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.
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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 Amazon.com 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 (ZNM25) 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), Amazon.com 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).
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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