Strong Gains Across Equities Driven by Earnings and Policy Signals
U.S. equity markets posted a robust rally on Tuesday, with the S&P 500, Nasdaq 100, and Dow Jones all gaining over 2.5%. The surge was fueled by better-than-expected corporate earnings, a more conciliatory tone from President Donald Trump, and signs of easing in the U.S.-China trade conflict.
Trump’s softer rhetoric-walking back his previous criticism of Federal Reserve Chair Jerome Powell and indicating a more measured approach toward China-was well-received by investors and played a key role in lifting market sentiment.
Tesla Leads After-Hours Gains
Tesla jumped 5.1% in after-hours trading. The rally followed CEO Elon Musk’s announcement that he would scale back involvement in government efficiency projects and dedicate more time to the company’s core operations.
European Confidence Lifts on ECB Commentary and Strong Earnings
European equity indices closed higher on Tuesday, bolstered by European Central Bank President Christine Lagarde’s remarks suggesting that disinflation in the eurozone is nearing completion. Her statements contributed to a more confident regional outlook.
Corporate earnings in the region also impressed. L’Oreal soared 6.3% after reporting stronger-than-expected Q1 sales, particularly in China. Meanwhile, Novo Nordisk declined after a competitor released positive results in a weight-loss drug trial, denting investor sentiment.
S&P 500 Earnings Season: Strong Results, Trimmed Forecasts
The Q1 earnings season continued to deliver upside surprises, with companies like Lockheed Martin, Verizon, and Moody’s exceeding expectations. However, analysts adjusted the S&P 500’s earnings growth forecast down to 8.1%, from a previous 12.2%, reflecting a more conservative outlook.
Futures Point to Ongoing Momentum
Following Tuesday’s rally, U.S. equity futures extended gains. S&P 500, Nasdaq 100, and Dow Jones futures all rose by 2% or more in after-hours trading, indicating sustained optimism heading into Wednesday’s session.
Asia Sees Selective Gains Amid Tariff Commentary
Regional Stocks Rise, Mainland China Remains Cautious
Asian equities advanced on Wednesday, with Hong Kong and Japan leading the gains. The upbeat tone followed President Trump’s comment that “High tariffs on China will come down substantially, but it won’t be zero,” raising hopes of de-escalation in trade tensions.
Mainland Chinese stocks, however, lagged as concerns lingered over economic slowdown and delayed stimulus. Bank of America revised its 2025 GDP forecast for China to 4%, down from 4.5%, citing continued trade pressures and policy uncertainty.
U.S. Dollar and Oil Strengthen on Geopolitical Developments
The U.S. dollar rallied sharply on Wednesday after Trump backed off threats to dismiss Fed Chair Powell, easing concerns over central bank independence. The dollar gained over 1% against the yen and Swiss franc, while stabilizing around $1.14 versus the euro.
Oil prices extended gains, with Brent and WTI futures rising about 1%. This was driven by a sharp decline in U.S. crude inventories and new U.S. sanctions on Iran, tightening the global supply outlook.
Putin Proposes Peace Deal Amid Ukraine Conflict
In a surprising development, Russian President Vladimir Putin reportedly proposed halting the invasion of Ukraine as part of a potential peace agreement with President Trump. According to the Financial Times, the offer—discussed with Trump’s envoy Steve Witkoff—suggests Moscow may withdraw claims to parts of four Ukrainian regions still under Kyiv’s control, marking a significant moment in peace talks.
Corporate News: Movers and Market Drivers
Earnings Surprises and Strategy Updates
- Tesla: Q1 net profit dropped 71% with a 20% decline in automotive revenue. However, lower costs improved margins. Musk reaffirmed commitment to launching an affordable EV and a robotaxi service.
- GE Aerospace: Beat expectations with Q1 EPS of $1.49 on $9.94 billion in revenue. Full-year EPS guidance stands at $5.10–$5.45 with free cash flow of $6.3–$6.8 billion.
- Enphase Energy: Missed profit estimates due to weak U.S. demand and regulatory changes in California. Revenue rose 35% YoY to $356.1 million. Shares fell 9.9% in after-hours trading.
- Intuitive Surgical: Warned tariffs will disrupt operations in China, raising costs. Still beat Q1 expectations but trimmed its 2025 margin forecast.
- RTX: Warned of an $850 million tariff-related profit hit by 2025. Despite beating Q1 estimates, shares fell 8.5% on supply chain concerns.
- Lockheed Martin: Q1 EPS came in at $7.28, with revenue up 4.5% to $17.96 billion. Strong demand for missile systems and jets offset F-35 contract scrutiny in Canada.
- Halliburton: Forecasted a 2–3 cent Q2 EPS hit from tariffs and weak North American oilfield activity. Q1 profit was $204 million, below expectations, but revenue of $5.42 billion beat forecasts.
- MSCI: Reported 9.7% revenue growth amid increased demand for its index and analytics tools. Higher workforce costs nudged expenses up.
Other Key Developments
- Bristol Myers Squibb: Shares fell 4.1% after its schizophrenia drug Cobenfy failed a Phase 3 trial. Further analysis is planned.
- Intel: Plans to cut 20% of its workforce under CEO Lip-Bu Tan as part of a $10 billion cost-cutting initiative.
- Roche: Announced a $50 billion U.S. investment over five years, tied to responses to Trump’s tariff policies. The plan includes 12,000 new jobs and new facilities for weight loss and glucose monitoring.
Strategic Shifts, M&A, and Ratings Moves
- UniCredit: Warned that conditions set by Italy for its $15 billion Banco BPM bid could impair decision-making.
- Elliott Investment Management: Raised its BP stake above 5%, calling for greater capital discipline and reduced renewable investments.
- Oklo Inc: Sam Altman stepped down as Chairman, raising questions about future leadership and strategic continuity.
Regulatory and Sector Updates
- Hims Hers Health: Stock dropped 1.9% following an FDA warning over the safety of its unapproved topical finasteride product.
- Duolingo: Rose 6.4% after launching a chess course—the first new subject since expanding into math and music.
- BMW: Will integrate DeepSeek AI in Chinese-market vehicles later this year, underscoring deeper China tech partnerships.
Analyst Calls and Forecast Changes
- McDonald’s: Named top Q1 restaurant pick by Wells Fargo for its defensive qualities, despite flat traffic and soft comps.
- Redburn Atlantic: Downgraded Stellantis and BMW to Neutral, citing potential $19 billion impact from U.S. auto tariffs.
- Bernstein: Downgraded eBay and Kraft Heinz. eBay faces tariff-related risk and softening U.S. sales; Kraft Heinz continues to lose share in key U.S. brands.
Economic Data & Earnings to Watch
Today’s key U.S. economic releases include:
- Building permits
- Manufacturing and services PMIs
- New home sales
- Weekly EIA crude oil inventories
Earnings reports are expected from:
- IBM
- Texas Instruments
- Newmont
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