Stocks Rally as Bond Yields Fall on Fed-Friendly US Economic Reports

The S&P 500 Index ($SPX) (SPY) Tuesday closed up +0.58%, the Dow Jones Industrials Index ($DOWI) (DIA) closed up +0.75%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +0.61%.  June E-mini S&P futures (ESM25) are up +0.60%, and June E-mini Nasdaq futures (NQM25) are up +0.56%. 

Stock indexes rallied on Tuesday, with the S&P 500 and Nasdaq 100 posting 3-1/2 week highs and the Dow Jones Industrials posting a 2-week high. Stocks erased early losses on Tuesday and pushed higher after the weaker-than-expected US job openings and consumer confidence reports knocked the 10-year T-note yield down to a 3-week low and bolstered the chances the Fed will cut interest rates. 

Stocks also found support Tuesday from signs of easing trade tensions.  President Trump signed an executive order easing auto tariffs that would lift levies on foreign parts for cars and trucks made in the US, giving imported autos a break from separate tariffs on aluminum and steel.  The change in tariffs would allow automakers to secure a partial reimbursement for tariffs on imported auto parts based on the value of their US car production, with reimbursements declining over time to encourage supply chain shifts to the US.

Corporate news Tuesday was mixed for stocks.  On the positive side, SBA Communications closed up more than +6% to lead gainers in the S&P 500 after raising its full-year revenue outlook.  Also, Honeywell International closed up more than +5% after reporting better-than-expected Q1 adjusted EPS and forecasting Q2 adjusted EPS above consensus.  On the negative side, NXP Semiconductors NV fell more than -6% to lead chip stocks lower after announcing CEO Sievers will retire by the end of this year and warned it was navigating “a very uncertain environment” due to tariffs. Also, Regeneron Pharmaceuticals fell more than -7% after reporting Q1 revenue below consensus. 

The US Mar trade deficit unexpectedly widened to a record -$162.0 billion, wider than expectations of -$145.0 billion and a negative factor for Q1 GDP.

The US Feb S&P CoreLogic composite 20 home price index rose +4.5% y/y, weaker than expectations of +4.7% y/y.

US Mar JOLTS job openings fell -288,000 to a 6-month low of 7.192 million, showing a weaker labor market than expectations of 7.500 million.

The Conference Board US Apr consumer confidence index fell -7.3 to a nearly 5-year low of 86.0, weaker than expectations of 88.0.

Market attention this week will focus on news of US tariffs and trade negotiations.  On Wednesday, Q1 GDP is expected at +0.4% (q/q annualized), with the Q1 core PCE price index up +3.0%.  Wednesday also brings Mar personal spending (expected +0.6% m/m), Mar personal income (expected +0.4% m/m), and the Mar core PCE price index (expected unchanged m/m and +2.2% y/y).  Finally, Microsoft and Meta Platforms release their quarterly earnings on Wednesday. On Thursday, the Apr ISM manufacturing index is expected to fall -1.0 to 48.0.  Thursday also brings earnings results from Amazon.com and Apple. Friday brings Apr nonfarm payrolls (expected +130,000) and the Apr unemployment rate (expected unchanged at 4.2%). Also, Apr average hourly earnings are expected to climb +0.3% m/m and +3.9% y/y.   

The markets are discounting the chances at 10% 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.  So far, just over a third of S&P 500 companies have reported quarterly results, with 75% beating estimates.  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 Tuesday settled lower.  The Euro Stoxx 50 closed down -0.17%.  China’s Shanghai Composite fell to a 1-week low and closed down -0.059%.  Japan’s Nikkei Stock 225 did not trade on Tuesday, with markets in Japan closed for the Showa Day holiday.

Interest Rates

June 10-year T-notes (ZNM25) Tuesday closed up +8 ticks.  The 10-year T-note yield fell -3.6 bp to 4.172%.  June T-notes Tuesday shook off early losses and rallied to a 3-week high, and the 10-year T-note yield fell to a 3-week low of 4.162%. Weaker-than-expected US job openings and consumer confidence reports Tuesday were dovish for Fed policy and sparked a rally in T-notes. 

T-notes on Tuesday initially moved lower as easing trade tensions reduced safe-haven demand for T-notes after the Wall Street Journal reported that President Trump is easing tariffs on foreign parts for cars and trucks made inside the US.

European government bond yields on Tuesday moved lower.  The 10-year German bund yield fell -2.4 bp to 2.497%.  The 10-year UK gilt yield fell to a 3-week low of 4.459% and finished down -2.9 bp to 4.480%.

The Eurozone Apr economic confidence index fell -1.4 to a 4-month low of 93.6, weaker than expectations of 94.5.

The ECB Mar 1-year CPI inflation expectations unexpectedly rose to an 11-month high of 2.9% from 2.6% in Feb, stronger than expectations of a decline to 2.5%.  The ECB Mar 3-year CPI expectations unexpectedly rose to a 1-year high of 2.5% from 2.4% in Feb, stronger than expectations of a decline to 2.3%.

ECB Governing Council member Stournaras said the ECB should proceed carefully with additional interest rate cuts due to the uncertain global environment.

Swaps are discounting the chances at 97% for a -25 bp rate cut by the ECB at the June 5 policy meeting.

US Stock Movers

SBA Communications (SBAC) closed up more than +6% to lead gainers in the S&P 500 after raising its full-year revenue outlook to $2.72 billion-$.76 billion from a previous estimate of $2.69 billion-$2.74 billion 

Honeywell International (HON) closed up more than +5% to lead gainers in the Dow Jones Industrials after reporting Q1 adjusted EPS of $2.51, stronger than the consensus of $2.21 and forecast Q2 adjusted EPS of $2.60-$2.70, better than the consensus of $2.57.

Cadence Design Systems (CDNS) closed up more than +5% to lead gainers in the Nasdaq 100 after raising its full-year adjusted EPS forecast to $6.73-$6.83 from a previous forecast of $6.65-$6.75.

Okta (OKTA) closed up more than +7% after S&P Dow Jones Indices announced that the stock will replace Berry Global in the S&P MidCap 400 before trading opens on May 1.

Crown Holdings (CCK) closed up more than +7% after reporting Q1 net sales of $2.89 billion, stronger than the consensus of $2.82 billion.

Zebra Technologies (ZBRA) closed up more than +5% to lead gainers in the S&P 500 after reporting Q1 adjusted EPS of $4.02, stronger than the consensus of $3.63.

Sherwin-Williams (SHW) closed up more than +4% after reporting Q1 adjusted EPS of $2.25, better than the consensus of $2.16.

Hims & Hers Health (HIMS) closed up more than +23% after Novo Nordisk partnered with it to offer its weight loss drug Wegovy at a reduced price through the NovoCare direct-to-consumer pharmacy platform.

NXP Semiconductors NV (NXPI) closed down more than -6% to lead chip stocks lower after announcing CEO Sievers will retire by the end of this year and warned it was navigating “a very uncertain environment” due to tariffs.  Also, On Semiconductor (ON) closed down more than -2%.  In addition, Microchip Technology (MCHP), Micron Technology (MU), and GlobalFoundries (GFS) closed down more than -1%.

Regeneron Pharmaceuticals (REGN) closed down more than -7% to lead losers in the S&P 500 and Nasdaq 100 after reporting Q1 revenue of $3.03 billion, well below the consensus of $3.25 billion. 

Brown & Brown (BRO) closed down more than -5% after reporting Q1 organic revenue rose 6.50%, below the consensus of 6.62%.

Spotify (SPOT) is down more than -6% after reporting Q1 monthly active users of 678 million, below the consensus of 679.04 million, and forecast Q2 monthly active users of 689 million, weaker than the consensus of 694.38 million.  

Alexandria Real Estate Equities (ARE) closed down more than -5% after cutting its full-year EPS estimate to $1.36-$1.56 from a previous estimate of $2.57-$2.77, well below the consensus of $2.62.   

UnitedHealth Group (UNH) closed down more than -2% after it was accused in a class action lawsuit that it mismanaged its $22 billion retirement plan by using forfeited 401K funds for its own benefit instead of reducing workers’ expenses.

Earnings Reports (4/30/2025)

Aflac Inc (AFL), Albemarle Corp (ALB), Align Technology Inc (ALGN), Allstate Corp/The (ALL), Amcor PLC (AMCR), American Electric Power Co Inc (AEP), American Water Works Co Inc (AWK), ANSYS Inc (ANSS), Automatic Data Processing Inc (ADP), AvalonBay Communities Inc (AVB), Caterpillar Inc (CAT), CH Robinson Worldwide Inc (CHRW), Cognizant Technology Solutions (CTSH), Crown Castle Inc (CCI), eBay Inc (EBAY), Equinix Inc (EQIX), Everest Group Ltd (EG), Garmin Ltd (GRMN), GE HealthCare Technologies Inc (GEHC), Generac Holdings Inc (GNRC), Globe Life Inc (GL), Hess Corp (HES), Host Hotels & Resorts Inc (HST), Humana Inc (HUM), Illinois Tool Works Inc (ITW), International Paper Co (IP), Invitation Homes Inc (INVH), KLA Corp (KLAC), Martin Marietta Materials Inc (MLM), Meta Platforms Inc (META), MetLife Inc (MET), MGM Resorts International (MGM), Microsoft Corp (MSFT), Mid-America Apartment Communities (MAA), Norwegian Cruise Line Holdings (NCLH), PPL Corp (PPL), Prudential Financial Inc (PRU), PTC Inc (PTC), Public Service Enterprise Group (PEG), Public Storage (PSA), QUALCOMM Inc (QCOM), Stanley Black & Decker Inc (SWK), Super Micro Computer Inc (SMCI), Trane Technologies PLC (TT), UDR Inc (UDR), Ventas Inc (VTR), VICI Properties Inc (VICI), Vulcan Materials Co (VMC), Western Digital Corp (WDC), Yum!  Brands Inc (YUM).