Market Snapshot
| Dow | 41249.38 | -119.07 | (-0.29%) | | Nasdaq | 17928.92 | +0.78 | (0.00%) | | SP 500 | 5659.91 | -4.03 | (-0.07%) | | 10-yr Note |
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| | NYSE | Adv 1549 | Dec 1176 | Vol 1.02 bln | | Nasdaq | Adv 2093 | Dec 2215 | Vol 8.87 bln |
Industry Watch
| Strong: Consumer Discretionary, Energy, Real Estate, Materials |
| | Weak: Consumer Staples, Communication Services, Health Care |
Moving the Market
--Uncertainty in front of U.S.-China trade meeting in Switzerland this weekend
--Buyers and sellers lack conviction
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Closing Stock Market Summary
09-May-25 16:20 ET
Dow -119.07 at 41249.38, Nasdaq +0.78 at 17928.92, S&P -4.03 at 5659.91
[BRIEFING.COM] The stock market lacked excitement today, likely because it was gearing up for the excitement that promises to follow the trade meeting this weekend between U.S. and Chinese officials in Switzerland. The excitement could have either a positive connotation or a negative connotation. It will all depend on what comes out of that meeting.
There is a baseline expectation that there will be some form of de-escalation that is agreed to on the tariff front, so it would be a profound disappointment if the takeaway from this confab is no change in the draconian tariff rates each side has implemented (145% by the U.S. and 125% by China).
Press reports have suggested the Trump administration is considering a tariff rate of 60% or less to get things going here, yet President Trump wrote in a Truth Social Post before today's open that "80% tariff on China seems right! Up to Scott B."
Scott B. would be Treasury Secretary Scott Bessent, who will be joined by U.S. Trade Representative Jamieson Greer to discuss the U.S. position with China's Vice Premier He Lifeng.
The anxiousness ahead of the meeting kept the stock market in check today. There was no real conviction on the part of buyers or sellers, as this macro item overshadowed all of the earnings results since yesterday's close that included reports from the likes of Expedia (EXPE 156.66, -12.33, -7.3%), Coinbase (COIN 199.32, -7.18, -3.5%), Akamai Technologies (AKAM 76.25, -9.19, -10.8%), Cloudflare (NET 132.51, +8.20, +6.6%), Microchip Technology (MCHP 55.33, +6.19, +12.6%), and Lyft (LYFT 16.65, +3.65, +28.1%).
As one can see, there were ample and mixed reactions to these individual reports, yet the major indices had their thinking caps and price caps on ahead of the weekend trade meeting.
Seven S&P 500 sectors finished higher with gains ranging from 0.04% to 1.1%, three sectors finished lower with losses ranging from 0.6% to 1.1%, and one sector -- information technology -- finished unchanged. The biggest winner was the energy sector (+1.1%) and the biggest loser was the health care (-1.1%) sector.
Market breadth reflected the mixed disposition. Advancers led decliners by a 5-to-3 margin at the NYSE, while decliners led advancers by an 11-to-10 margin at the Nasdaq.
There was no U.S. economic data of note today.
- Dow Jones Industrial Average: -3.1% YTD
- S&P 500: -3.8% YTD
- S&P Midcap 400: -5.6% YTD
- Nasdaq Composite: -7.2% YTD
- Russell 2000: -9.3% YTD
Eye on next week
09-May-25 15:30 ET
Dow -75.68 at 41292.77, Nasdaq +17.60 at 17945.74, S&P +1.97 at 5665.91
[BRIEFING.COM] The status of the major indices remains mixed and little changed, much like it has been most of the day, so it will be interesting to see if there is some speculative jockeying in the final half hour in front of the weekend.
Notwithstanding today's lackluster trade, there has been some ample movement this week, yet the S&P 500 hasn't really gotten anywhere. It is down 0.4% for the week, while the Nasdaq Composite is down 0.2% for the week.
There is strong potential for greater movement next week, not only because of what might come out of this weekend's meeting between U.S. and China officials, but also because next week features a slate of important economic releases that includes the April CPI, Retail Sales, and PPI reports.
Holding in tight trading range
09-May-25 15:00 ET
Dow -76.45 at 41292.00, Nasdaq +3.72 at 17931.86, S&P +0.82 at 5664.76
[BRIEFING.COM] It is a slow-going stock market today, which has held to a tight trading range for most of the session.
It is a wait-and-see trade with respect to the U.S.-China tariff discussions this weekend. That is fitting because that wait-and-see attitude was also on display Wednesday at Fed Chair Powell's press conference. He, too, said the Fed is waiting to see more data and what it might indicate about the impact of the new administration's policies, namely the tariff actions.
Earlier today, Fed Governor Barr (FOMC voter) said he thinks the tariffs could lead to higher inflation and higher unemployment. That thinking would put him in the camp of not being in a hurry to cut the target range for the fed funds rate, which continues to sit at 4.25-4.50%.
According to the CME FedWatch Tool, there is now just a 17.2% probability of a 25 basis point rate cut at the June FOMC meeting, versus a 73.3% probability a month ago of at least a 25 basis point cut. The probability of at least a 25 basis point cut at the July FOMC meeting sits at 60.0% today versus 91.1% a month ago.
S&P 500 slips back into red; Insulet soars on earnings, CrowdStrike falls on DOJ, SEC probe
09-May-25 14:30 ET
Dow -104.97 at 41263.48, Nasdaq -4.54 at 17923.60, S&P -2.09 at 5661.85
[BRIEFING.COM] The S&P 500 (-0.04%) is narrowly lower now, moving back into the red after being in positive territory for a brief time in the previous half hour.
Briefly, S&P 500 constituents Insulet (PODD 308.81, +51.81, +20.16%), First Solar (FSLR 141.17, +7.41, +5.54%), and AES (AES 11.15, +0.33, +3.05%) pepper the top of the standings. PODD touches a near two-year high after last night's earnings beat.
Meanwhile, CrowdStrike (CRWD 409.09, -19.54, -4.56%) is one of today's top laggards, retreating to a two-week low on reports that prosecutors and regulators are investigating a $32 million transaction between CRWD and technology distributor Carahsoft, originally intended to supply software to the IRS -- which never received or purchased the products. The DOJ and SEC are probing whether CrowdStrike executives were aware of potential irregularities.
Gold climbs 3.1% on week as Fed caution, geopolitical tensions spark flight to safety
09-May-25 14:00 ET
Dow -55.49 at 41312.96, Nasdaq +19.28 at 17947.42, S&P +4.99 at 5668.93
[BRIEFING.COM] With about two hours to go on Friday the tech-heavy Nasdaq Composite (+0.11%) has moved back into positive territory.
Gold futures settled $38 higher (+1.2%) at $3,344/oz, ultimately up 3.1% on the week, as investors sought safety amid growing global uncertainties. The rally was fueled by the Fed's cautious tone on inflation and economic risks, which dampened rate hike expectations. At the same time, rising geopolitical tensions -- especially U.S.-China trade frictions -- and steady central bank demand, particularly from countries diversifying away from the dollar, reinforced gold's appeal as a safe-haven asset.
Meanwhile, the U.S. Dollar Index is down about -0.3% to $100.31.
Lyft shares surge on solid guidance, buyback expansion, and proxy battle resolution (LYFT)
Lyft (LYFT) is surging to multi-month highs, driven by a confluence of positive developments despite missing 1Q25 EPS and revenue expectations. The rally is fueled by Engine Capital's withdrawal of its board nominations, ending a contentious proxy battle, LYFT's expanded $750 mln share buyback program, and a better-than-expected Q2 forecast for gross bookings and adjusted EBITDA. LYFT's downside Q1 results also come against low expectations following Uber's (UBER) disappointing Q1 earnings report on May 7 that included a slight gross bookings miss, putting U.S. demand concerns under the spotlight.
- In Q1, gross bookings reached $4.16 bln, up 13.5% yr/yr and slightly exceeding expectations, while rides hit a record 218.4 mln, up 16% yr/yr, reflecting strong demand across commute, weekend, evening, and airport trips. Enhanced driver retention via LYFT's 70% fare guarantee and rider-focused features like faster ETAs, which reduced wait times by 10% yr/yr, supported the outperformance for these metrics.
- LYFT's competitive pricing strategy, including a reduction in base fares to align with UberX pricing, boosted ride volume and active riders, indicating market share gains in key U.S. cities. However, this pricing pressure modestly crimped revenue per ride ($6.64 vs. $6.80 in 1Q24), contributing to the small revenue miss.
- Profitability continues to improve significantly for LYFT with adjusted EBITDA jumping by 59% yr/yr to $106.5 mln. The company also guided to Q2 adjusted EBITDA of $115-$130 mln, essentially matching analysts' expectations, and implying yr/yr growth of 26% at the high end of the range. Key drivers for the enhanced profitability include reduced insurance costs, higher driver hours and a healthy driver base, and cost discipline, as reflected by a manageable 10% increase in total costs and expenses.
- From a long-term perspective, LYFT's robotaxi progress remains a cornerstone of its growth strategy, although the company surprisingly didn't emphasize its robotaxi partnerships (Mobileye, May Mobility) during last night's earnings call. Instead, LYFT focused on its Q1 performance and highlighted its recent acquisition of FREENOW, a European multi-mobility app that marks the company's most significant expansion to date outside of North America. The addition of FREENOW, which has a taxi offering as its core service, will nearly double LYFT's total addressable market to more than 300 bln personal vehicle trips per year.
LYFT’s better-than-expected Q2 guidance, expanded $750 mln share repurchase program, and the resolution of Engine Capital’s proxy battle are propelling its stock sharply higher, reflecting renewed investor confidence. These tailwinds, alongside healthy gross bookings and profitability gains, position LYFT to navigate competitive pressures and capitalize on long-term opportunities like robotaxis.
Sweetgreen losing its luster, it defied gravity in 2024, but that is changing in 2025 (SG)
Sweetgreen (SG -19%) is under pressure today and continues its downward trend, which started after peaking in late November at $45.12. The stock is now down 67% from its highs. The main problem for this fast food restaurant operator with a focus on salads and bowls is that consumers are becoming more value-oriented and Sweetgreen's prices tend to be more on the high end of the fast food spectrum. SG defied gravity in 2024, but that is changing in 2025.
- The company missed slightly on EPS with slight revenue upside. It also lowered FY25 guidance for sales to $740-760 mln from $760-780 mln, which tells us management is getting more cautious. SG said the recent industry data shows that consumer sentiment has fallen sharply.
- The change in consumer behavior was most evident in Sweetgreen's Q1 same store comp of -3.1%, a notable drop off from +4% in Q4 and +6% for all of 2024. The silver lining is that Q1 comps were at the high end of prior guidance of -5% to -3%, but that is not a huge consolation.
- Another concern is that Sweetgreen chose not to provide Q2 comp guidance, which makes investors nervous. It did guide to 2025 full year comps of "approximately flat," which should translate as better comps in 2H25. However, this guidance was lowered from its previous 2025 outlook of +1-3%.
- After returning to positive comps in March, SG saw a mid-single digit decline in April comps, coinciding with the tariff announcements. SG believes the soft April sales trends are reflective of a broader consumer slowdown. This has been particularly true in its largest markets, such as NY, Boston and LA. Despite the demand headwinds, SG reaffirmed guidance to open at least 40 net new restaurants in 2025, with 20 featuring the Infinite Kitchen.
- In terms of possible value pricing, SG defended itself saying that it has raised prices less than most of the industry in recent years during an inflationary period. Instead, it chose to launch heartier, warmer options, things like protein plates and steak. One option is to use its seasonal menu to flex into different price points and possibly some additions are possible to its core menu. SG would not present them as necessarily as a value menu, rather it would just be finding things to add to the mid to lower price tiers. And of course, loyalty becomes a really big lever to possibly offer promotions.
Sweetgreen was sort of the talk of the town in 2024, putting up huge numbers despite a more value-conscious consumer in the face of inflation. However, the macro seems to finally be catching up to Sweetgreen. It looks like at least the first half of 2025 is going to be rough. Right now, SG is pointing to better comps in 2H25, but investors do not have a lot of faith right now.
The Trade Desk bounces back nicely with solid Q1 beat after troubling Q4 report (TTD)
The Trade Desk (TTD +22%) is bouncing back nicely on a much improved Q1 report. Recall that the stock sold off in February following disappointing Q4 results with downside revs. That was not the case this time. This operator of a cloud-based online advertising-buying platform beat handily on EPS. Whereas in Q4, TTD reported a rare top line miss, the company reported huge upside this time. TTD also guided higher for Q2 after downside guidance last time.
- Let's start with TTD' macro view. Basically, Q4 was relatively stable although signs of volatility were building beneath the surface after a contentious election cycle. That pressure intensified in Q1 with growing concern among its clients. TTD's primary clients are the largest brands in the world and the agencies that serve them, all of whom are navigating increasing volatility so far in 2025. In this environment, TTD aims to be a source of vision and stability for its clients.
- TTD notes that programmatic advertising is extremely agile. Because its technology buys one impression at a time and evaluates every single impression, TTD can adjust quickly. It's also more data-driven than other forms of advertising. As such, TTD believes that in an environment when CMOs and CFOs are trying to do more with less, TTD can help. In this environment, TTD's focus is to win market share from competitors, just as it did during the pandemic.
- Turning to Kokai, which is TTD's next-gen programmatic advertising platform, powered by AI. TTD conceded in Q4 that it endured a slower-than-expected uptake of its Kokai platform. However, Kokai adoption accelerated exiting December. TTD says around two-thirds of its clients are now using it and the bulk of the spend in its platform is now running through Kokai. TTD expects all clients to be using it by the end of year.
- Looking ahead to Q2, TTD concedes it is dealing with a volatile macro backdrop, which is having an impact on large global brands. Nevertheless, TTD is encouraged by the strength of its underlying business, driven by continued progress on Kokai, and a growing pipeline of joint business plans. TTD remains confident given its track record of gaining market share during periods of economic volatility.
This Q1 report was welcome news for investors who were quite spooked by the rare Q4 revenue miss and downside guidance, which almost never happens. Based on the strong results and commentary on the call, Q4 is looking more like a one-time blip rather than a prolonged structural problem. Kokai was a problem area in Q4, but it sounds like client adoption is picking up. We think there was a lot of negativity priced into the shares, which helps explain the big move today.
Expedia plunges as U.S. demand woes and downbeat Q2 guidance overshadows Q1 EPS beat (EXPE)
Expedia Group (EXPE) delivered mixed 1Q25 results with EPS edging past expectations, buoyed by robust growth in its high-margin B2B and advertising businesses, but total revenue grew by only 3%, missing expectations. Like competitors Airbnb (ABNB) and Booking Holdings (BKNG), each of which reported earnings over the past two weeks, EXPE's growth was hampered by softer U.S. travel demand, alongside FX pressures impacting its international-heavy Hotels.com brand. EXPE's downside Q2 guidance -- projecting revenue growth of 3-5% and gross bookings growth of 2-4% -- underscores these challenges, sparking a steep selloff in the stock.
- In Q1, total gross bookings increased 4% yr/yr to $31.5 bln and booked room nights were up 6% yr/yr to 101.7 mln, driven by strength in the B2B segment ($8.8 bln in bookings, +14% yr/yr). The B2B segment's outperformance, particularly in APAC, was offset by domestic weakness, with U.S. room night growth lagging international markets, highlighting a broader industry trend of uneven recovery. Meanwhile, unfavorable timing related to the Easter holiday presented a headwind in the B2C business.
- The VRBO business was stable in Q1 with bookings growing in-line with the U.S. market, a marked improvement from prior quarters where its recovery lagged due to re-platforming processes completed in 2023. The migration of VRBO onto EXPE's single front-end stack, which was completed at the end of 2023, was followed by a slow start for the brand in 2024 that caused EXPE to fall behind ABNB. Product improvements and supply expansion are providing a tailwind for VRBO, but intense competition from ABNB and macro uncertainties that disproportionately affect VRBO's higher-ticket vacation rentals are hindering growth.
- EXPE's advertising business has emerged as a bright spot, posting strong revenue growth of 20% and bolstering adjusted EBITDA margin, which increased by 105 bps to 9.9%. This growth, driven by Expedia Group Media Solutions and trivago’s hotel metasearch referrals, benefits from increased advertiser demand for targeted travel audiences and enhanced AI-powered ad tools. The high-margin nature of this segment also supports EXPE’s Q2 guidance for 75-100 bps of adjusted EBITDA margin expansion, despite top-line pressures.
EXPE's soft Q2 guidance and the broader U.S. travel demand slowdown, mirrored by peers ABNB and BKNG, signal near-term challenges for the travel industry. While improving margins through advertising growth and cost efficiencies provide a buffer, sustained margin expansion may prove difficult if macroeconomic conditions deteriorate further.
Crocs crushes muted Q1 expectations, driven by HEYDUDE rebound, but FY25 outlook scrapped (CROX)
In typical Crocs (CROX) fashion, the company easily surpassed muted EPS and revenue estimates in 1Q25. Heading into the earnings report, expectations were tempered due to CROX's soft Q1 guidance, which called for a 3.5% revenue decline, consistent with the company's pattern of conservative forecasts followed by outperformance. The sandal maker also withdrew its FY25 guidance -- previously set at EPS of $12.70-$13.15 and 2.0-2.5% revenue growth -- due to trade policy and tariff uncertainties, but this action has not pressured the stock. Investors appear to view the withdrawal as a prudent move and are instead focusing on a better-than-expected showing for the struggling HEYDUDE brand.
- Crocs brand revenue grew 4.2% in constant currency (cc) to $762 mln, fueled by double-digit international growth and solid North American demand for core products like clogs and sandals. The HEYDUDE brand, which has been bogged down by oversupply of inventory at major wholesale accounts, experienced a 9.8% drop in revenue to $176 mln, but that was better than the 14-16% decline that was anticipated. In the DTC channel, HEYDUDE revenue was up 7.2%, bolstered by CROX's e-Commerce efforts to leverage digital marketing and improve e-Commerce conversion rates.
- Both brands gained market share, with Crocs' internation markets (particularly China), and HEYDUDE's DTC inflection signaling stabilization. After CROX acquired HEYDUDE in 2022 for $2.5 bln, it launched a marketing campaign that was misaligned, failing to resonate with the right consumer segments. More recently, though, CROX has shifted to brand-building marketing investments, such as collaborations with Sydney Sweeney and Jelly Roll, which is showing signs of promise.
- Adjusted gross margin was a standout metric once again, expanding by 220 bps to 57.8%, despite challenging conditions marked by high inflation. Primary drivers include favorable product mix, with higher-margin Crocs clogs and Jibbitz charms outperforming, and reduced promotional activity due to leaner inventories. Furthermore, supply chain efficiencies, including through the new HEYDUDE distribution center in Las Vegas, have lowered freight costs.
- Crocs did not issue formal guidance for Q2, and it withdrew its FY25 outlook. However, the company has stated that tariffs are expected to reduce operating margins by 60-80 bps, while FX fluctuations could add further pressure to earnings. On the positive side, the Crocs brand has some momentum behind it, especially within international markets, and HEYDUDE's DTC recovery should also provide a tailwind in Q2 and 2H25.
CROX's upside Q1 results, driven by Crocs brand strength, HEYDUDE's stabilization, and gross margin expansion, highlights the company's resilience in a tough consumer environment. While tariff and currency headwinds cloud the 2025 outlook, the company's operational efficiency and investments support cautious optimism for additional market share gains and sustained profitability.
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