US Stock Markets Rise on Strong Earnings and Job Claims Data
The S&P 500 Index ($SPX) (SPY) is up +0.85% today. The Dow Jones Industrials Index ($DOWI) (DIA) has risen +0.43%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +1.37%. June E-mini S&P futures (ESM25) are up +0.90%, while June E-mini Nasdaq futures (NQM25) are up +1.25%.
Stock indexes are trading higher, with the S&P 500 and Dow Jones Industrials reaching 4-week highs and the Nasdaq 100 signaling a 5-week high. This positive trend follows strong earnings reports from Microsoft and Meta Platforms. Microsoft shares rose over +9% after posting stronger-than-expected Q3 sales and profit growth. Meta Platforms increased by more than +5% due to better-than-expected Q1 sales. Additionally, support for stocks came from a drop in the 10-year T-note yield, which fell to a 3-1/2 week low, influenced by higher-than-expected US weekly unemployment claims. This dovish economic data may impact Federal Reserve policy.
Market sentiment is bolstered further by reports from China Central Television that the US is engaging China through various channels to negotiate tariff issues.
Weekly initial unemployment claims rose by +18,000, reaching a 2-month high of 241,000, which is higher than expectations of 223,000. Continuing claims also increased by +83,000 to a 3-1/2 year high of 1.916 million, exceeding expectations of 1.865 million.
Upcoming market focus includes developments on US tariffs and trade negotiations. Later today, the April ISM manufacturing index is anticipated to fall by -1.0 to 48.0. Thursday will bring earnings reports from Amazon.com and Apple, while Friday’s employment data is expected to show a +130,000 increase in nonfarm payrolls and an unchanged unemployment rate of 4.2%. Additionally, April’s average hourly earnings are forecast to rise by +0.3% month-over-month and +3.9% year-over-year.
Currently, the markets are pricing in a 10% chance of a -25 basis point rate cut following the May 6-7 FOMC meeting.
During this Q1 earnings reporting season, data from Bloomberg Intelligence indicates that the consensus forecast for year-over-year earnings growth for S&P 500 companies stands at +6.7%, a decrease from earlier expectations of +11.1% in November. So far, over a third of S&P 500 firms have reported results, with 75% surpassing estimates. For the full year 2025, corporate profits for the S&P 500 are projected to rise by +9.4%, down from +12.5% forecasted in early January.
International markets also reflect positive trends today. The Euro Stoxx 50 and China’s Shanghai Composite are closed for the Labor Day holiday. Meanwhile, Japan’s Nikkei Stock 225 climbed to a 1-month high, closing up +1.13%.
Interest Rates
June 10-year T-notes (ZNM25) increased by +8 ticks today. The 10-year T-note yield declined by -2.7 basis points to 4.135%. T-notes reached a 3-1/2 week high, with the yield dropping to a corresponding 3-1/2 week low of 4.120%. The upward movement in T-notes reflects support from a strong rally in 10-year UK gilts. Today’s decline in WTI crude oil prices to a 3-week low has also reduced inflation expectations, favoring T-note prices. The increase in T-notes continued as US weekly jobless claims rose to a 2-month high, suggesting a dovish outlook for Fed policy.
In Europe, government bond yields have trended lower. With markets in Germany closed for Labor Day, 10-year German bunds did not trade. The 10-year UK gilt yield fell to a 3-1/2 week low of 4.415%, down -1.9 basis points to 4.422%.
Swaps are fully reflecting a 100% probability of a -25 basis point rate cut by the ECB in its June 5 meeting.
US Stock Movers
Microsoft (MSFT) currently leads S&P 500 gainers with an increase of over +9% after announcing Q3 revenue of $70.07 billion, surpassing the consensus estimate of $68.48 billion.
Meta Platforms (META) is up more than +5% after its Q1 sales hit $42.3 billion, exceeding expectations of $41.4 billion. IDEXX Laboratories (IDXX) gained over +9%, reporting Q1 EPS of $2.96, above the consensus of $2.81, and raised its full-year EPS forecast.
Arista Networks (ANET) rose by over +7% as AI-infrastructure stocks surged following Meta’s reported increase in AI spending. Vertiv Holdings (VRT), Dell Technologies (DELL), and Applied Digital (APLD) are also up more than +2%.
Align Technology (ALGN) rose more than +8% after it reported Q1 net revenue of $979.3 million, higher than the consensus of $976.4 million.
CVS Health (CVS) increased by over +4% after reporting Q1 adjusted EPS of $2.25, significantly higher than the consensus of $1.69, and revised its full-year adjusted EPS forecast to $6.00-$6.20.
Wayfair (W) is also up more than +4% after reporting Q1 net revenue of $2.73 billion, surpassing expectations of $2.71 billion.
On the downturn, Becton Dickinson & Co (BDX) fell more than -12%, leading losses in the S&P 500 after reducing its full-year adjusted EPS forecast below consensus estimates.
Qualcomm (QCOM) saw a drop of more than -8%, while Eli Lilly (LLY) fell more than -7% due to updated EPS projections cutting forecasts.
Church & Dwight (CHD) is down more than -6%, along with Confluent (CFLT), which dropped over -13% on weaker revenue guidance.
Fortiv Corp (FTV) declined more than -6% after its adjusted EPS forecast was lowered, while Air Products and Chemicals (APD) fell more than -2% after an earnings miss.
Earnings Reports (5/1/2025)
Air Products and Chemicals Inc (APD), Airbnb Inc (ABNB), Amazon.com Inc (AMZN), and others are scheduled to report earnings.
On the date of publication, Rich Asplund did not have positions in any of the securities mentioned. For further information, view the Barchart Disclosure Policy here.
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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
