Mid-Morning Look

Wednesday, April 23, 2025

U.S. stocks are jumping, adding to big gains on Tuesday after President Trump appeared to soften his tone on the Fed and China, lifting major averages between 2%-4%. The S&P 500 (SPX) topped the 4/14 hi of 5,459.46 on this morning spike higher (hit a high of 5,469.69) while the 4/9 high (+9.5% day) of 5,481.34 stands above. The CBOE Volatility index (VIX) hitting new lows, down over -10% to 27.26 – the lowest since 4/3. Even a bigger move in the Nasdaq (up over 4%) amid a surge in Mag 7 stocks, led by TSLA after Musk noted will cut DOGE duties greatly by May (reported big Q1 miss though), and a surge in semiconductor stocks (SOX +5%) on an AI related bounce. Energy stocks are slipping (XOM, CVX) after Kazakhstan said it will prioritize national interests over those of the OPEC+ alliance, a move that risks fueling further tensions within the cartel. Overnight saw prices rally after bigger than expected inventory drawdowns reported by API in the US. Consumer Staples also weaker given weakness in food stocks. Industrials, Materials, Technology, Consumer Discretionary among best gainers on China trade hopes given trump comments (more below) and Financials also posting big gains. Dow Transports get a boost, rising more than 4% after earnings results from trucker ODFL and rail NSC top consensus, aided by a lift in airline stocks on the softened tone of tariffs and trade deals by the President. Bitcoin surging above $93K, gold tumbles -3.8% off recent record highs, oil prices slump and Treasury yields roll lower.

President Donald Trump said China tariffs will drop if the two countries can reach a deal; Trump said, “145% is too high, it will come down substantially.” Trump’s comments came after Bessent told investors in a closed-door summit Tuesday that he sees a de-escalation in the US-China tariff situation. Trump expressed optimism that a trade deal with China could “substantially” cut tariffs, suggesting that a final deal will not “be anywhere near” current tariff rates. China will be very happy said trump, “we’re going to be very good with China”; “they have to make a deal, if they don’t make a deal we’ll set the deal.” Also in trade talk headlines, Reuters reported, citing State Media, Vietnam notes it has started trade talks with U.S. In data, new home sales surged In March as mortgage rates tumbled (though yields have since bounced). The President also said he has no intention of firing fed Chair Powell; Trump said he would like to see him be a little more active in terms of his idea to lower interest rates; this is a perfect time to lower rates.

The Wall Street Journal this morning reported the Trump administration is considering slashing its steep tariffs on Chinese imports — in some cases by more than half — in a bid to de-escalate tensions with Beijing. President Trump hasn’t made a final determination, the people said, adding that the discussions remain fluid, and several options are on the table. One senior White House official said the China tariffs were likely to come down to between roughly 50% and 65%. The administration is also considering a tiered approach similar to the one proposed by the House committee on China late last year: 35% levies for items the U.S. deems not a threat to national security, and at least 100% for items deemed as strategic to America’s interest.

• March single-family home sales rose 7.4% to 0.724M unit annual rate, (vs. consensus 0.680M) as March home sales Northeast -22.2%, Midwest +3.0%, South +13.6%, West -1.4%; March new home supply 8.3 months’ worth at current pace vs Feb 8.9 months; median sale price $403,600, -7.5% from March 2024 ($436,400).

• In Utilities: OKLO said OpenAI Chief Executive Sam Altman is stepping down as chairman of nuclear-energy startup Oklo, removing a conflict of interest and opening up the opportunity for future deals between the companies; FE was upgraded to Neutral from Underperform at Bank America saying pending Ohio legislation presents near-term transition risk, but the firm thinks Ohio rate case downside risk is priced in and believes Ohio legislation could prove to be a net positive to FirstEnergy’s regulated business long term. NEE reported a Q1 beat, boosted by rate hikes at its electric utility and increased power demand.
• In Software: SAP reported solid Q1 results earlier tonight and reaffirmed its full-year guidance, which drove shares higher; MANH also delivered strong Q1 and reaffirmed the FY25 guidance lifting shares as well as both issued comments that mission-critical software spend will hold up better than feared. PEGA shares jump on results as Q1 adj EPS $1.53 tops est. $0.49 on revs $475.633Mm vs est. $356.6Mm. Piper lowered ests and price targets in Cloud App software sector across the board to reflect increasing near term headwinds to growth from tariff, policy, and AI adoption hurdles while upgraded BL to Neutral and downgraded ORCL to Neutral (from OW) saying could pressure margin and free cash flow in fiscal 2026 on cloud mix/rising capex.

• BSX +6%; Q1 adj EPS $0.75 topped consensus est. $0.67; Q1 revs $4.66B vs. est. $4.57B; guides Q2 EPS $0.71-$0.73 vs. est. $0.71 and revs seen up 17.5%-19.5%.
• NVAX +22%; after the company said its Biologics License Application for its COVID-19 vaccine remains approvable based on conversations with the FDA.
• PM +4%; Q1 results top ests and raised its annual EPS view to $7.36-$7.49 from prior view $7.04-$7.17 thanks to its flagship heated tobacco product IQOS and products like nicotine pouch brand ZYN.
• SAP +9%; Q1 adj operating profit of 2.5B euros ($2.86 billion) topped ests of 2.22B euros after a result of 1.53B euros a year earlier; Q1 total revenue of euro 9.01B.
• SMMT +19%; after saying its lung cancer drug candidate, ivonescimab, showed that it improved patients’ longevity without the disease worsening in a late-stage trial, meeting the primary goal of progression-free survival when tested in combination with platinum-based chemotherapy.
• TSLA +7%; after Elon Musk pledges to retreat “significantly” from his US government work to concentrate on the electric-vehicle company as his work with DOGE is “mostly done”; also reported 1Q EPS and sales that missed Street expectations.
• VRT +11%; after beating 1Q25 top-/bottom-line consensus forecasts, reported better-than-feared 1Q orders +135% y/y and +21% q/q), and raised the FY25 organic sales outlook; maintained FY25 EBIT/EPS/FCF guidance midpoints (widening guidance for tariff scenarios) and guided 2Q EPS below the Street on tariff cost impacts,
• XPEV +9%; after the Chinese electric vehicle maker unveiled a fast-charging variant of its P7+ sedan model at the 2025 Shanghai auto show.

• CVX -1%; downgraded by two Wall Street analysts and falls with weakness in oil prices.
• ENPH -10%; after the company missed Q1, and Q2 guide came in below estimates mainly due to weaker US demand and import tariffs starting later this quarter; guides Q2 revs $340-380Mm vs est. $376.01Mm.
• OTIS -6%; reported mixed Q1 results as EPS beat/sales missed while raises year rev outlook.