Stocks See Support as Trump Softens Tariff Rhetoric

The S&P 500 Index ($SPX) (SPY) today is up +0.14%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.10%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.06%.  March E-mini S&P futures (ESH25) are down -0.17%, and March E-mini Nasdaq futures (NQH25) are down -0.15%. 

Stocks today are mostly higher, with the S&P 500 posting a new record high and the Nasdaq 100 posting a 5-week high. Stocks are climbing today on President Trump's softening approach toward tariffs.  Thursday evening, Trump told Fox News that he would "rather not" use tariffs against China, the world's second-largest economy. President Trump has also held back from imposing tariffs on Europe, though he warned of tariffs against Canada and Mexico.

On the negative side for stocks are some negative earnings results.  Texas Instruments is down more than -5% after forecasting a weaker-than-expected Q1 EPS.  Also, American Express is down more than -2% after reporting higher-than-expected Q4 total expenses.  In addition, CSX Corp is down more than -3% after reporting Q4 revenue below consensus.

Earnings season is in full swing as companies report Q4 earnings results.  According to Bloomberg Intelligence, analysts estimate S&P 500 earnings grew by +7.5% y/y in Q4, the second-highest pre-season forecast in the past three years.

The markets are discounting the chances at 1% for a -25 bp rate cut at the January 28-29 FOMC meeting.

Overseas stock markets today are mixed.  The Euro Stoxx 50 rallied to a 24-year high and is up +0.59%.  China's Shanghai Composite Index closed up +0.70%.  Japan's Nikkei Stock 225 fell from a 2-1/2 week high and closed down -0.07%.

Interest Rates

March 10-year T-notes (ZNH25) today are unchanged.  The 10-year T-note yield is also unchanged at 4.638%.  T-notes have support on comments from President Trump, who appears to have softened his approach toward tariffs on China when he said that he would "rather not" use tariffs against China.  Trump's comments on the lack of tariffs on China ease inflation concerns and supported T-note prices.  However, higher European government bond yields today are pressuring T-note prices. 

European government bond yields today are moving higher.  The 10-year German bund yield rose to a 1-week high of 2.584% and is up +2.9 bp to 2.578%.  The 10-year UK gilt yield is up +1.7 bp to 4.652%.

The Jan Eurozone S&P manufacturing PMI rose +1.0 to 46.1, stronger than expectations of 45.4.  Also, the Jan Eurozone S&P composite PMI rose +0.6 to 50.2, stronger than expectations of 49.7 and the highest level in 5 months.

Swaps are discounting the chances at 97% for a -25 bp rate cut by the ECB at its January 30 policy meeting.

US Stock Movers

Twilio (TWLO) is up more than +22% after reporting preliminary Q4 revenue growth of about +11% y/y, stronger than the consensus of +8% y/y. 

Affirm Holdings (AFRM) is up more than +2% after Liberty Mutual confirmed it will purchase up to $750 million of Affirm's installment loans on a forward flow basis through June 2027. 

Moderna (MRNA) is up more than 2% after receiving a tender for the supply of its Covid-19 vaccine in the European Union, Norway, and North Macedonia for up to 4 years.

Middleby Corp (MIDD) is up more than +11% after the Wall Street Journal reported that Garden Investments has built a 5% position in the company and plans to push for changes that could boost the stock and will seek board seats. 

Meta Platforms (META) is up more than +1% after CEO Zuckerburg said the company's 2025 capex will be $60 billion-$65 million, well above the consensus of $51.31 billion.

Verizon Communications (VZ) is up more than +1% to lead gainers in the Dow Jones Industrials after reporting Q4 adjusted EPS of $1.10, better than the consensus of $1.09.

Oshkosh Corp (OSK) is up more than +1% after KeyBanc Capital Markets upgraded the stock to overweight from sector weight with a price target of $113. 

Chip stocks are sliding today to weigh on the overall market, led by a -5% fall in Texas Instruments (TXN) to lead losers in the Nasdaq 100 after forecasting Q1 EPS of $0.94-$1.16, weaker than the consensus of $1.17.  Also, Analog Devices (ADI) and Microchip Technology (MCHP) are down more than -3%.  In addition, Intel (INTC) is down more than -2%, and ON Semiconductor (ON), Qualcomm (QCOM), GlobalFoundries (GFS), and Applied Materials (AMAT) are down more than -1%.

CF Industries Holdings (CF) is down more than -6% to lead losers in the S&P 500 after JPMorgan Chase downgraded the stock to underweight from neutral with a price target of $75. 

Intuitive Surgical (ISRG) is down more than -4% after forecasting a full-year gross profit margin of 67% to 68%, below the consensus of 68.6%. 

CSX Corp (CSX) is down more than -3% after reporting Q4 revenue of $3.54 billion, weaker than the consensus of $3.57 billion. 

Airbnb (ABNB) is down more than -2% on signs of insider selling after an SEC filing showed CEO Chesky sold $5.12 million shares on Tuesday.

American Express (AXP) is down more than -2% to lead losers in the Dow Jones Industrials after reporting Q4 total expenses of $13.1 billion, above the consensus of $12.88 billion. 

AutoNation (AN) is down more than -1% after Stephens downgraded the stock to equal weight from overweight. 

Earnings Reports (1/24/2025)

American Express Co (AXP), Crown Castle Inc (CCI), HCA Healthcare Inc (HCA), NextEra Energy Inc (NEE), and Verizon Communications Inc (VZ).