Market Overview

The stock market registered solid gains, continuing the momentum from yesterday's rally. Major equity indices closed with gains ranging from 1.1% to 2.5%, despite pulling back from their highs. The Nasdaq Composite surged as much as 4.5% at its peak, ultimately ending 2.5% higher than the previous day.

Positive Sentiment Drivers

• President's recent comments have positively influenced market sentiment. He assured that Fed Chair Powell will not be dismissed and expressed a willingness to ease trade tensions with China. Tariff rates are expected to drop significantly if a trade deal is reached.
• Stocks reporting earnings also contributed to the upbeat mood. Tesla (TSLA, Financial) stood out, with shares rising by 5.4% despite disappointing Q1 results. This positive reaction was bolstered by Elon Musk's announcement to reduce his involvement with DOGE.
• Boeing (BA) was another significant earnings-related winner, with its stock climbing 6.1%.

Sector Performance

Many stocks attracted buying interest, leading the Invesco S&P 500 Equal Weight ETF (RSP) to close 1.0% higher. Nine of the S&P 500 sectors ended in positive territory, with five sectors gaining more than 1.0%. The technology sector, in particular, rose by 2.9%.

Bond Market

The 10-year yield remained unchanged from the previous day, standing at 4.39%.

Year-to-Date Performance

• Dow Jones Industrial Average: -6.9% YTD
• S&P 500: -8.6% YTD
• S&P Midcap 400: -10.7% YTD
• Nasdaq Composite: -14.5% YTD
• Russell 2000: -14.0% YTD

Economic Data Review

• Weekly MBA Mortgage Applications Index: -12.7% (Prior: -8.5%)
• April S&P Global US Manufacturing PMI - Prelim: 50.7 (Prior: 50.2)
• April S&P Global US Services PMI - Prelim: 51.4 (Prior: 54.4)
• March New Home Sales: 724K (Consensus: 684K; Prior revised to 674K from 676K)

The key takeaway from the report is that March saw an increase in new home sales due to favorable weather, stable mortgage rates, and lower prices. However, the sustainability of this trend is uncertain given the rise in mortgage rates and stock market losses in April.

Today's News

Tesla (TSLA, Financial) shares experienced a significant rally, climbing 8% as CEO Elon Musk reassured investors of his commitment to focusing more on the company. Despite disappointing Q1 results, Musk's reaffirmation of Tesla's robotaxi and AI plans bolstered investor confidence. However, Tesla's stock remains down approximately 37% year-to-date, highlighting the challenges ahead for the electric vehicle giant.

Enphase Energy (ENPH) saw its shares drop by 15% following a revenue guidance miss and a downgrade from Morgan Stanley, which cited worsening end-market demand and potential negative impacts from tariffs. SolarEdge Technologies (SEDG) also faced a downgrade, reflecting similar concerns over demand and tariff impacts, resulting in a 7.5% decline in its stock price.

ServiceNow (NOW, Financial) reported a strong Q1 performance, with a Non-GAAP EPS of $4.04, beating estimates by $0.21. The company achieved an 18.8% year-over-year revenue growth, driven by a 19% increase in subscription revenues. ServiceNow's remaining performance obligations grew significantly, indicating robust future business prospects.

Google's (GOOG, Financial) AI product, Gemini, has seen its monthly active user count nearly quadruple since October, reaching 350 million by March. This surge in user engagement comes amidst the ongoing antitrust trial in Washington, D.C., where Google is defending its business practices.

Lam Research (LRCX, Financial) reported strong fiscal third-quarter results, with a 24.5% year-over-year increase in revenue, reaching $4.72 billion. The company's shares rose 5.5% in extended trading, buoyed by its compelling portfolio and robust outlook in the semiconductor equipment market.

IBM (IBM, Financial) delivered a solid Q1 performance, with a Non-GAAP EPS of $1.60, surpassing expectations by $0.17. The company reported a slight revenue increase and continues to anticipate a 5% growth for the full year, supported by favorable foreign exchange rates.

Amazon (AMZN, Financial) outperformed other retail giants amid a market rally, driven by President Trump's comments on Federal Reserve Chairman Jerome Powell. Investors showed confidence in Amazon ahead of its upcoming Q1 earnings report, despite potential cautious guidance due to various uncertainties.

Chipotle Mexican Grill (CMG, Financial) reported a Q1 Non-GAAP EPS of $0.29, slightly beating estimates, although revenue fell short by $40 million. The company opened 57 new restaurants, with a focus on expanding its Chipotlane format, despite facing a decline in comparable restaurant sales.

Agricultural equipment maker Deere & Company (DE, Financial) saw its shares rise following a robust earnings report, as the company capitalized on strong demand for its machinery amidst favorable agricultural market conditions.

Agree Realty (ADC, Financial) announced plans to enter a forward sale agreement for 4.5 million shares of its common stock, with proceeds aimed at funding property acquisitions and development. The company reported a significant investment volume in Q1 2025, raising its investment guidance for the year.

QuantumScape (QS, Financial) reported a Q1 GAAP EPS of -$0.21, aligning with expectations. The company remains at the forefront of the solid-state battery revolution, although it continues to face challenges in achieving profitability.

AT&T (T, Financial) received an upgrade from hold to buy, with analysts highlighting its tariff-resistant nature and attractive valuation amidst a protectionist environment. The stock is considered a solid investment opportunity given the current market conditions.

Phillip Morris International (PM) reported strong Q1 results, with double-digit growth in organic net revenue and operating income. The company's smoke-free segment, including products like ZYN and IQOS, saw significant growth, contributing to its overall performance.

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