April 24th Market Overview

Happy Thursday.

Big
connecting
green days - is that a haiku?

Anyways I didn’t want to log onto my brokerage account today. I was short $SMMT overnight via put contracts (options) and knew I was going to get smoked. The gym had on CNBC and I saw a lot of positivity in their faces. Long story short after the gym I logged onto my account and fell to my knees in a Walmart parking lot realizing we are having two big connecting green days in a row.

All you wonderful folks who genuinely checked out yesterday’s sponsor have the swing trading book headed your way this evening. That will be a separate email so look for it in your promo tab.

A personal ask - Please consider checking out today’s sponsor it buys me a sip of coffee. It's free, fast, and keeps these insights coming daily.

Let's dig in...

Executive Summary

• Tech stocks powered today’s market rally despite China’s denial of any US trade negotiations
  

• Mixed economic signals: housing market weakens while durable goods orders jump on pre-tariff aircraft buying
  

• Strong tech earnings from ServiceNow and Texas Instruments counterbalanced warnings from IBM about clients pausing spending
  

• Recession concerns grow with UBS noting markets are “pricing rapidly in a recessionary direction”

Market Overview

Key Market Drivers

1. US-China Trade Tensions: China’s Commerce Ministry stated “THERE HAVE NOT BEEN ECONOMIC & TRADE NEGOTIATIONS BETWEEN CHINA & US” and called such reports “groundless.” They demanded the US lift all unilateral tariffs as a precondition for resolving issues, contradicting recent optimism from President Trump’s comments.
   

2. South Korea Deal Progress: Treasury Secretary Bessent revealed promising bilateral meetings with South Korea could yield an “agreement on understanding” as soon as next week. “South Koreans came early, they came with their A-game,” he noted, suggesting faster than expected progress.
   

3. Housing Market Weakness: Existing home sales fell in March by their largest monthly drop since 2022, reaching the lowest level for March since 2009. The National Association of Realtors data showed a much steeper decline than analysts expected, as economic uncertainty and high prices deterred buyers.
   

4. Growing Recession Signals: Multiple warnings emerged from Wall Street. UBS noted tariff-sensitive stocks are now down significantly relative to the market. Bridgewater Associates co-CIOs warned of a “policy-induced slowdown, with rising probability of a recession” amid a “rapid shift to modern mercantilism.”
   

5. Fed Policy Outlook: Governor Waller indicated the Fed needs more time to assess tariff impacts, suggesting rate cuts are unlikely before July without “serious deterioration in the labor market.” This suggests the Fed may look past temporary tariff-related price increases but remains focused on employment data.
   

Stock Spotlight

ServiceNow $NOW ( ▲ 0.71% ) beat Q1 estimates on EPS and revenue; raised guidance despite global uncertainty with CEO citing AI-driven business transformation.

IBM $IBM ( ▲ 1.34% ) declined despite quarterly beat after CEO warned clients may pause spending due to economic uncertainty.

Hasbro $HAS ( ▲ 1.03% ) surged after Q1 earnings significantly beat estimates; maintained full-year guidance despite tariff concerns.

Texas Instruments $TXN ( ▲ 0.45% ) exceeded Q1 expectations and provided upbeat Q2 guidance, lifting semiconductor sentiment despite 50% of revenue exposure to China.

Chipotle $CMG ( ▲ 4.52% ) reported first comparable sales drop since 2020, citing food inflation and weakening consumer spending; Evercore called it "a historic deceleration."

Big Name Updates

Alphabet $GOOGL ( ▲ 1.68% ): Guggenheim maintained Buy rating ahead of tonight's earnings, citing attractive valuation despite ad-spend slowdown concerns.

Microsoft $MSFT ( ▲ 1.18% ): Goldman cut price target to $450 but expects strong earnings execution despite macro headwinds.

Tesla $TSLA ( ▲ 9.8% ): European registrations fell in March; Trump praised Musk despite reduced role at DOGE.

Amazon $AMZN ( ▲ 1.31% ): AWS executive confirmed AI data center demand remains strong with "numbers only going up."

Nvidia $NVDA ( ▲ 4.3% ): Executives affirmed robust AI data center demand amid US government's indefinite ban on H20 chip exports to China.

Other Notable Company News

Airlines: American $AAL, Delta, and Southwest $LUV ( ▲ 0.11% ) all pulled guidance citing uncertainty; $AAL ( ▲ 1.46% ) CEO opposes tariff-driven aircraft price increases.

Consumer: Tractor Supply $TSCO ( ▲ 1.88% ) and Procter & Gamble $PG cut outlooks on tariff concerns; PepsiCo $PEP warned Irish concentrate imports now face 10% tariff.

Tech/Manufacturing: Lam Research $LRCX ( ▲ 0.73% ) beat expectations; Rocket Lab $RKLB ( ▲ 2.29% ) won DoD hypersonic test contract; Roche shifting production to US ahead of potential tariffs.

Defense: Northrop Grumman $NOC ( ▲ 2.19% ) facing worst week since 2009 after guidance cut due to B-21 bomber cost overruns.

Other: Weight Watchers $WW ( ▲ 168.02% ) reportedly preparing for bankruptcy filing within weeks.

Sector Watch

Bond Market

• Yields Retreat: 10-year Treasury yield fell to 4.314%, down from Wednesday's close above 4.38%.

• Fed's Tariff View: Waller indicated the Fed can "look through" one-time price increases from tariffs.

• Rate Cut Trigger: Fed appears ready to cut rates if "serious deterioration in the labor market" materializes.

Policy Watch

• China Denies Talks: Commerce Ministry rejected reports of US trade negotiations, demanding "lift all unilateral tariff measures" as precondition.

• South Korea Progress: Bessent announced potential "agreement on understanding" as soon as next week.

• Shipping Disruption: Hapag-Lloyd reports China-to-US container bookings down one-third since early April, with cargo rerouting through Southeast Asia.

• Earnings Call Data: Tariffs mentioned on over 90% of S&P 500 calls this quarter (vs. <3% in Q4 2024); "recession" appeared in 44% of calls.
  
  

What to Watch Out For

1. Alphabet’s earnings tonight: Watch for:

   • Cloud growth metrics amid increasing AI competition

   • Digital advertising resilience during economic uncertainty

   • Progress on Gemini AI deployment and monetization
     

2. Intel’s quarterly results: Pay attention to:

   • PC demand trends and recovery outlook

   • Progress in manufacturing improvements

   • AI strategy and competitive positioning
     

3. South Korea trade deal developments: Focus on:

   • Timing and scope of potential agreement next week

   • Impact on other US trade negotiations

   • Market reaction to concrete progress
     

4. Labor market indicators: Monitor:

   • Weekly jobless claims for early warning signs

   • Hiring freezes or layoff announcements

   • Fed commentary on employment concerns

P.S. 

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Thanks for reading 🙂

- John