Stocks Rally as China Trade Tensions Ease and Trump Softens Stance on Powell

The S&P 500 Index ($SPX) (SPY) today is up +3.30%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +2.80%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +4.03%.  June E-mini S&P futures (ESM25) are up +3.13%, and June E-mini Nasdaq futures (NQM25) are up +3.86%. 

Stock indexes today are sharply higher for the second session, with the S&P 500 posting a 2-week high and the Nasdaq 100 posting a 1-week high.  Stocks are rallying today in hopes of better US-Chinese trade relations after President Trump said he plans to be “very nice” to China in any talks and that tariffs will drop if the two countries can reach a trade deal.  Stocks also rose after President Trump said late Tuesday that he had no intention of firing Fed Chair Powell, boosting confidence in the dollar and reducing the prospects that foreign investors would liquidate their dollar holdings, including stocks and Treasuries.

Stocks maintained their gains on today’s better-than-expected US new home sales and manufacturing PMI reports. 

US MBA mortgage applications fell -12.7% in the week ended April 18, with the purchase mortgage sub-index down -6.6% and the refinancing sub-index down -20.0%.  The average 30-year fixed rate mortgage rose +9 bp to 6.90% from 6.81% in the prior week.

The US Apr S&P manufacturing PMI unexpectedly rose +0.5 to 50.7, stronger than expectations of a decline to 49.0.

US Mar new home sales rose +7.4% m/m to a 6-month high of 724,000, stronger than expectations of 685,000.

Comments Tuesday evening from Fed Governor Kugler were negative for stocks when she said tariffs would likely put upward pressure on prices and have a bigger economic effect than previously expected.  She also said that she supports holding interest rates steady until inflation risks abate.

Bitcoin (^BTCUSD) is up more than +2% at a 7-week high as this week’s plunge in the dollar to a 3-year low bolstered demand for cryptocurrencies as a store of value. Also, the global trade turmoil has fueled safe-haven demand for cryptocurrencies. 

The markets are discounting the chances at 8% for a -25 bp rate cut after the May 6-7 FOMC meeting.

This week’s market focus will be on Q1 corporate earnings results and any changes to US trade policies.  The Fed Beige Book will be released later today.  Thursday brings the March capital goods new orders nondefense ex-aircraft and parts report (expected +0.1% m/m).  Also, March existing home sales on Thursday are expected to fall -2.8% m/m to 4.14 million.  Friday brings the revised University of Michigan April consumer sentiment index (expected no change at 50.8).

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.  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 climbed to a 2-1/2 week high and is up +3.03%.  China’s Shanghai Composite closed down -0.10%.  Japan’s Nikkei Stock 225 rallied to a 3-week high and closed up +1.89%.

Interest Rates

June 10-year T-notes (ZNM25) today are up +5 ticks.  The 10-year T-note yield is down -6.4 bp to 4.336%.  June T-notes are moving higher today after President Trump late Tuesday said he has no intention of firing Fed Chair Powell, easing concerns over the Fed’s independence, which could have sparked foreign selling of dollar assets, including Treasuries. 

However, T-note prices fell back from their best levels on the stronger-than-expected US new home sales and manufacturing PMI reports.  Also, an increase in inflation expectations is bearish for T-notes after the 10-year breakeven inflation rate today rose to a 1-1/2 week high of 2.303%.  In addition, supply pressures are negative for T-notes as the Treasury later today will auction $30 billion of 2-year floating-rate notes and $70 billion of 5-year T-notes as part of this week’s $213 billion auction package of T-note and floating-rate notes.

European government bond yields today are moving higher.  The 10-year German bund yield is up +6.6 bp to 2.509%.  The 10-year UK gilt yield rebounded from a 2-week low of 4.469% and is up +0.4 bp to 4.549%.

The Eurozone Apr S&P manufacturing PMI unexpectedly rose +0.1 to a 2-1/4 year high of 48.7, stronger than expectations of a decline to 47.4.  However, the Apr S&P composite PMI fell -0.8 to 50.1, weaker than expectations of 50.2.

ECB Governing Council member and Bundesbank President Nagel said Europe “is in a stagnating situation” due to fallout from US tariffs with a “risk of recession for Germany.”

Swaps are discounting the chances at 86% for a -25 bp rate cut by the ECB at the June 5 policy meeting.

US Stock Movers

Magnificent Seven stocks today are sharply higher and are supporting the broader market.  Tesla (TSLA) is up more than +7% and Amazon.com (AMZN) is up more than +6%.  Also, Meta Platforms (META) and Nvidia (NVDA) are up more than +5%, and Apple (AAPL), Alphabet (GOOGL), and Microsoft (MSFT) are up more than +3%. 

Chip stocks are soaring today on an easing of US-China trade tensions after President Trump said China tariffs will drop if the two countries can reach a trade deal.  As a result, Marvell Technology (MRVL), ARM Holdings Plc (ARM), and GlobalFoundries (GFS) are up more than +7%.  Also, Advanced Micro Devices (AMD), Broadcom (AVGO), Microchip Technology (MCHP), and Lam Research (LRCX) are up more than +6%.  In addition, Applied Materials (AMAT), NXP Semiconductors NV (NXPI), and Texas Instruments (TXN) are up more than +5%.  

Cryptocurrency-linked stocks are moving higher today after the price of Bitcoin up more than +2% to a 7-week high.  Riot Platforms (RIOT) is up more than +8%, and Coinbase Global (COIN) and MARA Holdings (MARA) are up more than +3%.  In addition, MicroStrategy (MSTR) is up more than +1%.

Amphenol Corp (APH) is up more than +11% after reporting Q1 net sales of $4.80 billion, stronger than the consensus of $4.25 billion.

Boeing (BA) is up more than +7% to lead gainers in the Dow Jones Industrials after reporting Q1 revenue of $19.50 billion, better than the consensus of $19.37 billion.

Boston Scientific (BSX) is up more than +5% after boosting its full-year net sales forecast to +15% to +17% from a prior view of +12.5% to +14.5%. 

Vertiv Holdings (VRT) is up more than +12% after raising its full-year net sales forecast to $9.33 billion-$9.58 billion from a previous estimate of $9.13 billion-$9.28 billion, well above the consensus of $9.20 billion.

Intel (INTC) is up more than +7% after Bloomberg reported the company plans to cut more than 20% of its staff to streamline operations. 

Phillip Morris (PM) is up more than +3% after reporting Q1 adjusted EPS of $1.69, above the consensus of $1.61, and raising its full-year adjusted EPS forecast to $7.36-$7.49 from a previous estimate of $7.04-$7.17, better than the consensus of $7.23. 

Otis Worldwide (OTIS) is down more than -6% after reporting Q1 net sales of $3.35 billion, below the consensus of $3.37 billion. 

AngloGold Ashanti Plc (AU) is down more than -6% to lead gold mining stocks lower with the price of gold today falling sharply by more than -3%. Also, Newmont (NEM) is down more than -2%.

Lennox International (LII) is down more than -4% after reporting Q1 earnings that missed the high end of analyst expectations and said higher prices would offset lower volume. 

CME Group (CME) is down more than -3% after reporting Q1 revenue of $1.60 billion, weaker than the consensus of $1.65 billion. 

Bristol-Myers Squibb (BMY) is down more than -2% after its drug, Cobenfy, a treatment for schizophrenia, missed its primary goal in a trial testing whether it could improve symptoms in patients who weren’t adequately responding to older medicines. 

Chubb Ltd (CB) is down more than -1% after reporting Q1 net premiums written of $12.65 billion, below the consensus of $13.03 billion.

Earnings Reports (4/23/2025)

Amphenol Corp (APH), AT&T Inc (T), Avery Dennison Corp (AVY), Boeing Co/The (BA), Boston Scientific Corp (BSX), Chipotle Mexican Grill Inc (CMG), CME Group Inc (CME), Discover Financial Services (DFS), Edwards Lifesciences Corp (EW), FirstEnergy Corp (FE), GE Vernova Inc (GEV), General Dynamics Corp (GD), International Business Machine (IBM), Lam Research Corp (LRCX), Las Vegas Sands Corp (LVS), Lennox International Inc (LII), Masco Corp (MAS), Molina Healthcare Inc (MOH), Newmont Corp (NEM), NextEra Energy Inc (NEE), Norfolk Southern Corp (NSC), Old Dominion Freight Line Inc (ODFL), O’Reilly Automotive Inc (ORLY), Otis Worldwide Corp (OTIS), Philip Morris International In (PM), Raymond James Financial Inc (RJF), ResMed Inc (RMD), Rollins Inc (ROL), ServiceNow Inc (NOW), TE Connectivity PLC (TEL), Teledyne Technologies Inc (TDY), Texas Instruments Inc (TXN), Thermo Fisher Scientific Inc (TMO), Tyler Technologies Inc (TYL), United Rentals Inc (URI), Westinghouse Air Brake Technol (WAB).