Stocks Finish Higher as Megacap Tech Stocks Rally

The S&P 500 Index ($SPX) (SPY) Friday closed up +0.74%, the Dow Jones Industrials Index ($DOWI) (DIA) closed up +0.05%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +1.14%.  June E-mini S&P futures (ESM25) are up +0.73%, and June E-mini Nasdaq futures (NQM25) are up +1.17%. 

Stock indexes on Friday settled moderately higher, with the S&P 500 and Nasdaq 100 posting 3-week highs.  Despite conflicting tariff news on Friday, strength in megacap technology stocks lifted the overall market.  Friday's US economic news also supported stocks after the University of Michigan US Apr consumer sentiment index was unexpectedly revised upward, and 1-year inflation expectations were revised lower.

Mixed tariff news on Friday limited gains in stocks.  On a positive note, Bloomberg reported that the Chinese government is considering suspending the 125% tariff on some US imports, including medical equipment and industrial chemicals like ethane.  However, Chinese Foreign Ministry spokesman Guo Jiakun reiterated that China isn't in negotiations with the US over tariffs and that the US "should not mislead the public." Also, President Trump said the US will not lower tariffs on China unless "they give us something substantial."

The University of Michigan US Apr consumer sentiment index was unexpectedly revised upward by +1.4 points to 52.2 from the previously reported 50.8, stronger than expectations of 50.5.  Also, the University of Michigan US Apr 1-year inflation expectations indicator was revised lower to +6.5% from the previously reported +6.7%, weaker than expectations of an upward revision to +6.8%.

Corporate earnings results on Friday were mixed.  Intel closed down more than -6% after giving an outlook that was weaker than expected.  Also, T-Mobile US closed down more than -11% after reporting fewer-than-expected new mobile phone subscribers in Q1.  In addition, Eastman Chemical closed down more than -6% after forecasting Q2 adjusted EPS below consensus, citing "tariffs between the US and China." On the positive side, Alphabet is up more than +1% after reporting Q1 revenue and profit that exceeded expectations. 

Goldman Sachs reported Friday that foreign investors sold $63 billion of US equities since March 1 and said, "This dynamic poses a substantial risk to equity valuations because foreign investors entered 2025 with a record 18% ownership share of US equities."

The markets are discounting the chances at 11% 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.  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 Friday settled mixed.  The Euro Stoxx 50 rose to a 3-week high and closed up +0.77%.  China's Shanghai Composite closed down -0.07%.  Japan's Nikkei Stock 225 climbed to a 3-1/2 week high and closed up +1.90%.

Interest Rates

June 10-year T-notes (ZNM25) Friday closed up +9.5 ticks.  The 10-year T-note yield fell -4.9 bp to 4.266%.  June T-notes Friday posted moderate gains on carryover support from Thursday on dovish Fed comments when Cleveland Fed President Hammack said clear data could prompt the Fed to cut interest rates in June, and Fed Governor Waller said he would support Fed rate cuts if tariffs led to job losses.  T-note prices also received some support as bond dealers lifted their short hedges put on during this week's Treasury auctions of $213 billion of T-notes and floating-rate notes.   

European government bond yields on Friday were mixed.  The 10-year German bund yield rose +2.1 bp to 2.469%.  The 10-year UK gilt yield fell -2.1 bp to 4.479%.

UK Mar retail sales ex-auto fuel unexpectedly rose +0.5% m/m versus expectations of a -0.5% m/m decline. 

ECB President Lagarde said, "Downside risks to economic growth have increased," highlighting the "major escalation in global trade tensions."

ECB Governing Council member Holzmann said, "So far, the net impact from the US tariff announcements seems to be rather deflationary than inflationary."

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

The Magnificent Seven stocks rallied on Friday and lifted the broader market.  Tesla (TSLA) closed up more than +9%, and Nvidia (NVDA) closed up more than +4%.  Also, Meta Platforms (META) closed up more than +2%, and Amazon.com (AMZN) and Microsoft (MSFT) closed up more than +1%.  In addition, Apple (AAPL) closed up +0.44%.

Alphabet (GOOGL) closed up more than +1% after reporting Q1 revenue ex-TAC of $76.49 billion, stronger than the consensus of $75.4 billion.

Charter Communications (CHTR) closed up more than +11% to lead gainers in the S&P 500 and Nasdaq 100 after reporting Q1 adjusted Ebitda of $5.80 billion, stronger than the consensus of $5.57 billion.

VeriSign (VRSN) closed up +8% after reporting Q1 new domain registrations processed rose +6.3% y/y to 10.1 million.

Digital Realty Trust (DLR) closed up more than +4% after reporting Q1 core FFO/share of $1.77, better than the consensus of $1.71.

Caesars Entertainment (CZR) closed up more than +4% after Texas Capital initiated coverage on the stock with a buy recommendation and a price target of $59. 

AbbVie (ABBV) closed up more than +3% after raising its full-year adjusted EPS estimate to $12.09-$12.29 from a previous estimate of $11.99-$12.19. 

Erie Indemnity (ERIE) closed down more than -11% to lead losers in the S&P 500 after reporting Q1 EPS of $2.65, well below the consensus of $3.19.

T-Mobile US (TMUS) closed down more than -11% to lead losers in the Nasdaq 100 after reporting 495,000 new monthly mobile phone subscribers in Q1, below the consensus of 507,000. 

Intel (INTC) closed down more than -6% after forecasting Q2 revenue of $11.2 billion-$12.4 billion, below the consensus of $12.88 billion. 

Aon Plc (AON) closed down -8% after reporting Q1 revenue of $4.70 billion, below the consensus of $4.83 billion.

Eastman Chemical (EMN) closed down more than -6% after forecasting Q2 adjusted EPS of $1.70-$190, weaker than the consensus of $2.20, citing factors including "tariffs between the US and China." 

Skechers USA (SKX) closed down more than -5% after saying it is not providing guidance and withdrawing its previous annual outlook due to macroeconomic uncertainty. 

Gilead Sciences (GILD) closed down more than -2% after reporting Q1 revenue of $6.67 billion, weaker than the consensus of $6.79 billion. 

Earnings Reports (4/28/2025)

Alexandria Real Estate Equities (ARE), Brown & Brown Inc (BRO), Cadence Design Systems Inc (CDNS), Cincinnati Financial Corp (CINF), Domino's Pizza Inc (DPZ), F5 Inc (FFIV), Nucor Corp (NUE), NXP Semiconductors NV (NXPI), Revvity Inc (RVTY), Roper Technologies Inc (ROP), SBA Communications Corp (SBAC), Teradyne Inc (TER), Universal Health Services Inc (UHS), Waste Management Inc (WM), Welltower Inc (WELL).