Market Snapshot
| Dow | 41316.57 | +564.47 | (1.39%) | | Nasdaq | 17977.73 | +266.99 | (1.51%) | | SP 500 | 5686.67 | +82.53 | (1.47%) | | 10-yr Note | -29/32 | 4.32 |
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| | NYSE | Adv 2151 | Dec 489 | Vol 1.0 bln | | Nasdaq | Adv 3187 | Dec 1132 | Vol 8.2 bln |
Industry Watch
| Strong: Industrials, Financials, Health Care, Communication Services, Materials, Real Estate |
| | Weak: -- |
Moving the Market
-- Reacting to earnings from Apple (AAPL) and Amazon (AMZN)
-- Optimism about trade situation with China after acknowledgement that China may be open to talks with US
-- Digesting a solid Employment Situation Report for April
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Closing Summary
02-May-25 16:30 ET
Dow +564.47 at 41316.57, Nasdaq +266.99 at 17977.73, S&P +82.53 at 5686.67
[BRIEFING.COM] The stock market finished a winning week on a high note. The S&P 500 logged its ninth-straight gain, rising 1.5% despite earnings-related decline in Apple (AAPL 205.35, -7.97, -3.7%) and Amazon (AMZN 189.98, -0.22, -0.1%). The Nasdaq Composite was more than 250 points above yesterday's close and the Dow Jones Industrial Average rose 1.4%.
The positive bias was driven by momentum after a big run of late, along with optimism around the trade with China after an acknowledgement that China may be open to talks with the U.S.
Market participants were also feeling better about the economic situation after a solid jobs report. There was a 177,000 increase in nonfarm payrolls and the unemployment rate was steady at 4.2%.
There was also some technical moves in play after the S&P 500 closed above its 50-day moving average (5,582) yesterday.
The broad advance led all 11 S&P 500 sectors to close higher. The communication services sector led the pack, boosted by its mega cap components. The heavily-weighted financial sector was the next best performer, jumping 2.2%.
Treasuries settled the session with solid losses. The 10-yr yield rose nine basis points to 4.32% and the 2-yr yield rose 14 basis points to 3.84%.
Reviewing today's economic data:
- April Nonfarm Payrolls 177K (Briefing.com consensus 130K); Prior was revised to 185K from 228K, April Nonfarm Private Payrolls 167K (Briefing.com consensus 125K); Prior was revised to 170K from 209K, April Avg. Hourly Earnings 0.2% (Briefing.com consensus 0.3%); Prior 0.3%, April Unemployment Rate 4.2% (Briefing.com consensus 4.2%); Prior 4.2%, April Average Workweek 34.3 (Briefing.com consensus 34.2); Prior was revised to 34.3 from 34.2
- The key takeaway from the report is that the employment situation in April remained relatively solid in spite of the volatility associated with the tariff actions and many castigations that they will hurt the economy. It is possible that will prove to be the case, but looking back at April, that wasn't the case in large part for the labor market.
- March Factory Orders 4.3% (Briefing.com consensus 4.1%); Prior was revised to 0.5% from 0.6%
- The key takeaway from the report is that the headline number masks a languid situation for factory orders in March, which were negative when the transportation component is removed.
Looking ahead to next week, market participants receive the following data on Monday: April ISM Services (prior 50.8%) at 10:00 ET.
Treasuries settle with losses
02-May-25 15:35 ET
Dow +602.98 at 41355.08, Nasdaq +275.56 at 17986.30, S&P +88.70 at 5692.84
[BRIEFING.COM] The major equity indices are holding steady ahead of the final closing bell of the week.
Treasuries settled the session with solid losses. The 10-yr yield rose nine basis points to 4.32% and the 2-yr yield rose 14 basis points to 3.84%.
Looking ahead to next week, market participants receive the following data on Monday: April ISM Services (prior 50.8%) at 10:00 ET.
AMZN dips into the red
02-May-25 15:00 ET
Dow +544.45 at 41296.55, Nasdaq +288.15 at 17998.89, S&P +85.56 at 5689.70
[BRIEFING.COM] The major equity indices hit an air pocket over the last half hour. There was no specific catalyst to account for the deterioration.
Amazon (AMZN 190.13, -0.07, -0.1%) returned to negative territory briefly as the market dipped.
Many other stocks still show robust gains. The Invesco S&P 500 Equal Weight ETF (RSP) is 1.8% higher.
S&P 500 rallies behind DXCM, UAL, BEN; GDDY lags on soft guidance
02-May-25 14:30 ET
Dow +574.33 at 41326.43, Nasdaq +314.12 at 18024.86, S&P +90.64 at 5694.78
[BRIEFING.COM] The S&P 500 (+1.62%) is in second place on Friday afternoon, hovering just off session highs.
Briefly, S&P 500 constituents Dexcom (DXCM 81.13, +10.87, +15.47%), United Airlines (UAL 75.08, +5.92, +8.56%), and Franklin Resources (BEN 20.06, +1.32, +7.04%) pepper the top of the standings. DXCM and BEN jump higher on earnings, while UAL enjoys relative outperformance in-line with Industrials (XLI 135.00, +2.79, +2.11%) peers.
Meanwhile, GoDaddy (GDDY 176.83, -15.53, -8.07%) slips to the bottom of the average following earnings; some investors are pointing to the company's in-line Q1 revs and underwhelming Q2 revs guidance as reasoning for the slide.
Gold rebounds Friday but logs worst week since February as trade fears ease, dollar strengthens
02-May-25 14:00 ET
Dow +550.83 at 41302.93, Nasdaq +293.24 at 18003.98, S&P +85.20 at 5689.34
[BRIEFING.COM] With about two hours to go on the session the tech-heavy Nasdaq Composite (+1.66%) clings to its narrow lead.
Gold futures settled $21.10 higher (+0.6%) at $3,243.30/oz, ultimately down -1.7% on the week; despite the Friday uptick, the yellow metal notched its steepest weekly losses since late February. The midweek downturn was driven by easing U.S.-China trade tensions and a stronger dollar, which dulled gold's appeal as a safe-haven asset. However, persistent uncertainties and anticipation of the U.S. non-farm payrolls report spurred renewed investor interest. Analysts suggest that while trade concerns have momentarily subsided, the market remains sensitive to economic indicators and Federal Reserve policy cues.
Meanwhile, the U.S. Dollar Index is down -0.2% to $99.96.
Instacart's Q1 order boom drives strong EBITDA growth with Q2 outlook signaling more gains (CART)
Instacart (CART) is delivering some big gains today, despite falling just short of 1Q25 EPS estimates, as solid Gross Transaction Value (GTV) growth and encouraging Q2 guidance fuel optimism for solid results moving forward. CART's revenue grew by about 9% to $897 mln, matching analysts' expectations, driven by a 14% surge in orders -- the fastest growth in 10 quarters -- and a 14% increase in high margin advertising revenue to $247 mln. This performance follows a disappointing 4Q24, where CART missed revenue estimates and issued soft Q1 guidance, causing a steep decline in the stock. Last night's Q1 beat and solid Q2 outlook, particularly in GTV and adjusted EBITDA, signal a recovery from Q4's softness, with initiatives like the $10 minimum basket for Instacart+ members and expanded restaurant orders driving the momentum.
- GTV grew 10%, slightly above the $9.11 bln estimate, accelerating from 8% in 4Q24, supported by new customer cohorts achieving higher basket sizes and a higher mix of club orders. This growth, though, was tempered by a slight decline in average order value (AOV), which fell to $110 from $111 last quarter and from $113 in 3Q24. The downtrend is due to a higher mix of restaurant orders and the $10 minimum basket feature, which promotes smaller baskets.
- A standout metric in Q1 was adjusted EBITDA, showcasing CART's improving profitability. Bolstered by disciplined cost management and a focus on higher margin advertising revenue, adjusted EBITDA rose 23% yr/yr to $244 mln, exceeding CART's guidance of $220-$230 mln. Operational efficiencies, such as improved shopper logistics and payment processing optimizations, further bolstered margins. The company’s reinvestment in consumer incentives, like Super Saver and Free Pickup, has not materially pressured profitability, supporting EBITDA expansion.
- CART's Q2 GTV guidance implies growth of 8-10%, while its adjusted EBITDA forecast of $240-$250 mln surpassed analysts' expectations. The outlook reflects confidence in sustained order growth (expected to outpace GTV growth) and continued advertising revenue strength, driven by AI-powered ad tools and high return-on-ad-spend performance.
CART's Q2 performance, marked by 14% order growth and a 23% jump in adjusted EBITDA, reflects robust demand and operational discipline, rebounding from a disappointing Q4. The solid Q2 guidance, buoyed by growth initiatives like Instacart+ and advertising, positions CART well for FY25, with prospects for continued market share gains in the under-penetrated online grocery space.
Apple heads lower despite MarQ upside, as tariff impact expected to be sizeable in JunQ (AAPL)
Apple (AAPL -4%) is trading lower after reporting Q2 (Mar) results last night. The headline numbers were roughly as expected with a nice EPS beat. Revenue rose 5.1% yr/yr to $95.36 bln, which was a bit above analyst expectations. Apple also increased its share buyback authorization by $100 bln and its dividend by 4%. Given the size of Apple, these are not very large increases but good to see. Apple expects Q3 (Jun) yr/yr rev growth in the low-to-mid single digits (FactSet consensus +3.6%).
- iPhone sales came in above street estimates in Q2, a nice bounce back following a miss in Q1. Revenue rose 1.9% yr/yr to $46.84 bln vs $45.8 bln street ests. iPhone revs were driven by the iPhone 16 family. The iPhone active installed base grew to an all-time high in total and in every geographic segment. During Q2, Apple introduced iPhone 16e, a new entry level addition to its iPhone 16 lineup, powered by its latest generation A18 chip.
- Mac sales grew 6.7% yr/yr to $7.95 bln, driven by the latest MacBook Air, MacBook Pro and Mac mini models. This performance was broad-based with every geographic segment growing yr/yr. The Mac installed base reached an all-time high and Apple saw strong growth for both upgraders and customers new to the Mac. iPad revenue jumped 15.2% yr/yr to $6.40 bln, driven by the new M3-powered iPad Air.
- Wearables revenue was down 4.9% yr/yr at $7.52 bln, a bit light of street estimates. Apple was lapping a more difficult compare against the launch of the Apple Vision Pro in the year ago quarter as well as the Watch Ultra 2. Services revenue rose a healthy 11.6% yr/yr to an all-time record of $26.65 bln, a bit above street estimates.
- Turning to tariffs, Apple saw a limited impact in MarQ as it was able to optimize its supply chain and inventory. For JunQ, at current tariff rates, Apple estimates a $900 mln cost impact. Apple expects the majority of iPhones sold in the US in JunQ will have India as their country of origin and Vietnam to be the country of origin for almost all iPad, Mac, Apple Watch, and AirPods products sold in the US. China continues to be the country of origin for the vast majority of sales outside the US.
Overall, the MarQ results were pretty solid with a nice bounce back quarter for iPhone sales. In fact, most product categories are doing well. Also, Apple is doing a good job reconfiguring its supply chain to avoid tariffs as best it can. However, we think the $900 mln tariff cost estimate and its impact on margins in JunQ is the main reason for the stock being lower today. Also, Apple says it's tough to predict beyond JunQ at this point, which adds to the uncertainty. Hopefully, we get some tariff reductions soon.
Amazon not seeing tariff impact yet, stock lower as Q2 operating income seen as a bit light (AMZN)
Amazon (AMZN) is trading slightly lower after reporting solid Q1 earnings last night. AMZN reported its fourth consecutive $0.20+ EPS beat, but Q1 was the smallest upside of that timeframe. Revenue rose 8.6% yr/yr to $155.7 bln, which was in-line. This was AMZN's first single-digit yr/yr revenue increase since 1Q23, which has seen only double-digits since then. However, it was 10% growth constant currency (CC).
- Amazon does not guide for EPS, but does for operating income. As such, this is an important metric, especially the guidance. Q1 operating income grew 20% yr/yr to $18.4 bln, above prior guidance of $14-18 bln. However, the Q2 guidance of $13.0-17.5 bln is being seen as a bit soft relative to street estimates.
- Let's start with the Stores segment. AMZN saw growth of +8% CC in North America and +8% CC in its international segment. That is lower than recent quarters, but not surprising on an increasingly larger base. In order to appeal to value-conscious consumers these days, AMZN held deal events worldwide in Q1 across the Big Spring sale in the US and Canada, spring deal days in Europe, and Ramadan Eid sale. It will hold a Prime Day event in July.
- Regarding tariffs, AMZN has not yet seen any attenuation of demand. To some extent, it has seen heightened buying in certain categories that may indicate stocking up in advance of any potential tariff impact.
- Amazon AWS segment sales rose 16.9% yr/yr to $29.27 bln with growth in both its generative AI business and non-generative AI offerings as companies turned their attention to newer initiatives, bring more workloads to the cloud etc. AMZN noted that more than 85% of global IT spend is still on premises but that equation should flip in the next 10-20 years.
- Turning to Advertising Services, segment revenue grew +19% CC to $13.92 bln. This was a slight reprieve from the downward trend from recent quarters: +18% CC in Q4, +19% CC in Q3, +20% CC in Q2, +24% CC in Q1. However, this segment's base is getting larger. Advertising remains an important contributor to profitability in the North America and International segments.
Overall, this was a solid but not spectacular report from Amazon, about what most expected. We think investors are pleased to hear AMZN is not yet seeing much impact from tariffs. Consumers are still buying items at a good clip, but that could change if prices rise. The main negative was the Q2 operating income guidance being a bit light.
Airbnb posts solid Q1 results on healthy bookings growth, but soft Q2 outlook weighs on stock (ABNB)
Airbnb (ABNB) delivered 1Q25 results that modestly exceeded EPS and revenue expectations, driven by healthy growth of 7.9% in Nights and Experiences Booked to 143.1 mln. Strong demand in Asia Pacific and Latin America, along with mobile app bookings growth of 17%, also contributed to the upside results. However, ABNB's Q2 revenue guidance of $2.99-$3.05 bln was merely in-line with analysts' estimates, and the company flagged potential flat-to-down Nights and Experiences Booked growth, representing a sharp downturn from Q1. Executives cited shorter booking lead times and broader economic uncertainties for the muted outlook.
This cautious guidance, coupled with softening U.S. demand amid trade-driven consumer caution, is keeping a lid on shares today.
- In addition to the strong growth for Nights and Experiences, Gross Booking Value (GBV) was another standout metric in Q1. Bolstered by robust nights booked growth and a modest 1% rise in Average Daily Rate (ADR) to $158, supported by price appreciation and monetization efforts around guest experiences, GBV grew by 7% to $24.5 bln.
- Adjusted EBITDA, a key profitability metric for ABNB, increased to $417 mln, comfortably exceeding expectations. This was propelled by revenue growth, disciplined cost management, and a favorable shift in marketing spend toward Q2.
- Looking ahead to the remainder of FY25, ABNB's growth strategy will hinge on expanding its core business and launching new offerings, with significant investments in underpenetrated overseas markets like Asia Pacific and the Middle East. Nights Booked growth in those markets outpaced growth in ABNB's core markets (U.S., UK, France, Canada, Australia) by over 2x.
- Additionally, the company is enhancing its technology stack, with over 535 platform upgrades over the past year, while relaunching its Experiences business in 2025 to capture premium, event-driven demand. As a recent example, last summer's Paris Olympics drew a 5x surge in bookings. These initiatives, though, will come at a cost.
- With $250+ mln earmarked in investments for 2025, ABNB's margins will be pressured. The good news is that the company reiterated its expectation of adjusted EBITDA margins of at least 34.5% in FY25 -- representing a reasonable 150-bps decline yr/yr -- but if travel demand weakens further, its adjusted EBITDA margin could potentially fall below that floor. Should the U.S. market soften further, lower ADR and reduced booking volumes could exacerbate margin compression.
ABNB's Q1 performance was solid, bolstered by robust Nights and Experiences Booked growth and solid cost management, though tempered by U.S. demand softness and currency headwinds. The cautious Q2 guidance, signaling flat-to-down booking growth, alongside heavy investments in overseas expansion and technology, may also pressure near-term profitability. Over time, these investments position ABNB for long-term growth.
Qualcomm posts solid Q2 results on Auto and IoT strength, but soft guidance slams shares (QCOM)
Qualcomm (QCOM) delivered solid 2Q25 results, exceeding EPS and revenue expectations, driven by robust demand across each of its core markets -- handsets (+12%), automotive (+59%), and IoT (+27%) -- highlighting the momentum behind its AI-enabled chipsets. However, the upside Q2 results are being overshadowed by QCOM's disappointing in-line Q3 revenue and EPS guidance, which reflect tariff-related uncertainties and softer chip demand.
- Over the past several years, QCOM has focused on diversifying its revenue streams away from the volatile and highly seasonal handset market, but handsets still account for approximately 60% of its total revenue. Driven by healthy demand for premium-tier smartphones incorporating QCOM's Snapdragon 8 Gen series with on-device AI capabilities, handset revenue grew by 12% yr/yr to $6.5 bln. The segment benefited from a recovering smartphone market, particularly in China, where sales are rebounding.
- Strong partnerships with smartphone OEMs, such as Samsung and Xiaomi, coupled with new AI-powered features like GenAI processing, boosted demand. The healthy handset growth highlights QCOM's dominance in premium chipsets, but its reliance on China exposes it to significant tariff risks.
- The standout performer in Q2 was Automotive with the 59% surge in revenue continuing a multi-quarter trend of near-triple-digit growth, fueled by the Snapdragon Digital Cockpit and ADAS platforms. Rising adoption of connected and autonomous vehicle technologies, with design wins across 20 of the top 25 global automakers, is driving the robust growth. Furthermore, high-margin software and licensing deals, alongside multi-year contracts, are enhancing QCOM's profitability.
- Although down a bit from last quarter's 36% surge, revenue growth was still very strong for IoT at 27%, driven by demand for edge AI and connected devices in industrial and consumer applications. The company's Snapdragon X Elite platform, designed for Windows-based PCs, continues to gain traction due to its AI capabilities, power efficiency, and 5G connectivity. Major OEMs like Microsoft (MSFT), Lenovo, and HP have launched Snapdragon-powered devices (Surface Pro 11, Lenovo Yoga Slim 7x), with over 20 PC models released in the past year.
- This good news, though, is clouded over by QCOM's disappointing Q3 guidance. U.S. tariffs on Chinese imports are expected to disrupt QCOM's supply chain and increase costs, with management noting potential impacts on the handset and IoT segments. QCOM's exposure to China, which accounts for roughly half of its revenue, is a double-edged sword, driving significant revenue growth, but also amplifying tariff-related risks.
QCOM's Q1 results showcased robust 17% revenue growth, buoyed by double-digit increases in each of its main segments, but tariffs and a soft Q3 outlook are triggering a steep selloff in the stock. The company's AI-driven diversification and momentum in the automotive market are key positives that should support solid long-term growth. However, near-term risks associated with trade policies may keep a lid on the stock for the foreseeable future.
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