Closing Recap

Tuesday, April 22, 2025

U.S. stocks found solid footing on this “Turnaround Tuesday” as the S&P 500 index (SPX) crossed back above 5,300 this afternoon (but failed to hold above) while the Dow Jones Industrial Average and Nasdaq both snapped their respective 4-day losing streaks. The Dow jumped as much as 1,000 points late day over easing U.S.-China trade tensions following commentary from Treasury Secretary Bessent this afternoon. Stocks had erased some of the sell-off from Monday sparked by concerns about the Fed's independence. White House press secretary Karoline Leavitt on Tuesday said the Trump administration is making “a lot of progress” in trade negotiations that have come amid a 90-day tariff pause for most U.S. trading partners. She told reporters during a briefing that 18 proposals have been brought to President Donald Trump’s trade team and that the team is meeting with 34 countries this week.

Stocks opened higher and rallied before getting another boost around 12:00 pm after Bloomberg reported U.S. Treasury Secretary Scott Bessent told a closed-door investor summit Tuesday that the tariff standoff with China is unsustainable and that he expects the situation to de-escalate. The headlines were enough to push major averages to new highs, taking out the prior day highs, lifting energy, materials, tech and consumer discretionary stocks the most which have presence in China. More details came out later on the meeting, with reports showing Bessent said, he believes there will be a de-escalation in U.S.-China trade tensions but described future negotiations with Beijing as a "slog" that has not started yet and Bessent described the current bilateral trade situation as an embargo, and neither side sees the status quo as sustainable. Stocks pared gains around 1:00 pm after more details of the meeting emerged. There were also reports that the White House is closing in on general agreements with Japan and India to stave off massive U.S. tariffs, but they are likely to leave many of the thorny details to be hashed out at a later date. The headline that it may take months to reach final trade deals paired some of the afternoon market gains.

Earnings are heavy this week and are reflecting the extreme uncertainties resulting from tariffs and the administration's other policies in today’s results. Tesla (TSLA) earnings are due after the close while this morning, defense contractors NOC, RTX, LMT declined after earnings and guidance disappoint; in Medtech, DGX, DHR shares rally on results/guidance; GE, MMM, PNR among early leaders in industrials after their results; KMB slides on lower outlook for year in consumer products; VZ slides on subscriber losses in telecom and solar stocks surging (FSLR, SEDG, ENPH) after U.S. trade officials finalized steep tariff levels on most solar cells from Southeast Asia.

Treasuries were mixed with the long end recovering somewhat from yesterday's selloff but shorter-term was weaker as yields rose. The dollar recovered slightly after hitting its lowest levels since April 2022 this week, even as investors continued to assess U.S. President Donald Trump's criticism of the Federal Reserve chair. Interesting stats: LizAnn Sonders tweets: "Year-to-date, S&P 500 has already seen 19 trading days with moves of -1% or more…same number of occurrences in all of 2024". Gold hit record highs before fading while Bitcoin surged to 7-week highs.

• U.S. Treasury long-term yields declined, reversing some of Monday's bond selloff, as fears that President Donald Trump's trade policies could trigger a U.S. economic slowdown provided some demand for U.S. government bonds. The 10-year yield hit lows of 4.372%, down from morning highs around 4.44%, while the shorter-term 2-yr yield rose 5.4bps to 3.806%. Prices had fallen Monday, lifting yields as Trump's calls to remove Federal Reserve Chair Jerome Powell caused market concerns over U.S. economic stability and institutional strength. The U.S. sold $69B in 2-year notes at high yield 3.795%, vs. when issued at 3.789% before auction; U.S. 2-year notes bid-to-cover ratio 2.52, as Primary dealers take 13.74% of U.S. 2-year notes sale, direct 30.08% and indirect 56.18%.

• In Food & Beverages: KHC was downgraded to Market Perform from Outperform at Bernstein (tgt to $31 from $34) saying the company continues to lose share in several of its legacy U.S.-focused brands. Jefferies provided thoughts on the impact for the food and beverage space following last week's update regarding LLY's development in weight loss medication – said approval for a more accessible GLP-1 will be incrementally negative for snacking cos PEP, CPB and MDLZ and a potential benefit to protein-exposed BRBR, SMPL and KO.
• In Retail: OXM said it expects less than 35% of goods from China in fiscal 2025 and expects less than 10% of goods from China in fiscal 2026; in research, Goldman Sachs downgraded Macy's (M) to Neutral with $12 PT and CURV downgraded to Sell with $4 PT as the firm reduces its outlook for the US apparel and Softlines sector to reflect a more cautious macro backdrop as their economists have reduced their US GDP growth outlook to 0.5% in 2025 from 2.5% in 2024 on a Q4/Q4 basis and now see a 45% probability of recession. The firm said they continue to view TJX and BURL as attractive in a more defensive environment and see brands with momentum and pricing power as relatively attractive, such as TPR (Buy), AS (Buy), and RL (Buy).

• In Autos: TSLA to report earnings tonight after the close; GPC reported Q1 EPS and revs above ests and maintained its FY outlook but guided Q2 below street (does not include tariffs).

• In Solar sector: FSLR, ENPH, SEDG shares jumped after U.S. trade officials finalized steep tariff levels on most solar cells from Southeast Asia. The case was brought last year by Korea's Hanwha Qcells, Arizona-based First Solar; Tariffs target major Chinese firms like Jinko Solar and Trina Solar; tariffs go as high as 3,500%.
• In Utilities: Barclays’ previews Q1 for the sector as they downgraded LNT to Underweight as sees risks surrounding the company's large renewable build out plan, saying there are several risks that could challenge its execution and long-term growth; initiated AWK with an Underweight rating and $138 tgt saying the stock is one of the most expensive names in group and upgraded CNP to Equal Weight from Underweight noting the company has successfully navigated several highly politicized regulatory execution items in the last three months. Overall, the firm said across their coverage, potentially the biggest quarterly beats relative to consensus are ATO, CNP, ETR, EXC, LNT, and NWE. These are mostly due to weather and stale consensus. For misses, they see AES, CMS, EIX, EVRG, PCG as possibly missing.

• In Financial Services: MCO Q1 adj EPS $3.83 tops consensus $3.54 on slightly better revs ($1.9B vs. est. $1.88B); EFX Q1 EPS of $1.53 topped the $1.40 estimate and unveiled a $3 billion buyback program, while only maintaining its full-year 2025 outlook despite the strong first-quarter results – said U.S. mortgage inquiries fell 9% in the quarter from a year earlier, better than Equifax's expectation of a 13% decline.
• In SmallCap Home Services: JP Morgan downgraded shares of REZI, FTDR and ZD to Neutral from Overweight, reducing estimates, multiples, and price targets for most small-cap internet and video game companies to reflect macro and tariff uncertainty.
• In Consumer Finance: SYF said it still expects its annual net revenue to be in the range of $15.2B-$15.7B and its loan growth to be in the low-single digits; said Q1 rose 1% to $4.46B on the back of lower deposit costs; Q1 fell 43% to $736 million, or $1.89 per share y/y; Q1 quarterly provision for credit losses was $1.49B; authorized a $2.5 billion share buyback program through June 30, 2026

• In Labs/Diagnostics: DGX Q1 adjusted EPS $2.21 tops ests $2.15 on better revs $2.65B, saying delivered strong revenue growth of approximately 12%, including nearly 2.5% in organic growth, as demand rebounded in March following weather impacts early in the quarter. DHR shares rose after 1Q25 revenue and EPS above consensus and FY25 core revenue guidance maintained at ~3% growth. Non-GAAP core revenue was flat YoY, made up of 7% growth from Biotechnology, (4%) decline from Life Sciences, and (1.5%) decline in Diagnostics.
• In Medical Research: MEDP mixed 1Q, with revs/EPS ahead, while guidance was raised for Rev + EPS as well, with the bottom line also benefitting from lower interest/tax/share count, while EBITDA guide was maintained. Focus centered around the booking miss, with Net New Business at $500M. (-7% vs. estimate).
• In Managed Care: After the group tumbled Thursday behind UNH miss and sharply lower guidance, ELV this morning reports Q1 adj EPS $11.97 vs, est. $11.48; Q1 revenue $48.8B vs. est. $46.25B; backs FY25 adjusted EPS view of $34.15-$34.85 as Q1 benefit expense ratio slightly better than estimates (86.4% vs 86.8%).

• MMM shares rallied as Q1 EPS $1.88 vs. est. $1.77 and sales $5.8B, down 25% y/y from $7.72B but above ests. $5.75B; now expects a tariff-related negative impact of $0.20-$0.40 on its full-year adj profit forecast of $7.60 to $7.90; said increasing full-year share repurchases to about $2B, board authorization at $7.5B; said trending to the lower end of the 2% to 3% forecast for 2025 adjusted organic sales growth.
• PNR Q1 sales of $1.01B topped ests $988.9M on better EPS ($1.11 vs. est. $1.01) helped by robust demand for its aftermarket pool maintenance and repair services; narrowed its profit outlook for 2025 from continuing operations to approximately $4.27-$4.42 per share, compared with its previous view $4.37-$4.52 per share.
• In Metals & Mining: in Gold miners, GOLD said it will exit the Donlin Gold Project in Alaska by selling its 50% stake to billionaire John Paulson and NovaGold Resources for up to $1.1 billion. Overall gold prices hit record highs above $3,500 an ounce this morning before paring gains.

• HXL shares fell as the aircraft parts supplier reported qtrly results below expectations ($0.37/$456.5M in revs below consensus of $0.43/$475.7M) and lowered its 2025 guidance, pointing to continued supply chain driven delays in commercial aircraft production rate ramps; now sees full-yr rev of $1.88-$1.95B and adj EPS of $1.85-$2.05, down from $1.95-$2.05B and $2.05-$2.25, respectively
• LMT reported Q1 EPS $7.28 vs. $6.39 y/y as Backlog of $172.97B, was up +8.5% y/y; reaffirms 2025 financial outlook; still forecasts FY FCF about $6.60B to $6.80B, vs. est. $6.72B.
• NOC shares fell; after Q1 revs $9.47Bmiss the est. $9.95B; cuts FY25 adjusted EPS view to $24.95-$25.35 from prior $27.85-$28.25 (est. $28.05) while backed its FY25 revenue view $42B-$42.5B.
• RTX shares fell; Q1 EPS and sales top consensus led by better Pratt & Whitney sales of $7.37B; reaffirmed FY EPS and sales guidance though midpoint of guidance is below consensus.

• In Internet: EBAY was downgraded to MP from Outperform at Bernstein and cut tgt to $65 noting the operating environment for eCommerce has changed and data that the firm tracks softened through Q1, and tariffs further exacerbate the risks. NFLX extended the prior day gains after better earnings late last week. TTD, MGNI and CRTO shares jumped after reports Google Chrome will now continue to use third-party cookies.
• In Data Center: CRWV, a leading provider of compute power to facilitate AI model development had its “quiet period” conclude after its recent IPO. Wall Street initiates coverage: Stifel with a Buy and $55 tgt, Needham a Buy and $55 tgt as well; Outperform rating at Barclays with $48 tgt; a Buy and $51 tgt at Jefferies; an Overweight and $43 tgt at JP Morgan.
• Data center sector (VRT, DELL, SMCI) as well as power names (VST, OKLO, NRG) and chip AI names (NVDA, ARM, AVGO) rebounded after AMZN AWS VP of Global Data Centers on speculations of AWS going on pause on certain Colo deals: "This is routine capacity management & there haven’t been any recent fundamental changes in our expansion plans." AWS VP of Global Data Centers on AI demand: said "irst and foremost, we continue to see strong demand for both Generative AI and foundational workloads on AWS."
• In Comm & Networking: CALX shares rallied on earnings as Q1 EPS $0.19 topped the est. $0.13; Q1 revs $220.2M vs. est. $206.9M; announces additional $100M share repurchase program; forecasts Q2 adj EPS $0.18-$0.24 vs. est. $0.16 and revs $221M-$227M vs. est. $211M.