Closing Recap

Wednesday, April 30, 2025

In an impressive end of month mark up, U.S. stocks spiked in the final 15-minutes of the close, pushing the S&P 500 into positive territory (a more than 100 point bounce off the lows), extending its impressive winning streak to 7-days ahead of key earnings after the bell from Meta and Microsoft in technology. Futures eased a bit overnight ahead of this morning’s PCE/GDP data. Futures slipped further following weak ADP employment data, a hotter Core PCE advance report and a negative US GDP advance reading. The mid-morning in-line Core PCE year/year change for March just muddied the waters further. The folks at the Fed surely will have fun trying to sort through today’s data and how it is likely to shift with tariff impacts. The market price showed about 58.5% probability of a 25bps cut at the June Fed meeting following the data and a December implied rate of about 3.3%. As a turbulent April comes to an end, the idea of sell in May and go away probably sounds tempting but the Trump tariff headline machine could go either way so perhaps it isn’t an easy call. That said, the sell-side seems to have taken an early move in that direction with the upgrade/downgrade ratio dipping back to 48.3% in April from 56.3% in March, though we still have plenty of earnings-related moves yet to come. On a Fear & Greed basis, sentiment remains weak with the index at 31/100 (Fear) versus 28 (Fear) last week and 21 (Extreme Fear) last month. Mid-morning breadth favored decliners by almost 6:1 as small caps underperformed in a broad decline with IWM (-2.46%) versus SPY (-1.84%) and QQQ (-2.15%). Health Care, Consumer Staples and Real Estate were early outperformers among S&P sector ETFs, while Technology, Energy and Consumer Discretionary led the underperformers with all 11 sectors declining.

In data of note today, on the economic reports @MikeZaccardi noted the Q1 GDP of -0.3% went negative for the first time in three years, while the ADP private payrolls report was the lowest since last July. Also on the GDP report, @NickTimiraos pointed out that Real GDP fell -0.3% in Q1, what he termed a better measure of underlying domestic demand (real final sales to private domestic purchasers) grew 3% at an annualized rate. On the wild ride in April, @bespokeinvest noted the S&P 500 and six sectors dropped at least 10% month-to-date through 4/8 but rallied at least 10% from 4/8 though yesterday. Perhaps buy the dip is not dead yet. Lastly, with the recent rally @isabelnet_sa noted a six-day S&P 500-win streak has preceded positive annual performance in 15 of 16 years since 2005 with only 2018 as the exception.

Heading into the final hour of trading, stocks had not managed to claw their way back to green but were off the lows. There was a bit of see-saw action following headlines out of China indicating the US had been proactively reaching out through various channels to negotiate on tariffs, but the source was quickly viewed as unreliable, and the initial bounce was sold. Breadth improved but still favored decliners by a bit more than 2:1 as small caps continued to underperform with IWM down versus SPY and QQQ. Sector performance also improved versus the morning with Consumer Staples, Health Care and Materials as outperformers among S&P sector ETFs, while Utilities, Consumer Discretionary and Energy led the underperformers with two sectors in the green versus none early in the session. Growth and value both struggled but value outperformed modestly with the Russell 1000 Value down 0.58% versus its Growth counterpart losing 0.78%.

• Chicago PMI April index 44.6 below consensus 45.5 and prior 47.6.
• US advance Q1 GDP -0.3% (1st negative adv reading since 2022) and US advance Q1 final sales -2.5%; advance Q1 consumer spending +1.8%, advance Q1 GDP deflator +3.7% (vs. consensus +3.0%), advance Q1 PCE price index +3.6% and advance Q1 core PCE +3.5% (vs. consensus +3.3%).
• The U.S. Q1 employment cost index +0.9% (consensus +0.9%) vs Q4 +0.9% (prev +0.9%); Q1 wages/salaries +0.8% vs Q4 +1.0% (prev +0.9%); Q1 benefit costs +1.2% vs Q4 +0.8% (prev +0.8%).
• March personal saving rate 3.9% vs Feb 4.1%, March personal income +0.5% (vs. consensus +0.4%) vs Feb +0.7% (prev +0.8%) and March Personal Spending +0.7% (consensus +0.5%) vs Feb +0.5% (prev +0.4%); US March real consumer spending +0.7% vs Feb +0.1% (prev +0.1%).
• Pending Home Sales (M/M) for March rose +6.1% vs. est. +1.0% and vs prior +2.0%); Pending Home Sales NSA (Y/Y) fell (-0.1%) vs. prior (-7.2%).
• Monthly March overall PCE price index unchanged, in line with consensus vs Feb +0.4% (prev +0.3%) and March core PCE price index unchanged (vs. est. +0.1%) vs Feb +0.5% (prev +0.4%). The March y/y PCE price index +2.3% (vs. est. +2.2%) vs Feb +2.7% and core +2.6% (vs. est. +2.6%) vs Feb +3.0%.
• China’s official purchasing managers’ index (PMI) fell to 49.0 in April versus 50.5 in March, the lowest reading since December 2023 and missing a median forecast of 49.8. The non-manufacturing PMI, which includes services and construction, fell to 50.4 from 50.8, but remained above the 50-mark separating growth from contraction

• June WTI crude futures settled down $2.21/bbl, or -3.66%, to $58.21 on multiple concerns. This morning’s GDP contraction reading was first hit to the demand picture, but later headlines indicating Saudi Arabia recently had notified allies it could sustain a prolonged period of low oil prices generated another leg lower as it indicated no supply relief is imminent. Brent Crude futures settle at $63.12/bbl, down $1.13, 1.76%.
• Treasury yields were flat on the day but declined in the month. The 10-yr yield fell 7.1 bps this month to 4.173%, down 3 in the last 4 months and off the April highs of 4.5%. Today’s yield is the sixth lowest this year and is off 62.8bps from its 52-week high of 4.802% hit Monday, Jan. 13, 2025. The shorter-term 2-year yield fell -29.2bps this month to 3.619%, now down 4-consecutive months (longest streak of falling yields since Sept. 2024 when the yield fell for five straight months). The 2-year yield is off 136.4bps points from its 52-week high of 4.983% hit Wednesday, May 29, 2024.

• In Retail: GAP, NKE, CRI and VSCO were all downgraded to Equal Weight from Overweight at Wells Fargo and lowered price targets while upgraded shares of GOOS, LEVI and VFC; China’s Shein mulls US restructuring if US keeps China tariffs, according to a report I the Financial Times.  WRBY was upgraded to Neutral from Sell at Citigroup but lower tgt to $17 from $23 saying with the shares down 41% since February 5, the market has priced in the company’s near-term tariff pressures. In pet retail, Truist downgraded both CENTA and FRPT to Hold from Buy as believe the pet food and products categories will post tepid to no growth for 2025.
• In Food & Beverages: MDLZ 1Q EPS of $0.74 vs Consensus $0.66 on largely in-line sales; organic revs +3.1% vs Consensus +3.5%; Q1 gross margins beat by 100 bps and operating margins beat by 200 bps; reaffirming both FY organic revenue growth (+5%) and EPS (constant F/x) of +10%.

• Online Travel/Lodging: BKNG reported solid 1Q results with revenue and adj. EBITDA beating expectations/2Q guidance came in above consensus, though ex: the 4-point expected benefit from FX, top-line guidance was broadly in-line with estimates/full-year FX is shifting from an expected ~3 point headwind to ~2 point tailwind. ABNB was upgraded to Buy from Neutral at Davidson (tgt to $155 from $170) and adding it to the team’s "Best-of-Breed Bison" initiative, which focuses on long-term best in class companies citing relative resilience of online leisure travel spending; the company’s spot as the category leader in alternative accommodations supply; a sustained period of extensible product/feature launches.
• In Leisure Products: CWH reported Q125 results with adj. EBITDA of $31mm coming ahead of the Street’s $28m, but revenue of $1.41B falling just shy of its $1.46B and the $1.42B Consensus est. Comp sales growth (+6% YoY) essentially matched its expectations
• In Cruise lines: NCLH shares dropped as Q1 EPS of $0.07 missed ests. $0.09 on revenues 1% light while guides 2Q EBITDA about 1% light on yields of +2.5%; reaffirming FY EPS and EBITDA but is lowering the FY yield guide to +2-3% vs prior +3%, which reflects recent booking trends and changes in the macro.
• In Autos: Ford (F) was upgraded to Peer Perform from Underperform at Wolfe Research; DAN Q1 EBITDA and sales beat as guides sales to high end of $9.53-$10.03B range, above consensus and reaffirms EBITDA guidance; STLA suspended its guidance for a moderate recovery this year, after a profit drop in 2024, due to the uncertain impact of President Trump’s tariffs, and said it would review capital spending plans. PAG the latest auto dealer to miss as Q1 adj net income $226.3M missed the $238.6M estimate on lower revs.

• In Utilities: Jefferies said they expect pricing stemming from PJM’s next capacity auction in July is likely to act as a catalyst for shares of IPPs. They note that Persistent demand growth and an ongoing derating of existing capacity supports continued price inflation. They find it likely this auction clears at a new "cap" of $329 from $325. Results are expected by 7/22, and they expect them to be positive for TLN, CEG, VST and CPX.

• In Insurance: ACGL Q1 operating EPS of $1.54 beat consensus of $1.32 on stronger favorable reserve development, lower-than-expected catastrophe losses, partially offset by lower other income and lower-than-expected NII; UNM Q1 operating EPS of $2.04 comes below estimates as benefit ratios miss in Disability and expenses come in higher than expected.
• In Mortgage/Real Estate Services; CSGP reported Q1 revenue finishing largely in line with consensus (ex: Matterport deal) and adjusted EBITDA, finishing ahead of the Street’s expectations while full-year guidance was broadly in line with management’s previous outlook.
• Financial Services/Tech: FRSH shares rose on results, as Q1 non-GAAP EPS of $0.18 (consensus $0.13) and a 23.6% operating margin on revenue of $196M (consensus $192M), up 19% y/y, down from 22% last quarter; and billings of $203M (consensus $198M), up 16% y/y. FICO Scores revenues beat estimates as Mortgage Originations revenue grew 48% y/y in Q1, Auto Originations revs accelerated to 16% y/y but RBC said below Buy side ests, while Software Platform ARR growth moderated to 17% and software revs missed estimates.
• In Lending: LC Q1 earnings miss and disappointing guidance as the pre-provision net revenue guide is 9% below consensus at the midpoint as LendingClub expects higher marketing and technology investments through the rest of 2025

• BXP Q1 FFO $1.64 vs. est. $1.65; Q1 revenue rose 3.1% y/y to $865.2M vs. est. $832.76M; narrows FY25 FFO view to $6.80-$6.92, from $6.77-$6/95 and vs. consensus $6.90; total portfolio occupancy for the first quarter was 86.9%.
• EQH Q1 operating EPS was $1.30, below consensus at $1.47 while normalized EPS at $1.35 as the miss was driven mainly by higher mortality, but IR and Legacy also had lower fees. Unlike last quarter, EQH did not reiterate its 12-15% EPS growth guide for 2025.
• EQR Q1 FFO $0.95 vs. est. $0.93; Q1 revs $760.81M vs. est. $769.44M; Q1 same store revenues increased 2.2% y/y, same store expenses increased 4.1% and same store Net Operating Income (NOI) increased 1.3%; resident Turnover of only 7.9% in the first quarter of 2025 was the lowest in its history.
• EXR Q1 core FFO $2.00, vs. est. $1.96; Q1 revs $820M vs. est. $823.42M; Q1 same-store revenue increased by 0.3% and same-store net operating income decreased by (-1.2%) y/y; sees FY25 core FFO $8.00-$8.30, vs. consensus $8.16.
• ESS Q1 core FFO $3.97 vs. est. $3.92; Achieved same-property revenue and net operating income ("NOI") growth of 3.4% and 3.3%, respectively y/y; Increased the dividend by 4.9% to an annual distribution of $10.28 per common share; reaffirmed full-year ranges.
• KRG Q1 core FFO/SHR $0.53 vs est. $0.51 on revs $221.8Mm vs est. $211.07Mm; guides FY core FFO/SHR $2.00-2.06 vs est. $2.06.
• REG Q1 FFO $1.15 vs. est. $1.14; Q1 increased Same Property NOI y/y, excluding lease termination fees, by 4.3%. Same Property percent leased ended the quarter at 96.5%, an increase of 100 basis points y/y, and Same Property percent commenced ended the quarter at 93.5%, up 170 basis points y/y.

• JNJ noted the FDA approved its drug to treat patients aged 12 years and older with an immune-mediated disorder; J&J acquired the drug with its $6.5 billion buyout of autoimmune disease specialist Momenta in 2020.
• NVS agreed to buy RGLS for up to $1.7B to gain access to its experimental kidney disease drug, paying Regulus upfront $7 per share in cash, or about $800M, which represents a premium of about 108% while Regulus is also eligible to receive an additional $7 per share contingent upon certain regulatory milestones.

• In Healthcare Services: GEHC reported a beat on the top and bottom line for Q1, announces $1B share repurchase program, cuts FY25 adjusted EPS view to $3.90-$4.10 from $4.61-$4.75; backs FY25 organic revenue growth of 2%-3% year-over-year; cuts FY25 free cash flow view to at least $1.2B (from $1.75B).
• In Medical Supplies/Equipment: BLCO shares fell on Q1 adj EPS loss missing estimates, while revs of $1.14B rose y/y, but missed estimates on mixed guidance (raised FY25 revs outlook but cut its adjusted EBITDA view to $850M-$900M from $900M-$950M.
• Healthcare Facilities: OPCH upgraded to Buy from neutral at UBS and raise PT to $40 from $38 saying Q1 results evidenced strong earnings momentum, despite a $5M impact from STELARA, which was more muted than UBS anticipated given inventory management actions taken by OPCH.

• In Transports: WERN Q1 reported a Q1 miss driven by elevated insurance costs, extreme weather, and accelerated IT spend, all coupled with operational inefficiencies and an ongoing truckload market trough; XPO shares outperformed in LTL space following earnings results.
• In Building Products & Materials: VMC Q1 EPS and adj EBITDA beat in qtr on in line revenue while reaffirmed FY adj EBITDA guidance; MLM Q1 in line with pre-announcement on 4/10 and reaffirmed FY numbers; SWK Q1 EPS beat on better sales while FCF loss came in worse than expectations; GNRC Q1 EPS beat on better sales while widens FY net sales guidance to flat to +7% (vs. prior +3-7%) and widens FY EBITDA margin.

• In the Steel sector (X, NUE, STLD, RS): Goldman Sachs noted Weekly US steel industry production was up ~1% vs prior week with production above 1.7mn tons for the first time since September 2024. US HRC spot pricing rolled in April, down almost 2% month-to-date but still up ~11% YoY.
• In Paper & Packaging: IP firm said Q1 sales rose 28% y/y to $5.9B below ests $6.2B and EPS loss of (-$0.23) vs. est. $0.37 saying overall market demand was softer than anticipated in both the North American and Europe, Middle East and Africa regions, and demand hit as consumers reined in spending amid persistent inflation and fears of a recession due to a global trade war; shares of SON declined on Q1 miss as EPS $1.38 vs. est. $1.41; Q1 revs $1.71B vs. est. $2.04B; reaffirmed full-year guidance.

• In Internet: META to report earnings after the close tonight; SNAP shares fell as 1Q advertising revenue +9% y/y, same as 4Q, with subscription driving 1Q 1% above Street, while EBITDA $44M above. Lack of 2Q guide and Cloud costs/DAU guidance unchanged, causing GM pressure weighed on shares (slow ad growth weighed on names like META, RDDT, PINS, others). APP shares fell after Edgewater comments on APP, trimming estimates with subtle deceleration apparent in gaming & Ecom.

• NTAP was upgraded to Overweight from EW at Barclays with $115 PT noting the company is currently trading well below its historic ranges despite being in a better position with more recurring revenue mix and cites an attractive valuation and the company’s accelerating cloud business with higher margin.

• SMCI shares tumbled after saying expects Q3 revenue between $4.5B-44.6B and EPS $0.29-$0.31, below prior outlooks of $5B-46B and $0.46-$0.62 (and ests $5.4B $0.53), after saying during Q3 some delayed customer platform decisions moved sales into Q4 (weighed on AI server makers DELL, VRT, HPE)
• HDD disk drive stocks STX and WDC both outperform on earnings and results; STX Q3 EPS $1.90 vs. est. $1.74; Q3 revs $2.16B vs. est. $2.13B on better guide while WDC guides Q4 revs $2.45B and adj. EPS outlook of $1.45, above the Street at $2.38B/$1.16 after slightly weaker Q3 revs.
• Seaport Global initiated a few semis with a Buy on AVGO ($230 tgt) and Buy on AMD ($110 tgt), and a Sell on NVDA ($100 tgt) and INTC ($18 tgt).