Markets Close Higher Amid Mixed Economic Signals and Earnings

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

Stock indexes closed moderately higher on Friday, with the S&P 500 and Nasdaq 100 reaching three-week highs. Strength in major technology stocks played a key role in elevating the market, despite mixed tariff news. Positive economic data also bolstered market confidence as the University of Michigan’s April consumer sentiment index was revised upward, with one-year inflation expectations moving lower.

Mixed Tariff News Limits Gains

Conflicting tariff updates contributed to a cap on stock market gains. Bloomberg reported that the Chinese government may suspend the 125% tariff on certain U.S. imports, including medical equipment and industrial chemicals like ethane. However, Chinese Foreign Ministry spokesman Guo Jiakun stated that China is not currently negotiating tariffs with the U.S., cautioning against public misinterpretation. President Trump also remarked that tariff reductions would not occur without substantial concessions from China.

Economic Indicators Reflect Consumer Sentiment

The University of Michigan’s consumer sentiment index for April was unexpectedly revised upward by +1.4 points to 52.2, surpassing expectations of 50.5. Additionally, one-year inflation expectations were adjusted down to +6.5% from +6.7%, contrary to predictions of an upward shift to +6.8%.

Corporate Earnings Mixed as Companies Report Results

Corporate earnings on Friday showed a mixed response. Intel’s shares dropped over -6% following a weaker-than-expected outlook. Similarly, T-Mobile US fell by more than -11% after reporting fewer new mobile phone subscribers than anticipated in Q1. Eastman Chemical also declined over -6% after adjusting its Q2 EPS forecast downward due to tariffs. On a positive note, Alphabet’s stock rose by more than +1% after exceeding revenue and profit expectations for Q1.

Goldman Sachs noted that foreign investors sold $63 billion in U.S. equities since March 1, highlighting a potential risk to equity valuations as foreign ownership stood at a record 18% of U.S. equities at the start of 2025.

Market Expectations for Rate Cuts

The markets currently assign an 11% chance of a -25 basis point rate cut following the FOMC meeting on May 6-7. As Q1 earnings season progresses, Bloomberg Intelligence indicates a consensus for S&P 500 earnings growth of +6.7%, a decrease from prior expectations of +11.1%. Projections for full-year 2025 corporate profits now predict an increase of +9.4%, down from +12.5% in early January.

Global Market Trends

Overseas markets experienced mixed outcomes on Friday. The Euro Stoxx 50 rose to a three-week high, closing up +0.77%. Conversely, China’s Shanghai Composite declined by -0.07%. Japan’s Nikkei 225 advanced to a 3.5-week high, with a closing increase of +1.90%.

Interest Rates and Bond Market Insights

June 10-year T-notes (ZNM25) rose by +9.5 ticks. The yield on 10-year T-notes fell by -4.9 basis points to 4.266%. Gains in T-notes were supported by dovish comments from Cleveland Fed President Hammack, who indicated a rate cut could occur in June based on clear data. Similarly, Fed Governor Waller expressed support for rate cuts if tariffs resulted in job losses. Bond prices also received support as dealers adjusted their short hedges from recent Treasury auctions.

In Europe, government bond yields displayed varied movements. The 10-year German bund yield increased by +2.1 basis points to 2.469%, while the 10-year UK gilt yield decreased by -2.1 basis points to 4.479%.

UK Retail Sales Show Unexpected Gain

UK retail sales excluding auto fuel rose unexpectedly by +0.5% month-over-month, contrary to forecasts anticipating a -0.5% decline. ECB President Lagarde pointed to heightened downside risks to economic growth due to escalating global trade tensions, while ECB Governing Council member Holzmann noted the deflationary impact from U.S. tariff announcements.

Swaps currently indicate a 98% chance of a -25 basis point rate cut by the ECB during its policy meeting on June 5.

US Stock Movements and Earnings Reports

The “Magnificent Seven” tech stocks significantly contributed to Friday’s market rally. Tesla (TSLA) and Nvidia (NVDA) saw gains of more than +9% and +4%, respectively. Other notable performers included Meta Platforms (META), Amazon (AMZN), Microsoft (MSFT), and Apple (AAPL) with increases ranging from +0.44% to +2%.

Alphabet (GOOGL) outperformed expectations with Q1 revenue ex-TAC of $76.49 billion. Charter Communications (CHTR) surged more than +11% after reporting a stronger-than-expected Q1 adjusted EBITDA of $5.80 billion. VeriSign (VRSN) and Digital Realty Trust (DLR) also saw strong gains after reporting favorable Q1 results.

On the downside, Erie Indemnity (ERIE) led the S&P 500 in losses, dropping more than -11% after reporting underwhelming Q1 EPS. T-Mobile US fell similarly as it reported fewer new subscribers than analysts expected. Other companies such as Intel (INTC), Aon Plc (AON), and Eastman Chemical (EMN) also faced declines amidst disappointing earnings forecasts and respective market reactions.

Earnings Reports Due on 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).

On the date of publication, Rich Asplund did not hold any positions in the securities mentioned. All information in this article is purely for informational purposes. For more details, please refer to the Barchart Disclosure Policy here.

The views expressed in this article are those of the author and do not necessarily reflect those of Nasdaq, Inc.