Breakfast News: Fed Hold, Trade Talks Unfold

Source: Image Created by Jester AI.

1. Trade Talks and Fed Decisions Lead Futures Higher

President Trump will announce a trade deal with the U.K. at 10am ET after he posted on social media this morning "The agreement with the United Kingdom is a full and comprehensive one that will cement the relationship between the United States and the United Kingdom for many years to come."

• "Despite heightened uncertainty, the economy is still in a solid position": S&P 500 futures rose over 0.9% in anticipation of the trade deal, adding to the 0.43% gain during market hours following the positive reaction to the latest U.S. Federal Reserve meeting, where Chair Jerome Powell reiterated the need for a wait-and-see approach before cutting interest rates further.
• Key barometer indicates increasing investor calm: The VIX, a popular measure of stock market fear, traded lower to 22.75, only modestly above the level it was at pre-April 2.

2. AppLovin Remains Investor Heartthrob

Stock Advisor recommendation AppLovin (APP -0.14%) rocketed over 14% higher after the closing bell following upbeat results, which included details of being on track to sell its mobile gaming division for $400 million.

• "We think we've got the best performance advertising AI model the world has ever seen": CEO Adam Frueghi talked up the company's tech advancements as being a key factor in the 40% jump in revenue versus last year.
• Pronounced efficiency of operations: The run-rated annual adjusted EBITDA per employee in the advertising business rose in the quarter to approximately $4 million.

3. Notable After-Hours Earnings

MercadoLibre (MELI 1.59%) soared over 8% post market closing thanks to results that beat expectations and showed the number of unique active buyers growing for a fifth quarter in a row.

• Beating the S&P 500 by 143% since 2021 Rule Breakers rec: Axon Enterprise (AXON -0.21%) popped almost 5% after notching year-over-year sales growth in excess of 25% for the 13th quarter in a row.
• "Our investments in automation, client ROI achievement and world-class service are paying off": After beating both revenue and earnings expectations, Paycom Software (PAYC 0.24%) is trading around 1% higher ahead of the market opening.

4. Pending Changes for Chip Restrictions

The Trump administration is looking at amending AI chip curbs in favor of more country-specific chip access negotiations, in a move seen to provide a temporary reprieve for the sector and related stocks.

• Advanced chip sale restrictions currently on over 40 nations: Nvidia (NVDA 2.95%) rallied to close over 3% higher on the day, although any optimism could be short lived as a draft of the new version of rules is likely to be released shortly.
• Net income down from $224 million last year to $210 million: The rally for Arm Holdings (ARM 1.16%) was short lived, with the stock falling over 11% after the market closed after offering softer-than-expected guidance for the coming quarter.

5. Next Up: Key Thursday Earnings

The Trade Desk (TTD 1.51%) is set to report quarterly earnings after the market closes, with investors keeping a close eye on potential advertising spending weakness caused by the recent market uncertainty.

• Up 81% since Nov 2023 Hidden Gems recommendation: Shopify (SHOP 0.72%) is expected to report a 27% year-over-year growth in revenue when it reports ahead of the opening bell, although the forward guidance will likely dictate the market reaction.
• Pushing to be the leader in AI-as-a-Service: Reporting after hours, Cloudflare (NET -0.37%) shareholders will be focused on how many customers have annual spending above $1 million, along with adoption and progress with the Workers AI platform.

6. Foolish Fun

Axon Enterprise continues to diversify its business with investments in drones and its AI offerings. But as we Fools know, investing is about the future. What do you think is the next great "growth frontier" for Axon? Discuss with friends and family, or become a member to hear what your fellow Fools are saying!