Markets Mixed Amid Trade Talks and Mixed Earnings Reports

The S&P 500 Index ($SPX) (SPY) has decreased by -0.14%, while the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.16%. In contrast, the Nasdaq 100 Index ($IUXX) (QQQ) shows a slight increase of +0.15%. Additionally, June E-mini S&P futures (ESM25) fell by -0.12%, while June E-mini Nasdaq futures (NQM25) rose by +0.12%.

Stock indexes traded lower today after initially gaining ground, reflecting caution ahead of forthcoming weekend trade negotiations between the US and China. Comments from President Trump on social media, indicating that an 80% tariff on China “seems right,” contributed to a bearish sentiment in the market. Trump mentioned that the exact tariff level would be determined by Treasury Secretary Bessent. Furthermore, remarks from New York Fed President Williams, suggesting expectations of considerably slower economic growth in the US this year, coupled with predictions of higher inflation and unemployment, added pressure on stocks.

Initially, stocks extended their Thursday gains following President Trump’s announcement of a preliminary trade framework with the UK, although several details remain unresolved. This development raised hopes for a reduction in Trump’s tariffs, which could help mitigate potential harm to economic growth and corporate profitability.

Earnings Reports Show Divergent Trends

Today’s earnings reports resulted in mixed reactions among stocks. Microchip Technology surged over +12%, leading chip stocks higher after posting stronger-than-expected Q4 net sales and forecasting Q1 net sales above consensus. Lyft also saw substantial gains of more than +21%, driven by a forecast for Q2 gross bookings that exceeded expectations. Insulet surged by over +17%, reporting better-than-expected Q1 revenue and increasing its full-year revenue outlook.

Conversely, Expedia Group fell more than -8% after reporting weaker-than-expected Q1 revenue and revising down its 2025 revenue forecasts. Akamai Technologies experienced a decline of over -7% after issuing a full-year adjusted EPS forecast that fell below consensus estimates.

Bond Market Dynamics

T-note prices rose today in response to comments from Japanese Finance Minister Kato, who clarified that the Japanese government is not considering the sale of US Treasuries as part of ongoing trade negotiations. As of February, Japan held $1.13 trillion in Treasury Securities, making it the leading foreign holder of US debt. Any significant sell-off from Japan could lead to an unexpected surge in Treasury yields, potentially harming the US economy.

Fed Governor Kugler’s comments added bearish sentiment for stocks and bonds, as she indicated that the Fed should maintain steady interest rates due to economic stability and uncertainty surrounding Trump’s tariff policies. Current market estimates assume only a 17% chance of a -25 bp rate cut following the upcoming FOMC meeting on June 17-18.

As the Q1 earnings reporting season progresses, Bloomberg Intelligence data shows an expected Q1 year-over-year earnings growth of +6.7% for S&P 500 companies, down from earlier projections of +11.1%. So far, 78% of the 386 companies that have reported earnings have exceeded estimates. Moreover, S&P 500 corporate profits for the full year of 2025 are expected to rise +9.4%, a decrease from the prior forecast of +12.5%.

Global Market Overview

International stock markets today displayed mixed results. The Euro Stoxx 50 reached a five-week high, increasing by +0.38%. Conversely, China’s Shanghai Composite declined by -0.30%. Japan’s Nikkei Stock 225 closed up by +1.56%, marking a six-week high.

Interest Rates Update

June 10-year T-notes (ZNM25) gained +7 ticks today, with the 10-year T-note yield down by -3.1 bp to 4.347%. T-note prices were bolstered by positive comments regarding a lack of plans to sell US Treasuries from Japanese officials and New York Fed President Williams’ remarks on slower expected US economic growth. However, T-note prices faced headwinds due to weakness in European government bonds, easing global trade tensions, and hawkish comments from Fed Governor Kugler indicating a potential hold on interest rates.

European government bond yields rose today, with the 10-year German bund yield climbing to 2.588% and the 10-year UK gilt yield reaching 4.603%. ECB Council member Simkus suggested another interest rate cut in June could be necessary, while fellow Council member Rehn echoed the need for a rate cut depending on upcoming financial forecasts.

Stock Movers of the Day

Insulet (PODD) is up more than +16% after reporting Q1 revenue of $569.0 million, exceeding the consensus of $543.5 million and raising its full-year revenue guidance. Microchip Technology (MCHP) rose over +12% after reporting Q4 net sales of $970.5 million, which was higher than the consensus of $962.7 million, while forecasting Q1 net sales significantly above expectations.

Trade Desk (TTD) led Nasdaq 100 gainers with an increase of over +21%, driven by strong Q1 adjusted EBITDA margins and positive Q2 forecasts. Lyft also gained more than +19% with optimistic booking forecasts.

On the downside, Globus Medical (GMED) dropped over -23% due to Q1 net sales that fell short of expectations, while Expedia Group (EXPE) led S&P 500 losers after reporting disappointing Q1 revenue. Other notable decliners included HubSpot (HUBS), Akamai Technologies (AKAM), and Crowdstrike Holdings (CRWD), the latter being under investigation linked to business transactions.

Upcoming Earnings Reports

Look out for earnings reports from Starwood Property Trust Inc (STWD) and Ubiquiti Inc (UI) on May 9, 2025.

On the date of publication, Rich Asplund did not hold any positions in the securities mentioned. All information in this article is for informational purposes only.

The views and opinions expressed herein are solely those of the author and do not necessarily reflect those of any associated entities.