April 28th Market Overview

Happy Monday.

Markets feeling a bit wishy washy today as tech pulled back ahead of earnings week. Treasury Secretary Bessent placed the burden on China for trade de-escalation while Huawei’s AI chip development pressured Nvidia. Reports of declining Chinese vessel arrivals on west coast ports raise some supply chain woes. A solid rip into the close across the board is always nice to see on a Monday.


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Let's dig in...

Executive Summary

• Big Tech Earnings Focus: Reports from Amazon, Apple, Meta, Microsoft this week, seeking clarity on tariff impacts and guidance.
  

• Supply Chain Risk Crystallizes: Concrete data (falling vessel arrivals, Port of LA projection) fuels tangible shortage/inflation fears; “de minimis” expiry looms Friday.
  

• Trade Policy Gridlock: Conflicting US-China talk reports and Bessent’s firm stance on de-escalation maintain investor caution; focus shifts to upcoming Japan talks.
  

• Economic Data Watch: Spotlight turns to this week’s Q1 GDP and April Jobs report for first hard data signals on economy’s tariff resilience.

Market Overview

Key Market Drivers

1. Trade Messaging Conflict: China's Commerce Ministry denied any recent trade talks, contradicting Trump's earlier claims. Bessent stated China must de-escalate, citing the 5-to-1 trade imbalance. Trump told The Atlantic no specific market level would trigger tariff easing. Japan's trade negotiator visits the US April 30.
   

2. Supply Chain Data Points: China-US vessel arrivals are declining. Port of LA projects a 35% import drop within weeks. Apollo warns of potential "Covid-like shortages" by May. Shein has already raised some prices up to 377%. The "de minimis" exemption ends Friday, impacting e-commerce.
   

3. Critical Week for Markets: Four Magnificent Seven companies report earnings, offering first detailed tariff impact assessments. Q1 GDP (Wednesday) and April Jobs Report (Friday) will provide the first major economic data covering the post-tariff period.
   

4. Potential Support Factors: JPMorgan shifted to "tactically bullish," citing earnings potential and consumer resilience (stable employment, healthy balances, wage growth) that may offset macro concerns.
   

Stock Spotlight

Nvidia $NVDA ( ▼ 3.19% ): Fell after WSJ reported Huawei is testing a new AI chip (Ascend 910D) designed to compete with Nvidia’s high-end products.

Peloton $PTON ( ▲ 4.53% ): Rose on Truist’s upgrade to Buy with $11 target, citing clearer profitability path following cost cuts and balance sheet improvements.

Boeing $BA ( ▲ 2.36% ): Gained following Bernstein’s upgrade to Outperform with $218 target, noting progress on growth trajectory post-Alaska incident.

Plug Power $PLUG ( ▲ 27.53% ): Jumped after announcing a deal for up to $525 million in secured debentures.

Domino’s Pizza $DPZ ( ▲ 1.64% ): Recovered despite mixed Q1 results - beat on earnings but missed revenue with declining US same-store sales.

Big Name Updates

Apple $AAPL ( ▲ 0.31% ): Only Magnificent Seven stock to gain today. JPMorgan expects “better-than-feared” earnings while Morgan Stanley raised its target to $235.

Microsoft $MSFT ( ▼ 0.27% ): SemiAnalysis reports the company froze 1.5GW of datacenter projects and walked away from 2GW of leases, suggesting infrastructure spending adjustments.

IBM $IBM ( ▲ 1.26% ): $150 billion US investment plan includes manufacturing mainframe and quantum computers domestically.

Take-Two $TTWO ( ▲ 0.2% ): BofA raised target to $250, maintaining Buy based on strong pipeline (GTA 6, Borderlands) expected to outperform even during economic slowdown.

Other Notable Company News

Eli Lilly $LLY ( ▼ 1.51% ): HSBC downgraded to Reduce, cutting target to $700 from $1,150, citing economic sensitivity in GLP-1 adoption and valuation concerns.

Netflix $NFLX ( ▲ 0.99% ) & VeriSign $VRSN ( ▲ 0.77% ): Both reached new all-time highs.

Progressive $PG ( ▲ 0.09% ) : Gained on BofA upgrade to Buy after recent pullback.

Airbnb $ABNB ( ▲ 0.86% ): Canaccord assigns Buy rating with $180 target ahead of earnings.

Booking $BKNG ( ▲ 0.96% ): BofA raised target but kept Neutral, noting lower tariff exposure offset by high valuation.

Sector Watch

Bond Market

Treasury yields fell to 4.218% today,this movement comes despite gold's continued strength (up to $3,359.60) and indicates:

• Growing confidence that tariff-induced inflation might prompt earlier Fed action

• Positioning ahead of corporate earnings that could reveal supply chain disruptions

• Contrasting with earlier rising yields when tariffs were first announced, suggesting evolved market thinking

Policy Watch

Economic Impact Assessment: Goldman Sachs released detailed analysis of potential second-order effects, warning that beyond the direct trade impact, US tariffs could trigger structural manufacturing shifts in Asia. Their research suggests Chinese companies may accelerate production relocation to Vietnam, Malaysia and other nearby countries.

Corporate Positioning: Major corps continue announcing US investment plans, with IBM's $150 billion commitment and Apple's $500 billion pledge representing strategic positioning amid changing trade dynamics. These announcements follow direct engagement with the administration.

International Response: Canada's election today represents the first major Western democracy electoral test in the new tariff environment, with candidates offering contrasting approaches to economic realignment. The outcome could influence how other US allies respond to trade pressures.

What to Watch

1. Mega-Cap Tech Earnings (Wed/Thu): Results from Microsoft ($MSFT), Meta ($META), Apple ($AAPL), Amazon ($AMZN).

   • Focus on management commentary regarding tariff costs, supply chain impact, and forward guidance.

2. Q1 GDP Data (Wednesday): First official economic growth reading covering the early tariff implementation period.

   • Provides baseline data; significant deviation from consensus could move markets.

3. April Jobs Report (Friday): Initial labor market data reflecting the post-“Liberation Day” tariff environment.

   • Key indicator for economic resilience and potential Fed policy shifts.

4. Japan-US Trade Talks (Begin Apr 30): Progress or stalemate in these talks could influence broader trade sentiment.

   • Outcomes may signal US administration’s negotiating stance with other partners.

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- John