to its robust innovation pipeline, new product launches were up by 60% yr/yr, putting the company on track to easily meet its initial target for double-digit growth for product launches in 2025.
3M's results underscore the company’s ability to drive margin expansion and earnings growth in a challenging macro environment. While top-line growth remains modest, disciplined execution, operational improvements, and a robust innovation pipeline are providing resilience. FY25 guidance appears achievable but will require navigating persistent macro and sector-specific headwinds. The company’s operational momentum, strong cash flow ($1.23 bln in Q1), and shareholder return commitments continue to support a constructive long-term investment case.
GE Aerospace cleared for take-off following reaffirmed FY25 guidance, plans to offset tariffs (GE)
By reiterating its FY25 guidance despite increasing broader economic uncertainty, GE Aerospace (GE +4%) is being cleared for take-off today, ascending toward last week's highs. The aerospace engine manufacturer provided encouraging remarks about its ability to offset potential tariff-induced headwinds, noting that it is leveraging available programs the current administration is providing businesses, including duty drawbacks and expanding foreign trade zones. GE is also taking additional actions to offset remaining impacts like controlling costs and hiking prices.
- GE's upbeat Q1 results were consistent with the past several quarters, posting wide beats on its top and bottom lines. Adjusted EPS rose by 60% yr/yr to $1.49 on revenue growth of 10.9% to $9.94 bln. On an adjusted basis, which backs out insurance revenue, total sales grew at the same rate to $9.0 bln.
- Order growth remained buoyant, jumping by 12%, supported primarily by GE's commercial business. In Commercial Engines & Services (CES), total orders climbed by 15%, with services orders up 31%. Conversely, equipment orders contracted by 13% due to a challenging yr/yr comparison. In Defense & Propulsion Technologies (DPT), total orders were unchanged yr/yr while service orders swelled by 14%. However, like in CES, equipment orders fell due to an unfavorable +34% comp from last year.
- The gains across both commercial and defense were encouraging given the cautionary forecasts and commentary lately. For instance, earlier this month, major commercial airlines slashed their outlooks for the year citing sluggish travel demand. Meanwhile, GE warned of uncertainty surrounding its defense division due to the current U.S. administration, which has been looking to cut costs. An example recently was Accenture (ACN) noting that its government contracts were being cut by the Department of Government Efficiency.
- Looking ahead, GE reaffirmed its FY25 outlook, including adjusted EPS of $5.10-5.45 and adjusted revenue growth in the low double digits. However, there was one tweak to FY25 departures, which GE lowered to low single digits from mid-single digits, incorporating the impact of announced tariffs net of GE's actions.
- Essentially, GE is embedding a slower 2H25 in its estimate despite Q2 departures shaping up in line with Q1, which grew by 4%, due to a lag in converting orders to revenue due to supply chain dynamics. The cautionary forecast includes a reduction in North American departures, which comprises 25% of the total.
GE's Q1 report was encouraging. Even though supply headwinds are eroding departure growth, GE is confident in being able to offset trade policy effects and maintain its original FY25 guidance while simultaneously investing nearly $1.0 bln in its U.S. factories and supply chains this year. Also, the silver lining to its lowered departure forecast is that it stems from supply woes rather than demand problems. While this did lead to a slower start to the year, GE drove meaningful improvement in material input during February and March, fueling its confidence in accelerating output during Q2. As such, GE is positioned to maintain its upward momentum today, potentially moving back toward all-time highs set following Q4 results in January over the next few months.
Kimberly-Clark sneezes a bit, stock lower on Q1 results, tariffs impacting cost side (KMB)
Kimberly-Clark (KMB -2%) is pulling back today after the paper-based consumer product manufacturer reported Q1 results this morning. It reported modest EPS upside while revenue fell 6% yr/yr to $4.84 bln, but was generally in-line. The main problem was the FY25 guidance, which was reduced primarily to a higher level of expected costs.
- Quickly on the Q1 results, sales declined due to a combination of its PPE divestiture, the exit of its private label diaper business in the US and some FX impact. However, organic sales still declined 1.6%, driven by a 1.5% decrease in price while volume and mix were in line with a year ago. In fairness, 1Q25 was lapping 1Q24 (+5.6%), which was KMB's strongest organic growth quarter in FY24. However, KMB said Q1 organic sales were slightly below internal expectations while profitability was in-line.
- On the call, an analyst noted that KMB's North America segment significantly trailed the scanner retail data despite KMB saying there was not a lot of retailer destocking. KMB responded that weighted average category growth came in at 1.5-2.0% whereas KMB had expected around 2%. KMB also had one fewer day in the quarter relative to the scanner. The company also had some planned strategic pricing investments in terms of price pack architecture across several markets and categories.
- In terms of the guidance, KMB expects tariffs will result in greater costs across its global supply chain vs expectations at the beginning of the year. KMB lowered its outlook for adjusted operating profit to be flat to positive on a constant-currency (CC) basis vs prior guidance of high single-digit growth (CC). Adjusted Free Cash Flow in FY25 is now expected to be approximately $2 bln vs prior guidance of more than $2 bln.
- The headwinds are mostly on the cost side, not really on the sales side. KMB notes that its categories continue to exhibit very resilient demand as its brands are well-known (Huggies, Kleenex, Scott, Kotex, Cottonelle, Depend etc.) Increasingly, affordability has become paramount and KMB is very focused on that as middle income to lower income households are hurting.
Overall, Q1 was a solid quarter for KMB although the weakness in North America was a bit of a surprise. The lowered guidance seems to be the main catalyst for the weakness today. Consumer products are seen as a defensive sector because people will always need to buy diapers, toilet paper etc. However, they are not immune from tariffs, especially on the cost side. These companies have global supply chains, which means higher input costs. We suspect we will hear a similar story from Procter & Gamble (PG), when it reports on Thursday before the open.
Tesla's growth outlook dims again as rollout of low-cost Model Y slips to late 2025 or beyond (TSLA)
Tesla (TSLA), which is no stranger to model launch delays, is pushing back its timeline for a U.S. launch of a more affordable version of its Model Y SUV, according to Reuters. The news comes one day ahead of the EV maker's 1Q25 earnings report and reinforces concerns about the company's ability to reignite its growth engine amid intensifying competitive pressures in its core U.S. and China markets. After deliveries declined by approximately 1% in 2024 -- TSLA's first annual drop in deliveries in over a decade -- analysts and investors have been banking on the launch of new lower-priced models to reverse the deliveries and revenue growth downtrends.
Now, however, it appears that this significant near-term growth catalyst has been removed, setting the stage for more downward revisions to revenue and EPS estimates for FY25. While a specific reason for the delay of the new affordable Model Y was not disclosed, TSLA's prioritization of its robotaxi platform is a likely culprit.
- When Elon Musk made the decision to cancel TSLA's plan for a new, next-generation $25,000 vehicle built on an "unboxed platform" back in 2023, to instead focus the company's resources on developing the robotaxi, a chain reaction was put into motion. As a result of this decision, TSLA opted to develop more affordable versions of existing vehicles -- including a stripped-down Model Y version -- on its production lines, rather than manufacturing all-new, low-cost models.
- This pivot and change in priorities have not only delayed the launch timeline of the affordable Model Y (codenamed E41), but it's also probable that the release of a more basic Model 3 sedan has been pushed back by at least a few months. When TSLA reported 4Q24 earnings on January 29, it stated that it remained on track to begin production on new affordable models in 1H25, but now 2H25 or 1H26 is more likely.
- An aging fleet that lacks lower-priced models has opened the door for competitors to take market share from TSLA, especially in China. In 2024, it's estimated that TSLA's market share in China in the battery-electric vehicle (BEV) market slipped to 10.4% from 11.7% in 2023. New vehicle launches, such as Nio's (NIO) new sub-brand, Firefly, and BYD Company's (BYDDY) budget-friendly e2 and Seagull hatchbacks, have caused TSLA to cede more ground.
- From a financial standpoint, TSLA's revenue is likely to remain stagnant, or worse, in the near-term due to the delay. Although the delay may help to preserve the current margin structure, which has been under pressure due to several rounds of price cuts, EPS will remain under pressure as flat/declining revenue, combined with rising costs amid a global trade war, apply pressure on TSLA's profits.
The delay of the affordable Model Y postpones a critical growth lever for TSLA, increasing near-term financial risks, while providing competitors more time to erode its market share. As the global EV market pivots towards affordability and scale, TSLA's aging product lineup positions the company for an extended period of stagnation in both sales and earnings.
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