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Globe and Mail
05-05-2025
- Business
- Globe and Mail
Stocks Close Lower on US Trade Policy Uncertainty
The S&P 500 Index ($SPX) (SPY) Monday closed down -0.64%, the Dow Jones Industrials Index ($DOWI) (DIA) closed down -0.24%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed down -0.67%. June E-mini S&P futures (ESM25) are down -0.66%, and June E-mini Nasdaq futures (NQM25) are down -0.71%. Stock indexes closed lower Monday due to US trade uncertainty. President Trump said on Sunday that he had no plans to speak to Chinese President Xi Jinping, although Mr. Trump said there could be trade deals with some US trading partners as soon as this week. Stock indexes recovered from their worst levels on Monday after the US Apr ISM services index unexpectedly increased, which dampened concern that the economy might be sliding into recession. Energy producers sold off Monday, with the price of WTI crude down -2% at a 3-1/2 week low after OPEC+ on Saturday agreed to raise its crude production level by 411,000 bpd in June, threatening to add to a global crude oil glut. Saudi Arabia also signaled that further similar-sized increases in crude output could follow, which is viewed as a strategy to reduce oil prices and punish overproducing OPEC+ members, such as Kazakhstan and Iraq. The US Apr ISM services index unexpectedly rose +0.8 to 51.6, stronger than expectations of a decline to 50.2. Also, the Apr ISM services prices paid sub-index rose +4.2 to a 2-1/4 year high of 65.1, higher than expectations of 61.4. This week, the market will focus on tariffs and any changes to US trade policy. On Tuesday, the March trade deficit is expected to widen to -$136.7 billion. On Wednesday, the FOMC is expected to keep its federal funds target range unchanged at 4.25%-4.50%. Post-FOMC comments on Wednesday from Fed Chair Powell will also be studied for any clues as to the future of Fed policy. Thursday brings weekly initial unemployment claims, Q1 nonfarm productivity (expected 0.7%), and Q1 unit labor costs (expected +5.2%). The markets are discounting the chances at 2% for a -25 bp rate cut after the 2-day FOMC meeting that ends on Wednesday. Q1 earnings reporting season remains in progress. According to data compiled by Bloomberg Intelligence, the market consensus is for Q1 year-over-year earnings growth of +6.7% for the S&P 500 stocks, down from expectations of +11.1% in early November. So far, of the 365 companies in the S&P 500 companies that have reported quarterly results, 78% have beaten estimates. Full-year 2025 corporate profits for the S&P 500 are seen rising +9.4%, down from the forecast of +12.5% in early January. Overseas stock markets on Monday settled lower. The Euro Stoxx 50 closed down -0.04%. China's Shanghai Composite was closed for the Labor Day holiday. Japan's Nikkei Stock 225 was closed for the Children's Day holiday. Interest Rates June 10-year T-notes (ZNM2 5) Monday closed down -3 ticks. The 10-year T-note yield rose +3.0 bp to 4.338%. June T-notes fell to a 1-week low Monday, and the 10-year T-note yield rose to a 1-week high of 4.369%. T-note prices retreated Monday after the Apr ISM services index rose more than expected, and the Apr ISM service prices-paid sub-index jumped to a 2-1/4 year high, bolstering inflation concerns. T-notes were also pressured by caution ahead of Wednesday's FOMC decision, where the FOMC appears unlikely to lay out a dovish tone. In addition, tepid demand for the Treasury's $58 billion 3-year T-notes auction was bearish for T-notes price as the auction had a bid-to-cover ratio of 2.56, below the 10-auction average of 2.61. T-notes had some support from safe-haven demand with Monday's slump in stocks. T-notes also had carryover support from strength in 10-year German bunds. European government bond yields on Monday moved lower. The 10-year German bund yield fell -1.6 bp to 2.517%. The 10-year UK gilt yield did not trade on Monday, with markets in the UK closed for the May Day holiday. The Eurozone May Sentix investor confidence index rose +11.4 to -8.1, stronger than expectations of -11.5. Swaps are discounting the chances at 97% for a -25 bp rate cut by the ECB at the June 5 policy meeting. US Stock Movers Energy stocks and energy service providers were under pressure Monday, with the price of WTI crude down more than -2% at a 3-1/2 week low. As a result, Apa Corp (APA) closed down more than -5%, and Occidental Petroleum (OXY) closed down more than -4%. Also, ConocoPhillips (COP) and Haliburton (HAL) closed down more than -3%. In addition, Diamondback Energy (FANG), Exxon Mobil (XOM), Chevron (CVX), Schlumberger (SLB), and Devon Energy (DVN) closed down more than -2%. Media stocks fell Monday after President Trump said he plans to impose a 100% tariff on films produced overseas. As a result, Netflix (NFLX), Paramount Global (PARA), and Warner Bros Discovery (WBD) closed down more than -1%. Zimmer Biomet Holdings (ZBH) closed down more than -11% to lead losers in the S&P 500 after cutting its full-year adjusted diluted EPS estimate to $7.90-$8.10 from a previous estimate of $8.15-$8.35. ON Semiconductor (ON) closed down more than -8% to lead losers in the Nasdaq 100 despite reporting better-than-expected Q1 revenue after forecasting Q2 adjusted gross margins of 36.5% to 38.5%, below the consensus of 39%. Tyson Foods (TSN) closed down more than -7% after reporting Q2 sales of $13.07 billion, below the consensus of $13.12 billion. Apple (AAPL) closed down more than -3% to lead losers in the Dow Jones Industrials as the company prices a 4-part debt offering today. Berkshire Hathaway (BRK.B) closed down more than -5% after CEO Buffet announced that he would step down at the end of the year. Gold Fields (GFI) closed up more than +7% to lead gold-mining stocks higher after gold prices jumped more than +2% on Monday. Also, AngloGold Ashanti Plc (AU) closed up more than +4%, and Newmont (NEM) closed up more than +2%. Howard Hughes Holdings (HHH) closed up more than +3% after entering into an agreement where Pershing Square Capital will invest $900 million to acquire 9 million shares of the company. Freshpet (FRPT) closed up more than +3% after reporting Q1 net sales of $263.2 million, above the consensus of $259.9 million. Axsome Therapeutics (AXSM) closed up more than +3% after reporting Q1 cash and cash equivalents of $300.9 million, above the consensus of $255.5 million. EQT Corp (EQT) closed up more than +2% after UBS upgraded the stock to buy from neutral with a price target of $64. Henry Schein (HSIC) closed up more than +1% after reporting Q1 adjusted EPS of $1.15, better than the consensus of $1.11, and forecast full-year adjusted EPS of $4.80-$4.94, the midpoint above the consensus of $4.86. Earnings Reports (5/6/2025) Advanced Micro Devices Inc (AMD), American Electric Power Co Inc (AEP), Archer-Daniels-Midland Co (ADM), Arista Networks Inc (ANET), Assurant Inc (AIZ), Ball Corp (BALL), Constellation Energy Corp (CEG), Corpay Inc (CPAY), Devon Energy Corp (DVN), DoorDash Inc (DASH), Duke Energy Corp (DUK), Electronic Arts Inc (EA), Expeditors International of Washington (EXPD), Fidelity National Information (FIS), Gartner Inc (IT), Gen Digital Inc (GEN), Global Payments Inc (GPN), International Flavors & Fragrances (IFF), IQVIA Holdings Inc (IQV), Jack Henry & Associates Inc (JKHY), Jacobs Solutions Inc (J), Leidos Holdings Inc (LDOS), Marathon Petroleum Corp (MPC), Marriott International Inc/MD (MAR), Mosaic Co/The (MOS), Super Micro Computer Inc (SMCI), TransDigm Group Inc (TDG), Waters Corp (WAT), WEC Energy Group Inc (WEC), Wynn Resorts Ltd (WYNN), Zoetis Inc (ZTS).
Globe and Mail
02-05-2025
- Business
- Globe and Mail
Stocks Settle Higher on Trade Optimism and US Labor Market Strength
The S&P 500 Index ($SPX) (SPY) Friday closed up +1.47%, the Dow Jones Industrials Index ($DOWI) (DIA) closed up +1.39%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +1.60%. June E-mini S&P futures (ESM25) are up +1.50%, and June E-mini Nasdaq futures (NQM25) are up +1.60%. Stock indexes rallied on Friday and settled moderately higher, with the S&P 500 and Nasdaq 100 posting 5-week highs and the Dow Jones Industrials posting a 1-month high. Stocks rose Friday on a possible thaw in the US-China trade stalemate. China's Commerce Ministry is assessing the possibility of trade talks with the US. On Friday, it said, 'The US has recently sent messages to China through relevant parties, hoping to start trade talks with China, and we are currently evaluating this.' Stocks added to their gains Friday on signs the US labor market remains resilient with slack wage pressures after April payrolls and hourly earnings rose less than expected. Also, US Mar factory orders posted their biggest increase in 8 months. US Apr nonfarm payrolls rose +177,000, stronger than expectations of +138,000, although Mar nonfarm payrolls were revised lower by 43,000 jobs to +185,000 from the previously reported +228,000. The Apr unemployment rate was unchanged at 4.2%, in line with expectations. US Apr average hourly earnings rose +0.2% m/m and +3.8% y/y, slightly weaker than expectations of +0.3% m/m and +3.9% y/y. US Mar factory orders rose +4.3% m/m, the largest increase in 8 months. On the negative side for stocks, the 10-year T-note yield rose +9.0 bp as the better-than-expected US payroll report dampens the outlook for Fed interest rate cuts. Also, Apple closed down more than -3% after it reported falling China sales and warned that tariffs will increase costs. In addition, gave a weaker-than-expected outlook for operating income and said it is bracing for a tougher business climate. The markets are discounting the chances at 3% for a -25 bp rate cut after the May 6-7 FOMC meeting. Q1 earnings reporting season is in full swing. According to data compiled by Bloomberg Intelligence, the market consensus is for Q1 year-over-year earnings growth of +6.7% for the S&P 500 stocks, down from expectations of +11.1% in early November. So far, of the 332 companies in the S&P 500 companies that have reported quarterly results, 78% have beaten estimates. Full-year 2025 corporate profits for the S&P 500 are seen rising +9.4%, down from the forecast of +12.5% in early January. Overseas stock markets on Friday settled higher. The Euro Stoxx 50 climbed to a 1-month high and closed up +2.42%. China's Shanghai Composite was closed for the Labor Day holiday. Japan's Nikkei Stock 225 rallied to a 5-week high and closed up +1.04%. Interest Rates June 10-year T-notes (ZNM2 5) Friday closed down -22.5 ticks. The 10-year T-note yield rose +9.0 bp to 4.308%. June T-notes on Friday retreated from a larger-than-expected increase in US Apr nonfarm payrolls, which shows strength in the labor market that is hawkish for Fed policy. Also, a possible thaw in the US-China trade war has curbed safe-haven demand for T-notes after China's Commerce Ministry said it is assessing the possibility of trade talks with the US. Friday's stock rally has also reduced safe-haven demand for T-notes. Finally, T-notes were pressured by negative carryover from Friday's slump in 10-year German bunds to a 2-week low. A supportive factor for T-notes is benign US wage pressures after Apr average hourly earnings rose less than expected. European government bond yields on Friday moved higher. The 10-year German bund yield jumped to a 2-week high of 2.534% and finished up +8.9 bp to 2.533%. The 10-year UK gilt yield rebounded from a 3-1/2 week low of 4.408% and finished up +2.8 bp to 4.509%. The Eurozone Apr core CPI was revised upward to 2.7% y/y from the previously reported 2.4% y/y. The Eurozone Apr S&P manufacturing PMI was revised upward by +0.3 to 49.0 from the previously reported 48.7. The Eurozone Mar unemployment rate was unchanged at a record low 6.2%. Swaps are discounting the chances at 97% for a -25 bp rate cut by the ECB at the June 5 policy meeting. US Stock Movers Chip stocks are rallying today and are giving the broader market a boost. ARM Holdings Plc closed up more than +6%, and ON Semiconductor (ON) closed up more than +5%. Also, Applied Materials (AMAT) and Microchip Technology (MCHP) closed up more than +4%. In addition, Broadcom (AVGO), Intel (INTC), KLA Corp (KLAC), GlobalFoundries (GFS), NXP Semiconductors NV (NXPI), Texas Instruments (TXN), Micron Technology (MU), Lam Research (LRCX), and Qualcomm (QCOM) closed up more than +3%. Travel stocks moved higher on Friday on signs of economic strength after US Apr nonfarm payrolls rose more than expected. United Airlines Holdings (UAL) closed up more than +7%, and Delta Air Lines (DAL) and Norwegian Cruise Line Holdings (NCLH) closed up more than +6%. Also, Southwest Airlines (LUV) and Carnival (CCL) closed up more than +4%. Dexcom (DXCM) closed up more than +16% to lead gainers in the S&P 500 and Nasdaq 100 after reporting Q1 revenue of $1.04 billion, better than the consensus of $1.02 billion. Duolingo (DUOL) closed up more than +20% after boosting its full-year bookings estimate to $1.12 billion- $1.13 billion from a previous estimate of $1.08 billion-$1.10 billion, stronger than the consensus of $1.09 billion. Exact Sciences (EXAS) closed up more than +8% after reporting Q1 revenue of $706.8 million, better than the consensus of $688.7 million, and raised its full-year revenue forecast to $3.07 billion-$3.12 billion from a previous estimate of $3.03 billion-$3.09 billion, stronger than the consensus of $3.06 billion. Iron Mountain (IRM) closed up more than +4% after boosting its full-year revenue forecast to $6.74 billion-$6.89 billion from a previous forecast of $6.65 billion-$6.80 billion. US-listed Chinese stocks are climbing after China's Commerce Ministry is assessing the possibility of trade talks with the US. As a result, PDD Holdings (PDD), (JD), Baidu (BIDU), and Alibaba Group Holding Ltd (BABA) closed up more than +2%. Apple (AAPL) closed down more than -3% to lead losers in the Dow Jones Industrials after reporting Q2 greater China revenue of $16.00 billion, weaker than the consensus of $16.83 billion. (AMZN) closed down -0.12% after forecasting Q2 operating income of $13.0 billion to $17.5 billion, weaker than the consensus of $17.82 billion. Block (XYZ) closed down more than -20% after reporting Q1 net revenue of $5.77 billion, weaker than the consensus of $6.22 billion, and cut its full-year adjusted operating income estimate to $1.9 billion from a previous estimate of $2.1 billion, below the consensus of $2.12 billion. Atlassian (TEAM) closed down more than -8% to lead losers in the Nasdaq 100 after forecasting Q4 revenue of $1.35 billion to $1.36 billion, the midpoint below the consensus of $1.36 billion. Motorola Solutions (MSI) closed down more than -7% after forecasting Q2 adjusted EPS of $3.32-$3.37, weaker than the consensus of $3.47. Take-Two Interactive Software (TTWO) closed down more than -6% after announcing a delay in releasing the Grand Theft Auto VI game. Hologic (HOLX) closed down more than -5% after cutting its full-year adjusted EPS forecast to $4.15-$4.25 from a previous forecast of $4.25-$4.35. Earnings Reports (5/5/2025) Clorox Co/The (CLX), Coterra Energy Inc (CTRA), Cummins Inc (CMI), Diamondback Energy Inc (FANG), Ford Motor Co (F), Henry Schein Inc (HSIC), Loews Corp (L), ON Semiconductor Corp (ON), Palantir Technologies Inc (PLTR), Realty Income Corp (O), Tyson Foods Inc (TSN), Vertex Pharmaceuticals Inc (VRTX), Williams Cos Inc/The (WMB), Zimmer Biomet Holdings Inc (ZBH).
Globe and Mail
02-05-2025
- Business
- Globe and Mail
Stocks Climb on Possible US-China Trade Talks and a Resilient US Labor Market
The S&P 500 Index ($SPX) (SPY) today is up +1.07%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +1.06%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +1.15%. June E-mini S&P futures (ESM25) are up +0.99%, and June E-mini Nasdaq futures (NQM25) are up +1.09%. Stock indexes today are trading higher, with the S&P 500 and the Dow Jones Industrials posting 1-month highs and the Nasdaq 100 posting a 5-week high. Stocks are climbing today on a possible thaw in the US-China trade stalemate. China's Commerce Ministry is assessing the possibility of trade talks with the US. Today, it said, 'The US has recently sent messages to China through relevant parties, hoping to start trade talks with China, and we are currently evaluating this.' Stocks added to their gains on signs the US labor market remains resilient with slack wage pressures after Apr nonfarm payrolls rose more than expected and Apr average hourly earnings rose less than expected. US Apr nonfarm payrolls rose +177,000, stronger than expectations of +138,000, although Mar nonfarm payrolls were revised lower by 43,000 jobs to +185,000 from the previously reported +228,000. The Apr unemployment rate was unchanged at 4.2%, right in line with expectations. US Apr average hourly earnings rose +0.2% m/m and +3.8% y/y, slightly weaker than expectations of +0.3% m/m and +3.9% y/y. The weakness in some megacap technology stocks is limiting the upside in the overall market. Apple is down more than -4% after it reported falling China sales and warned that tariffs will increase costs. Also, is down more than -1% after it gave a weaker-than-expected outlook for operating income and said it is bracing for a tougher business climate. The markets are discounting the chances at 3% for a -25 bp rate cut after the May 6-7 FOMC meeting. Q1 earnings reporting season is in full swing. According to data compiled by Bloomberg Intelligence, the market consensus is for Q1 year-over-year earnings growth of +6.7% for the S&P 500 stocks, down from expectations of +11.1% in early November. So far, of the 303 companies in the S&P 500 companies that have reported quarterly results, 78% have beaten estimates. Full-year 2025 corporate profits for the S&P 500 are seen rising +9.4%, down from the forecast of +12.5% in early January. Overseas stock markets today are higher. The Euro Stoxx 50 climbed to a 1-month high and is up +2.08%. China's Shanghai Composite was closed for the Labor Day holiday. Japan's Nikkei Stock 225 rallied to a 5-week high and closed up +1.04%. Interest Rates June 10-year T-notes (ZNM2 5) today are down -16 ticks. The 10-year T-note yield is up +6.9 bp to 4.287%. June T-notes today are under pressure from a larger-than-expected increase in US Apr nonfarm payrolls. Also, a possible thaw in the US-China trade war has curbed safe-haven demand for T-notes after China's Commerce Ministry said it is assessing the possibility of trade talks with the US. Today's stock rally has also reduced safe-haven demand for T-notes. Losses in T-notes are contained due to benign US wage pressures after Apr average hourly earnings rose less than expected. T-notes also have carryover support from today's rally in 10-year UK gilts to a 3-1/2 week high. European government bond yields today are mixed. The 10-year German bund yield is up +5.0 bp to 2.494%. The 10-year UK gilt yield fell to a 3-1/2 week low of 4.408% and is down -1.8 bp to 4.463%. The Eurozone Apr core CPI was revised upward to 2.7% y/y from the previously reported 2.4% y/y. The Eurozone Apr S&P manufacturing PMI was revised upward by +0.3 to 49.0 from the previously reported 48.7. The Eurozone Mar unemployment rate was unchanged at a record low 6.2%. Swaps are discounting the chances at 97% for a -25 bp rate cut by the ECB at the June 5 policy meeting. US Stock Movers Chip stocks are rallying today and are giving the broader market a boost. Lam Research (LRCX) and Microchip Technology (MCHP) are up more than +4%. Also, Nvidia (NVDA), Applied Materials (AMAT), ON Semiconductor (ON), KLA Corp (KLAC), GlobalFoundries (GFS), Texas Instruments (TXN), and Micron Technology (MU) are up more than +3%. Travel stocks are moving higher today on signs of economic strength after US Apr nonfarm payrolls rose more than expected. Delta Air Lines (DAL), United Airlines Holdings (UAL), and Norwegian Cruise Line Holdings (NCLH) are up more than +4%. Also, Southwest Airlines (LUV) and Carnival (CCL) are up more than +3%. Dexcom (DXCM) is up more than +14% to lead gainers in the S&P 500 and Nasdaq 100 after reporting Q1 revenue of $1.04 billion, better than the consensus of $1.02 billion. Exact Sciences (EXAS) is up more than +10% after reporting Q1 revenue of $706.8 million, better than the consensus of $688.7 million, and raised its full-year revenue forecast to $3.07 billion-$3.12 billion from a previous estimate of $3.03 billion-$3.09 billion, stronger than the consensus of $3.06 billion. Duolingo (DUOL) is up more than +12% after boosting its full-year bookings estimate to $1.12 billion- $1.13 billion from a previous estimate of $1.08 billion-$1.10 billion, stronger than the consensus of $1.09 billion. US-listed Chinese stocks are climbing after China's Commerce Ministry is assessing the possibility of trade talks with the US. As a result, PDD Holdings (PDD), (JD), Baidu (BIDU), and Alibaba Group Holding Ltd (BABA) are up more than +2%. Apple (AAPL) is down more than -4% to lead losers in the Dow Jones Industrials after reporting Q2 greater China revenue of $16.00 billion, weaker than the consensus of $16.83 billion. (AMZN) is down more than -1% after forecasting Q2 operating income of $13.0 billion to $17.5 billion, weaker than the consensus of $17.82 billion. Block (XYZ) is down more than -23% after reporting Q1 net revenue of $5.77 billion, weaker than the consensus of $6.22 billion, and cut its full-year adjusted operating income estimate to $1.9 billion from a previous estimate of $2.1 billion, below the consensus of $2.12 billion. Motorola Solutions (MSI) is down more than -8% to lead losers in the S&P 500 after forecasting Q2 adjusted EPS of $3.32-$3.37, weaker than the consensus of $3.47. Take-Two Interactive Software (TTWO) is down more than -8% to lead losers in the Nasdaq 100 after announcing a delay in releasing the Grand Theft Auto VI game. Atlassian (TEAM) is down more than -7% after forecasting Q4 revenue of $1.35 billion to $1.36 billion, the midpoint below the consensus of $1.36 billion. Airbnb (ABNB) is down more than -2% after forecasting Q2 revenue of $2.99 billion to $3.05 billion, the midpoint below the consensus of $3.03 billion. Earnings Reports (5/2/2025) AES Corp/The (AES), Apollo Global Management Inc (APO), Cboe Global Markets Inc (CBOE), Chevron Corp (CVX), Cigna Group/The (CI), DaVita Inc (DVA), DuPont de Nemours Inc (DD), Eaton Corp PLC (ETN), Exxon Mobil Corp (XOM), Franklin Resources Inc (BEN), Monster Beverage Corp (MNST), T Rowe Price Group Inc (TROW).
Globe and Mail
30-04-2025
- Business
- Globe and Mail
Stocks Rebound Ahead of Earnings from Microsoft and Meta Platforms
The S&P 500 Index ($SPX) (SPY) Wednesday closed up +0.15%, the Dow Jones Industrials Index ($DOWI) (DIA) closed up +0.35%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +0.13%. June E-mini S&P futures (ESM25) are up +0.19%, and June E-mini Nasdaq futures (NQM25) are up +0.21%. Stock indexes recovered from early losses on Wednesday and settled slightly higher. Stocks found support from Wednesday's news that showed the Fed's preferred inflation gauge, the US Mar core PCE price index, rose at the slowest pace in 9 months. Also, March personal spending rose more than expected, and March pending home sales posted their biggest increase in 15 months. In addition, late-day short covering lifted stock indexes into positive territory ahead of earnings results from Microsoft and Meta Platforms after Wednesday's close. On Wednesday, stocks initially moved lower after weak economic news bolstered concerns about an economic slowdown. Stagflation risks increased and undercut stocks after Wednesday's reports showed the US economy in Q1 contracted at the steepest pace in 3 years, and the Q1 core PCE price index rose more than expected. Also, signs of labor market weakness undercut stocks after the April ADP employment change showed employers added fewer jobs than expected. However, The Fed-friendly news knocked the 10-year T-note yield down to a 3-week low, improving the prospects for Fed rate cuts. Corporate earnings results on Wednesday were mixed for stocks. Seagate Technology Holdings rose more than +11% after reporting stronger-than-expected Q1 revenue. Also, Trane Technologies rose more than +8% after reporting Q1 adjusted EPS from continuing operations above consensus. On the negative side, Super Micro Computer fell more than -11% to weigh on tech stocks after reporting preliminary Q3 results that missed expectations. Also, Norwegian Cruise Line Holdings fell more than -7% after saying it saw 'softening' in its 12-month forward bookings. Weaker-than-expected manufacturing activity in China is negative for global growth prospects after Wednesday's news showed China's Apr manufacturing PMI fell -1.5 to 49.0, weaker than expectations of 49.7 and the steepest pace of contraction in 16 months. The Treasury announced it will sell $125 billion of T-notes and T-bonds in next week's quarterly refunding, right on expectations. US MBA mortgage applications fell -4.2% in the week ended April 25, with the purchase mortgage sub-index down -4.4% and the refinancing sub-index down -3.7%. The average 30-year fixed rate mortgage fell -1 bp to 6.89% from 6.90% in the prior week. The US Apr ADP employment change rose +62,000, weaker than expectations of +115,000 and the smallest increase in 9 months. US Q1 GDP fell -0.3% (q/q annualized), weaker than expectations of -0.2% and the steepest pace of contraction in 3 years. The Q1 core PCE price index rose +3.5% q/q, stronger than expectations of +3.1% q/q. The US Q1 employment cost index rose +0.9%, which is right on expectations. The US Apr MNI Chicago PMI fell -3.0 to 44.6, weaker than expectations of 45.9. US Mar personal spending rose +0.7% m/m, stronger than expectations of +0.6% m/m. May personal income rose +0.5% m/m, stronger than expectations of +0.4% m/m. The US Mar core PCE price index, the Fed's preferred inflation gauge, rose +2.6% y/y, right on expectations and the slowest pace of increase in 9 months. US Mar pending home sales rose +6.1% m/m, stronger than expectations of +1.0% m/m and the biggest increase in 15 months. Market attention for the rest of this week will focus on news of US tariffs and trade negotiations. On Thursday, the Apr ISM manufacturing index is expected to fall -1.0 to 48.0. Thursday also brings earnings results from and Apple. Friday brings Apr nonfarm payrolls (expected +130,000) and the Apr unemployment rate (expected unchanged at 4.2%). Also, Apr average hourly earnings are expected to climb +0.3% m/m and +3.9% y/y. The markets are discounting the chances at 8% for a -25 bp rate cut after the May 6-7 FOMC meeting. Q1 earnings reporting season is in full swing. According to data compiled by Bloomberg Intelligence, the market consensus is for Q1 year-over-year earnings growth of +6.7% for the S&P 500 stocks, down from expectations of +11.1% in early November. So far, just over a third of S&P 500 companies have reported quarterly results, with 75% beating estimates. Full-year 2025 corporate profits for the S&P 500 are seen rising +9.4%, down from the forecast of +12.5% in early January. Overseas stock markets on Wednesday settled mixed. The Euro Stoxx 50 closed down -0.03%. China's Shanghai Composite fell to a 1-week low and closed down -0.23%. Japan's Nikkei Stock 225 closed up +0.57%. Interest Rates June 10-year T-notes (ZNM2 5) Wednesday closed up +3 ticks. The 10-year T-note yield fell -0.4 bp to 4.168%. June T-notes climbed to a 3-week high Wednesday, and the 10-year T-note yield dropped to a 3-week low of 4.133%. T-notes moved higher Wednesday on positive carryover from rallies in European government bonds. T-notes also garnered support after the US Apr ADP employment change rose less than expected, and the Q1 employment index rose as expected, dovish factors for Fed policy. T-notes fell from their best levels today after the US Q1 core PCE price index rose more than expected, a hawkish factor for Fed policy. European government bond yields on Wednesday moved lower. The 10-year German bund yield dropped to a 1-week low of 2.440% and finished down -5.3 bp to 2.444%. The 10-year UK gilt yield fell to a 3-week low of 4.428% and finished down -3.9 bp to 4.441%. Eurozone Q1 GDP rose +0.4% q/q and +1.2% y/y, stronger than expectations of +0.2% q/q and +1.1% y/y. German Mar retail sales fell -0.2% m/m, a smaller decline than expectations of -0.4% m/m. German Apr CPI (EU harmonized) rose +2.2% y/y, stronger than expectations of +2.1% y/y, but still the slowest pace of increase in 7 months. Swaps are discounting the chances at 100% for a -25 bp rate cut by the ECB at the June 5 policy meeting. US Stock Movers Seagate Technology Holdings (STX) closed up more than +11% to lead gainers in the S&P 500 after reporting Q1 revenue of $2.16 billion, stronger than the consensus of $2.13 billion. Qorvo (QRVO) closed up more than +14% after reporting Q4 adjusted EPS of $1.42, well above the consensus of 99 cents. Trane Technologies (TT) closed up more than +8% after reporting Q1 adjusted EPS from continuing operations of $2.45, better than the consensus of $2.20. Western Digital (WDC) closed up more than +7% after forecasting Q4 revenue of $2.3 billion to $2.6 billion and declared a cash dividend of 10 cents a share. PPG Industries (PPG) closed up more than +4% after reporting Q1 adjusted EPS of $1.72, better than the consensus of $1.64, and forecast full-year adjusted EPS of $7.75-$8.05, the midpoint above the consensus of $7.80. Booking Holdings (BKNG) closed up more than +3% after reporting Q1 revenue of $4.76 billion, stronger than expectations of $4.59 billion. Mondelez International (MDLZ) closed up more than +3% to lead gainers in the Nasdaq 100 after reporting Q1 adjusted EPS of 74 cents, stronger than the consensus of 66 cents. GE HealthCare (GEHC) closed up more than +3% after reporting Q1 revenue of $4.78 billion, stronger than the consensus of $4.66 billion. Energy stocks retreated Wednesday after WTI crude prices fell more than -3% to a 3-week low. APA Corp (APA) closed down more than -4%, and Diamondback Energy (FANG), Haliburton (HAL), and ConocoPhillips (COP) closed down more than -3%. Also, Devon Energy (DVN), Exxon Mobil (XOM), Chevron (CVX), Schlumberger (SLB), and Occidental Petroleum (OXY) closed down more than -2%. Super Micro Computer (SMCI) closed down more than -12% to lead gainers in the S&P 500 after reporting preliminary Q3 net sales of $4.5 billion to $4.6 billion, well below the consensus of $5.35 billion. Edison International (EIX) closed down more than -8% after saying its equipment 'could have' been linked to the ignition of the Eaton fire in California and that the company would probably incur material losses in connection with it. Garmin Ltd (GRMN) closed down more than -8% after forecasting full-year pro forma EPS of $7.80, below the consensus of $7.91. Starbucks (SBUX) closed down more than -8% after reporting Q2 adjusted EPS of 41 cents, weaker than the consensus of 49 cents, and said it sees challenges from tariffs and volatile coffee prices. Werner Enterprises (WERN) closed down more than -10% after Evercore ISI downgraded the stock to underperform from in line with a price target of $21. Norwegian Cruise Line Holdings (NCLH) closed down more than -7% after saying it saw 'softening' in its 12-month forward bookings. AppLovin (APP) closed down more than -6% after Edgewater Research said, 'Mobile gaming macro seems to be decelerating slowly,' and competition from both Meta Platforms and Alphabet is rising. Earnings Reports (5/1/2025) Air Products and Chemicals Inc (APD), Airbnb Inc (ABNB), Inc (AMZN), Ameren Corp (AEE), American International Group Inc (AIG), AMETEK Inc (AME), Amgen Inc (AMGN), Apple Inc (AAPL), Aptiv PLC (APTV), Arthur J Gallagher & Co (AJG), Baxter International Inc (BAX), Becton Dickinson & Co (BDX), Biogen Inc (BIIB), Broadridge Financial Solutions (BR), Builders FirstSource Inc (BLDR), Camden Property Trust (CPT), Cardinal Health Inc (CAH), Carrier Global Corp (CARR), Church & Dwight Co Inc (CHD), Consolidated Edison Inc (ED), CVS Health Corp (CVS), Dexcom Inc (DXCM), Dominion Energy Inc (D), DTE Energy Co (DTE), Eli Lilly & Co (LLY), EOG Resources Inc (EOG), Estee Lauder Cos Inc/The (EL), Eversource Energy (ES), Exelon Corp (EXC), Fortive Corp (FTV), GoDaddy Inc (GDDY), Hershey Co/The (HSY), Hologic Inc (HOLX), Howmet Aerospace Inc (HWM), Hubbell Inc (HUBB), Huntington Ingalls Industries (HII), IDEX Corp (IEX), IDEXX Laboratories Inc (IDXX), Ingersoll Rand Inc (IR), Intercontinental Exchange Inc (ICE), Iron Mountain Inc (IRM), Juniper Networks Inc (JNPR), Kellanova (K), Kimco Realty Corp (KIM), KKR & Co Inc (KKR), Linde PLC (LIN), Live Nation Entertainment Inc (LYV), Mastercard Inc (MA), McDonald's Corp (MCD), Mettler-Toledo International Inc (MTD), Moderna Inc (MRNA), Mohawk Industries Inc (MHK), Monolithic Power Systems Inc (MPWR), Motorola Solutions Inc (MSI), Parker-Hannifin Corp (PH), Pinnacle West Capital Corp (PNW), Quanta Services Inc (PWR), Smurfit WestRock PLC (SW), Southern Co/The (SO), Stryker Corp (SYK), Targa Resources Corp (TRGP), WW Grainger Inc (GWW).
Globe and Mail
30-04-2025
- Business
- Globe and Mail
Stocks Fall as Weak Economic Reports Spark Growth Concerns
The S&P 500 Index ($SPX) (SPY) today is down -1.40%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -1.03%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -1.65%. June E-mini S&P futures (ESM25) are down -1.26%, and June E-mini Nasdaq futures (NQM25) are down -1.50%. Stock indexes today are sharply lower as weak economic news bolsters concerns about an economic slowdown. Stagflation risks are pressuring stocks after the US economy in Q1 contracted at the steepest pace in 3 years, and the Q1 core PCE price index rose more than expected. Also, signs of labor market weakness undercut stocks after the April ADP employment change showed employers added fewer jobs than expected. Stocks recovered from their worst levels after the Fed's preferred inflation gauge, the US Mar core PCE price index, rose at the slowest pace in 9 months. Also, Mar personal spending rose more than expected, and Mar pending home sales posted their biggest increase in 15 months. Corporate earnings results today are mixed for stocks. Super Micro Computer is down more than -17% to weigh on tech stocks after reporting preliminary Q3 results that missed expectations. Also, Norwegian Cruise Line Holdings is down more than -10% after saying it saw "softening" in its 12-month forward bookings. On the positive side, Seagate Technology Holdings is up more than +8% after reporting stronger-than-expected Q1 revenue. Also, Trane Technologies is up more than +6% after reporting Q1 adjusted EPS from continuing operations above consensus. After today's close, the markets are awaiting earnings results from Microsoft and Meta Platforms. Weaker-than-expected manufacturing activity in China is negative for global growth prospects after today's news showed China's Apr manufacturing PMI fell -1.5 to 49.0, weaker than expectations of 49.7 and the steepest pace of contraction in 16 months. The Treasury announced it will sell $125 billion of T-notes and T-bonds in next week's quarterly refunding, right on expectations. US MBA mortgage applications fell -4.2% in the week ended April 25, with the purchase mortgage sub-index down -4.4% and the refinancing sub-index down -3.7%. The average 30-year fixed rate mortgage fell -1 bp to 6.89% from 6.90% in the prior week. The US Apr ADP employment change rose +62,000, weaker than expectations of +115,000 and the smallest increase in 9 months. US Q1 GDP fell -0.3% (q/q annualized), weaker than expectations of -0.2% and the steepest pace of contraction in 3 years. The Q1 core PCE price index rose +3.5% q/q, stronger than expectations of +3.1% q/q. The US Q1 employment cost index rose +0.9%, which is right on expectations. The US Apr MNI Chicago PMI fell -3.0 to 44.6, weaker than expectations of 45.9. US Mar personal spending rose +0.7% m/m, stronger than expectations of +0.6% m/m. May personal income rose +0.5% m/m, stronger than expectations of +0.4% m/m. The US Mar core PCE price index, the Fed's preferred inflation gauge, rose +2.6% y/y, right on expectations and the slowest pace of increase in 9 months. US Mar pending home sales rose +6.1% m/m, stronger than expectations of +1.0% m/m and the biggest increase in 15 months. Market attention for the rest of this week will focus on news of US tariffs and trade negotiations. Microsoft and Meta Platforms will release their quarterly earnings after today's close. On Thursday, the Apr ISM manufacturing index is expected to fall -1.0 to 48.0. Thursday also brings earnings results from and Apple. Friday brings Apr nonfarm payrolls (expected +130,000) and the Apr unemployment rate (expected unchanged at 4.2%). Also, Apr average hourly earnings are expected to climb +0.3% m/m and +3.9% y/y. The markets are discounting the chances at 9% for a -25 bp rate cut after the May 6-7 FOMC meeting. Q1 earnings reporting season is in full swing. According to data compiled by Bloomberg Intelligence, the market consensus is for Q1 year-over-year earnings growth of +6.7% for the S&P 500 stocks, down from expectations of +11.1% in early November. So far, just over a third of S&P 500 companies have reported quarterly results, with 75% beating estimates. Full-year 2025 corporate profits for the S&P 500 are seen rising +9.4%, down from the forecast of +12.5% in early January. Overseas stock markets today are mixed. The Euro Stoxx 50 is down -0.68%. China's Shanghai Composite fell to a 1-week low and closed down -0.23%. Japan's Nikkei Stock 225 closed up +0.57%. Interest Rates June 10-year T-notes (ZNM2 5) today are up +3 ticks. The 10-year T-note yield is down -1.0 bp to 4.162%. June T-notes climbed to a 3-week high today, and the 10-year T-note yield dropped to a 3-week low of 4.133%. T-notes are moving higher today on positive carryover from rallies in European government bonds. T-notes also garnered support after the US Apr ADP employment change rose less than expected, and the Q1 employment index rose as expected, dovish factors for Fed policy. In addition, today's stock slump has boosted some safe-haven demand for T-notes. T-notes fell from their best levels today after the US Q1 core PCE price index rose more than expected, a hawkish factor for Fed policy. European government bond yields today are moving lower. The 10-year German bund yield is down -4.8 bp to 2.449%. The 10-year UK gilt yield fell to a 3-week low of 4.428% and is down -2.9 bp to 4.451%. Eurozone Q1 GDP rose +0.4% q/q and +1.2% y/y, stronger than expectations of +0.2% q/q and +1.1% y/y. German Mar retail sales fell -0.2% m/m, a smaller decline than expectations of -0.4% m/m. German Apr CPI (EU harmonized) rose +2.2% y/y, stronger than expectations of +2.1% y/y, but still the slowest pace of increase in 7 months. Swaps are discounting the chances at 99% for a -25 bp rate cut by the ECB at the June 5 policy meeting. US Stock Movers Magnificent Seven stocks are under pressure today and weighing on the broader market. Tesla (TSLA) is down more than -4%, and (AMZN) is down more than -3%. Also, Nvidia (NVDA) and Meta Platforms (META) are down more than -2%. In addition, Alphabet (GOOGL) and Microsoft (MSFT) are down more than -1%, and Apple (AAPL) is down -0.46%. Super Micro Computer (SMCI) is down more than -16% to lead gainers in the S&P 500 after reporting preliminary Q3 net sales of $4.5 billion to $4.6 billion, well below the consensus of $5.35 billion. Norwegian Cruise Line Holdings (NCLH) is down more than -9% after saying it saw "softening" in its 12-month forward bookings. Garmin Ltd (GRMN) is down more than -7% after forecasting full-year pro forma EPS of $7.80, below the consensus of $7.91. Starbucks (SBUX) is down more than -7% after reporting Q2 adjusted EPS of 41 cents, weaker than the consensus of 49 cents, and said it sees challenges from tariffs and volatile coffee prices. Werner Enterprises (WERN) is down more than -16% after Evercore ISI downgraded the stock to underperform from in line with a price target of $21. Edison International (EIX) is down more than -8% after saying its equipment "could have" been linked to the ignition of the Eaton fire in California and that the company would probably incur material losses in connection with it. AppLovin (APP) is down more than -6% after Edgewater Research said, "Mobile gaming macro seems to be decelerating slowly," and competition from both Meta Platforms and Alphabet is rising. Carter's (CRI) is down more than -4% after Wells Fargo Securities downgraded the stock to underweight from equal weight with a price target of $25. Seagate Technology Holdings (STX) is up more than +8% to lead gainers in the S&P 500 after reporting Q1 revenue of $2.16 billion, stronger than the consensus of $2.13 billion. Qorvo (QRVO) is up more than +9% after reporting Q4 adjusted EPS of $1.42, well above the consensus of 99 cents. Trane Technologies (TT) is up more than +7% after reporting Q1 adjusted EPS from continuing operations of $2.45, better than the consensus of $2.20. Mondelez International (MDLZ) is up more than +4% to lead gainers in the Nasdaq 100 after reporting Q1 adjusted EPS of 74 cents, stronger than the consensus of 66 cents. Western Digital (WDC) is up more than +5% after forecasting Q4 revenue of $2.3 billion to $2.6 billion and declared a cash dividend of 10 cents a share. PPG Industries (PPG) is up more than +3% after reporting Q1 adjusted EPS of $1.72, better than the consensus of $1.64, and forecast full-year adjusted EPS of $7.75-$8.05, the midpoint above the consensus of $7.80. GE HealthCare (GEHC) is up more than +2% after reporting Q1 revenue of $4.78 billion, stronger than the consensus of $4.66 billion. Earnings Reports (4/30/2025) Aflac Inc (AFL), Albemarle Corp (ALB), Align Technology Inc (ALGN), Allstate Corp/The (ALL), Amcor PLC (AMCR), American Electric Power Co Inc (AEP), American Water Works Co Inc (AWK), ANSYS Inc (ANSS), Automatic Data Processing Inc (ADP), AvalonBay Communities Inc (AVB), Caterpillar Inc (CAT), CH Robinson Worldwide Inc (CHRW), Cognizant Technology Solutions (CTSH), Crown Castle Inc (CCI), eBay Inc (EBAY), Equinix Inc (EQIX), Everest Group Ltd (EG), Garmin Ltd (GRMN), GE HealthCare Technologies Inc (GEHC), Generac Holdings Inc (GNRC), Globe Life Inc (GL), Hess Corp (HES), Host Hotels & Resorts Inc (HST), Humana Inc (HUM), Illinois Tool Works Inc (ITW), International Paper Co (IP), Invitation Homes Inc (INVH), KLA Corp (KLAC), Martin Marietta Materials Inc (MLM), Meta Platforms Inc (META), MetLife Inc (MET), MGM Resorts International (MGM), Microsoft Corp (MSFT), Mid-America Apartment Communities (MAA), Norwegian Cruise Line Holdings (NCLH), PPL Corp (PPL), Prudential Financial Inc (PRU), PTC Inc (PTC), Public Service Enterprise Group (PEG), Public Storage (PSA), QUALCOMM Inc (QCOM), Stanley Black & Decker Inc (SWK), Super Micro Computer Inc (SMCI), Trane Technologies PLC (TT), UDR Inc (UDR), Ventas Inc (VTR), VICI Properties Inc (VICI), Vulcan Materials Co (VMC), Western Digital Corp (WDC), Yum! Brands Inc (YUM).
