Stocks Rally on Strength in Big Tech and Dovish Fed Speak

The S&P 500 Index ($SPX) (SPY) today is up +1.06%, the Dow Jones Industrials Index ($DOWI) (DIA) is up by +0.47%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +1.63%.  June E-mini S&P futures (ESM25) are up +1.22%, and June E-mini Nasdaq futures (NQM25) are up +1.75%. 

Stock indexes today are trading higher.  Strength in megacap technology stocks and chip makers are boosting the broader market after Texas Instruments and Lam Research reported better-than-expected earnings results.  Signs of a stable US labor market also support stocks after weekly initial unemployment claims rose as expected, and weekly continuing claims fell to a 10-week low.  In addition, lower T-note yields are positive for stocks, with the 10-year T-note yield down -5.1 bp to 4.330% after Cleveland Fed President Hammack said the Fed could cut rates in June if it has clear, convincing data and after Fed Governor Waller said he would support Fed rate cuts if tariffs led to job losses.

Stock gains are limited by the concern that there will be no quick resolution to the China-US trade war.  Treasury Secretary Bessent said President Trump hasn't offered to take down US tariffs on China on a unilateral basis.  Also, China's Commerce Ministry said the US should revoke all unilateral tariffs and "show sincerity" if it wants to make a trade deal, and "any reports on development in trade talks are groundless." 

US weekly initial unemployment claims rose +6,000 to 222,000, right on expectations.  Weekly continuing claims fell -37,000 to a 10-week low of 1.841 million, showing a stronger labor market than expectations of 1.869 million.

US March capital goods new orders nondefense ex-aircraft and parts rose +0.1% m/m, right on expectations.

The US Mar Chicago Fed national activity index fell -0.27 to -0.03, weaker than expectations of 0.12.

US Mar existing home sales fell -5.9% m/m to a 6-month low of 4.02 million, weaker than expectations of 4.13 million.

Dovish Fed comments today are supportive of stock and bonds.  Cleveland Fed President Hammack ruled out a Fed rate cut at that May 6-7 FOMC meeting but said, "If we have clear and convincing data by June, I think you'll see the committee move if we know which is the right way to move at that point in time." Also, Fed Governor Waller said, "If we see a significant drop in the labor market due to aggressive tariff levels, then I think it's important that we step in" and lower interest rates.

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.  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 higher.  The Euro Stoxx 50 is up +0.05%.  China's Shanghai Composite rose to a 3-week high and closed up +0.03%.  Japan's Nikkei Stock 225 climbed to a 3-week high and closed up +0.49%.

Interest Rates

June 10-year T-notes (ZNM25) today are up +14 ticks.  The 10-year T-note yield is down -5.9 bp to 4.323%.  June T-notes today are moderately higher due to carryover support from strength in European government bonds.  T-notes also have carryover support from Wednesday when President Trump said he had 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.   T-notes extended their gains on dovish Fed comments after Cleveland Fed President Hammack said clear data could prompt the Fed to cut interest rates in June, and Fed Governo Waller said he would support Fed rate cuts if tariffs led to job losses.  Supply pressures are limiting gains in T-notes ahead of the Treasury's $44 billion auction of 7-year T-notes later this afternoon.

European government bond yields today are moving lower.  The 10-year German bund yield is down -4.2 bp to 2.455%.  The 10-year UK gilt yield is down -4.9 bp to 4.503%.

Eurozone Mar new car registrations fell -0.2% y/y to 1.030 million units, the third consecutive monthly decline.

The German Apr IFO business confidence index unexpectedly rose +0.2 to a 9-month high of 86.9, stronger than expectations of a decline to 85.2.

ECB Governing Council member Rehn said the ECB would probably have to lower interest rates further and shouldn't exclude a larger reduction than 25 bp.

Swaps are discounting the chances at 98% for a -25 bp rate cut by the ECB at the June 5 policy meeting.

US Stock Movers

Magnificent Seven stocks are moving higher today and supporting gains in the broader market.  Nvidia (NVDA) is up more than +2%.  Also, Tesla (TSLA), Meta Platforms (META), Amazon.com (AMZN), Alphabet (GOOGL), and Microsoft (MSFT) are up more than +1%.  In addition, Apple (AAPL) is up +0.47%.

Chip stocks are climbing today on some better-than-expected earnings results.  Microchip Technology (MCHP) is up more than +8% to lead gainers in the Nasdaq 100, and ON Semiconductor (ON) is up more than +7%.  Texas Instruments (TXN) is up more than +6% after reporting Q1 revenue of $4.07 billion, above the consensus of $3.91 billion, and forecast Q2 revenue of $4.17 billion-$4.53 billion, stronger than the consensus of $4.12 billion.  Also, Lam Research (LRCX) is up more than +5% after reporting Q3 adjusted EPS of $1.04, above the consensus of $1.00.  Other chipmakers rallied on the news, with Marvell Technology (MRVL) up more than +5%, and GlobalFoundries (GFS), ARM Holdings Plc (ARM), and NXP Semiconductors NV (NXPI) up more than +4%. 

Hasbro (HAS) is up more than +15% to lead gainers in the S&P 500 after reporting Q1 net revenue of $887.1 million, well above the consensus of $769.2 million. 

ServiceNow (NOW) is up more than +13% after reporting Q1 subscription revenue of $3.09 billion, better than the consensus of $3.08 billion, and forecast Q2 subscription revenue of $3.03 billion-$3.04 billion, stronger than the consensus of $3.02 billion. 

Allegion Plc (ALLE) is up more than +9% after reporting Q1 adjusted EPS of $1.86, better than the consensus of $1.68.

United Rentals (URI) is up more than +7% after reporting Q1 adjusted EPS of $8.86, stronger than the consensus of $8.66.

Edwards Lifesciences (EW) is up more than +6% after reporting raising its full-year sales forecast to $5.7 billion-$6.1 billion from a previous forecast of $5.6 billion-$6.0 billion, the midpoint above the consensus of $5.81 billion. 

Fiserv (FI) is down more than -14% to lead losers in the S&P 500 after reporting Q1 organic revenue rose +7.0%, weaker than expectations of +8.48%.

Alaska Air Group (ALK) is down more than -10% after forecasting Q2 adjusted EPS of $1.15-$1.65, well below the consensus of $2.41. 

International Business Machines (IBM) is down more than -6% to lead losers in the Dow Jones Industrials despite reporting better-than-expected Q1 earnings after it said economic uncertainty and US government cost cuts may affect future earnings. 

LKQ Corp (LKQ) is down more than -10% after reporting Q1 revenue of $3.46 billion, weaker than the consensus of $3.59 billion. 

Robert Half Inc (RHI) is down more than -7% after reporting Q1 revenue of $1.35 billion, below the consensus of $1.41 billion, citing US trade policy that’s weighing on business confidence. 

Comcast Corp (CMCSA) is down more than -4% to lead losers in the Nasdaq 100 after reporting  Q1 pay-TV customers fell by -427,000, a larger decline than the consensus of -409,300. 

Tractor Supply (TSCO) is down more than -3% after reporting Q1 net sales of $3.47 billion, weaker than the consensus of $3.53 billion. 

Earnings Reports (4/24/2025)

Allegion plc (ALLE), Alphabet Inc (GOOGL), Ameriprise Financial Inc (AMP), Bristol-Myers Squibb Co (BMY), CBRE Group Inc (CBRE), CenterPoint Energy Inc (CNP), CMS Energy Corp (CMS), Comcast Corp (CMCSA), Digital Realty Trust Inc (DLR), Dover Corp (DOV), Dow Inc (DOW), Eastman Chemical Co (EMN), Erie Indemnity Co (ERIE), Fiserv Inc (FI), Freeport-McMoRan Inc (FCX), Gilead Sciences Inc (GILD), Hartford Insurance Group Inc/The (HIG), Hasbro Inc (HAS), Healthpeak Properties Inc (DOC), Intel Corp (INTC), Interpublic Group of Cos Inc/The (IPG), Keurig Dr Pepper Inc (KDP), L3Harris Technologies Inc (LHX), LKQ Corp (LKQ), Merck & Co Inc (MRK), Nasdaq Inc (NDAQ), PepsiCo Inc (PEP), PG&E Corp (PCG), Pool Corp (POOL), Principal Financial Group Inc (PFG), Procter & Gamble Co/The (PG), Republic Services Inc (RSG), Southwest Airlines Co (LUV), Textron Inc (TXT), T-Mobile US Inc (TMUS), Tractor Supply Co (TSCO), Union Pacific Corp (UNP), Valero Energy Corp (VLO), VeriSign Inc (VRSN), West Pharmaceutical Services Inc (WST), Weyerhaeuser Co (WY), Willis Towers Watson PLC (WTW), Xcel Energy Inc (XEL).