Stocks Rise on Solid Earnings as Qualcomm and Ford Face Challenges
The S&P 500 Index ($SPX) (SPY) is up +0.29%, while the Dow Jones Industrials Index ($DOWI) (DIA) has increased by +0.12%. The Nasdaq 100 Index ($IUXX) (QQQ) is also higher, gaining +0.18%. March E-mini S&P futures (ESH25) are up by +0.21%, and March E-mini Nasdaq futures (NQH25) have increased by +0.16%.
Positive Earnings Boost Stock Indexes
Today, stock indexes are showing modest gains following several positive earnings reports. Tapestry surged over +16% after exceeding expectations with its Q2 adjusted EPS and raising its full-year EPS forecast. Similarly, YUM! Brands climbed more than +7% thanks to Q4 worldwide comparable sales that beat forecasts. AstraZeneca Plc also saw its stock rise over +3% after reporting a Q4 EPS that surpassed expectations.
Challenges for Qualcomm and Ford
On the downside, Qualcomm, the leading smartphone processor company, fell more than -4% amid fears of a slowdown in mobile phone demand. Ford Motor Company experienced a decline of over -6% after cautioning that profits may decrease. Skyworks Solutions faced an even steeper drop of over -25% after announcing heightened competition in the semiconductor sector.
Mixed Economic Signals
Today’s U.S. economic data provided mixed signals for stocks. Weekly jobless claims rose by +11,000 to 219,000, which was higher than the expected 213,000, indicating a softer labor market. Meanwhile, Q4 nonfarm productivity increased by +1.2%, aligning with projections, while unit labor costs rose +3.0%, falling short of the expected +3.4%.
Comments from Treasury Secretary Bessent provided some support for the market, emphasizing the administration’s goal to lower the Treasury 10-year yield through expanded energy supply measures aimed at reducing inflation.
Earnings Season in Full Effect
With earnings season underway, Amazon.com is set to release its quarterly results after today’s market close. Analysts from Bloomberg Intelligence predict that S&P 500 earnings will have grown by +7.5% year-over-year in Q4, marking the second-highest pre-season forecast in three years. Current market expectations show a 16% chance of a -25 bp rate cut at the upcoming FOMC meeting scheduled for March 18-19.
International Markets Gain Ground
Global markets are also trending higher, with the Euro Stoxx 50 reaching a 24-year high and rising +1.11%. China’s Shanghai Composite Index saw a gain of +1.27%, and Japan’s Nikkei Stock 225 closed +0.61% up.
Interest Rates Trend and Economic News
March 10-year T-notes (ZNH25) decreased by -6 ticks, pushing the 10-year T-note yield up by +2.0 bp to 4.438%. Stock market strength has minimized safe-haven demand for T-notes, although a rally in UK gilts provided some support. Today’s mixed economic indicators also contributed to this dynamic.
In Europe, government bond yields showed variability. The 10-year German bund yield rose by +0.8 bp to 2.374%, while the 10-year UK gilt yield fell to a 1-3/4 month low of 4.375%, down -0.8 bp to 4.429%.
Retail Sales and Industrial Updates
In the Eurozone, retail sales for December dropped -0.2% month-over-month, which was worse than predictions of -0.1%. However, German factory orders for December increased by +6.9% month-over-month, outperforming the expected +2.0%. Additionally, the German January S&P construction PMI rose +4.7 to a 1-1/2 year high of 42.5.
Comments from ECB Executive Board member Cipollone indicated a consensus for potential rate cuts as inflation trends downward, while the Bank of England lowered its official bank rate by -25 bp to 4.50% but warned of rising inflation.
Stock Movers in Focus
Tapestry (TPR) stands out among S&P 500 gainers, rising more than +17% after delivering a Q2 adjusted EPS of $2.00, better than the expected $1.75, while upping its full-year EPS forecast to $4.85-$4.90. Ralph Lauren (RL) gained over +13% after it raised full-year revenue expectations in constant currency to a range of +6% to +7%.
Philip Morris (PM) rose by more than +10% following its Q4 adjusted EPS of $1.55, exceeding the $1.49 consensus. Following these results, YUM! Brands (YUM) climbed over +7% due to a +1.00% rise in comparable sales for Q4.
Hershey Co (HSY) also saw gains, increasing by more than +5% after reporting better-than-expected Q4 net sales of $2.89 billion. In the Nasdaq 100, AstraZeneca Plc (AZN) climbed over +3% following a Q4 EPS of $2.09 that surpassed the $2.06 consensus.
Declines among Key Companies
Several companies faced sharp declines today. Qualcomm (QCOM) dropped more than -4% due to cautious forecasts for Q2 licensing revenue. Ford Motor (F) slumped over -6% after its CFO warned about a possible profit drop. Molina Healthcare (MOH) also took a hit, falling over -8% after reporting Q4 adjusted EPS significantly below forecasts.
Skyworks Solutions (SWKS) led losses in the S&P 500, plummeting more than -25% as management highlighted increased competition and expected revenue impacts. ARM Holdings Plc (ARM) and Hologic Inc (HOLX) both experienced notable drops as well, highlighting challenges across various sectors.
Earnings Reports (2/6/2025)
Air Products and Chemicals Inc (APD), Amazon.com Inc (AMZN), Aptiv PLC (APTV), Becton Dickinson & Co (BDX), BorgWarner Inc (BWA), Bristol-Myers Squibb Co (BMY), Camden Property Trust (CPT), CMS Energy Corp (CMS), ConocoPhillips (COP), Eli Lilly & Co (LLY), Equifax Inc (EFX), Expedia Group Inc (EXPE), Fortinet Inc (FTNT), Hershey Co/The (HSY), Hilton Worldwide Holdings Inc (HLT), Honeywell International Inc (HON), Huntington Ingalls Industries (HII), Intercontinental Exchange Inc (ICE), IQVIA Holdings Inc (IQV), Kellanova (K), Kenvue Inc (KVUE), Labcorp Holdings Inc (LH), Linde PLC (LIN), MarketAxess Holdings Inc (MKTX), Mettler-Toledo International I (MTD), Microchip Technology Inc (MCHP), Mohawk Industries Inc (MHK), Monolithic Power Systems Inc (MPWR), Philip Morris International In (PM), Principal Financial Group Inc (PFG), Ralph Lauren Corp (RL), Regency Centers Corp (REG), Snap-on Inc (SNA), Take-Two Interactive Software (TTWO), Tapestry Inc (TPR), VeriSign Inc (VRSN), Xcel Energy Inc (XEL), Yum! Brands Inc (YUM), Zimmer Biomet Holdings Inc (ZBH).
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information, please view the Barchart Disclosure Policy here.
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