May 5, 2025
S&P futures are down 0.8% after the S&P 500 posted a ninth straight gain Friday—its longest winning streak since 2004—rising 2.9% for the week. The Dow, Nasdaq, and Russell 2000 also gained over 3%. Asian markets were mixed with several exchanges closed for holidays, while European markets are down 0.4%. Treasuries are flat, the dollar index is off 0.3%, gold is up 2.1% after two weeks of losses, Bitcoin futures are down 1.6%, and WTI crude fell 1.7%, extending last week’s 7.5% drop following OPEC+’s weekend decision to raise output.
Headline flow is quiet. Trump hinted at possible tariff reductions on China but offered no specifics or plans to speak with Xi. Focus remains on the upcoming Fed meeting, where Powell is expected to maintain a cautious tone amid tariff-related uncertainty. Q1 earnings season continues to surprise to the upside (+12.8% growth vs. +7.2% expected), though macro and recession risks remain in focus. Fiscal headlines highlight continued GOP gridlock and deficit concerns.
Today’s calendar includes April ISM services (Street expects 50.3) and final S&P Global services PMI. Treasury auctions $58B in 3-year notes. Later this week includes trade data, initial claims, productivity, and Thursday’s $25B 30-year bond auction. The Fed announces policy Wednesday (no change expected); Powell to emphasize tariff risks. Multiple Fed speakers are scheduled for Friday.
Corporate Highlights:
- Berkshire Hathaway (BRK.B): Q1 operating earnings fell ~14% y/y, hurt by California wildfire losses. Buffett to step down as CEO at year-end.
- Shell (SHEL): Reportedly exploring a potential bid for BP but waiting for further declines in stock and oil prices.
- Alphabet (GOOGL): FT reports DOJ may seek divestiture of key digital ad assets.
- Nike (NKE), Adidas (ADS), Skechers (SKX): Urging Trump to exempt footwear from reciprocal tariffs.
- United Airlines (UAL): Canceling 35 daily Newark round trips due to ATC staffing issues
U.S. equities extended their recent rally Friday, with the S&P 500 posting its ninth consecutive gain and surpassing its April 2 close, which preceded the announcement of reciprocal tariffs. The rally was supported by a stronger-than-expected April jobs report, easing concerns about a slowdown in economic growth. Nonfarm payrolls rose by 177,000, beating expectations of 130,000. However, revisions to prior months subtracted a total of 58,000 jobs. The unemployment rate held steady at 4.2%, and average hourly earnings rose just 0.2% month-over-month, softer than expected and supportive of the disinflation narrative. Still, the solid labor market print pushed Treasury yields higher and led Goldman Sachs to delay its projection for the first Fed rate cut from June to July.
Trade policy developments also drove sentiment. China said it is weighing the possibility of restarting trade talks with the U.S. and began quietly exempting around $40 billion worth of U.S. imports from tariffs—covering items such as pharmaceuticals and chemicals. This followed the U.S.’s earlier exemption of approximately $102 billion in Chinese goods. A media report suggested that China may use fentanyl negotiations as a bridge to broader trade engagement, potentially offering a path to de-escalation. These developments contributed to optimism around global trade and alleviated some fears about prolonged tariff-driven disruption.
Earnings season continued to offer mixed but overall supportive signals. With roughly three-quarters of the S&P 500 reported, blended Q1 earnings growth is tracking near 13%, up from 7.2% at the start of the season. Earnings surprises are running 9% above consensus, with many companies highlighting tariff mitigation strategies and avoiding major job cuts. Corporate commentary, combined with systematic re-leveraging, resilient retail buying, and the return of corporate buybacks, added to bullish sentiment. However, risks remain, including weak consumer confidence, rising core PCE inflation (3.5% vs. 3.1% consensus), and a negative Q1 GDP print (-0.3% annualized). Despite this, equity flows continue to reflect constructive positioning.
Sector Performance (S&P 500)
Outperformers: Communication Services (+2.31%), Financials (+2.15%), Industrials (+1.81%), Materials (+1.66%)
Underperformers: Consumer Staples (+0.60%), Utilities (+0.71%), Tech (+1.17%), Consumer Discretionary (+1.20%), Real Estate (+1.25%), Energy (+1.37%), Health Care (+1.42%)
Company Highlights by GICS Sector
Information Technology
- Apple (AAPL -3.7%): iPhone sales grew, but Services missed and China remained weak. June-quarter guidance underwhelmed, with margin pressure from a $900M tariff hit. $100B buyback announced.
- Amazon (AMZN): EBIT beat on resilient e-commerce, but AWS growth decelerated. Q2 guidance mixed; tariff impacts cited in more cautious margin commentary.
- Nvidia (NVDA +2.6%): Tailoring AI chips for China to navigate U.S. export restrictions.
- Twilio (TWLO +2.3%): Beat across the board; raised FY guidance on stronger Communications performance.
- MPWR (+5.9%): Q1 ahead of expectations; Q2 guide strong. GM headwinds noted due to product mix.
- GoDaddy (GDDY -8.4%): Revenue in line; bookings slowing. Q2 guide light; announced $3B buyback.
Communication Services
- Reddit (RDDT): Positive Q1 results and upbeat advertising commentary.
- Roku (ROKU -8.5%): Revenue beat but GM and Q2 outlook disappointed.
- Take-Two (TTWO -6.7%): GTA VI delayed to May 2026, weighing on sentiment.
Consumer Discretionary
- Duolingo (DUOL +21.6%): Strong Q1 growth in paid users and MAUs; raised FY guidance.
- Airbnb (ABNB): Q1 room nights soft; Q2 guide cautious.
- Five Below (FIVE +11.9%): Raised Q1 sales guidance; comps +6.7%.
- Instacart (CART +13.6%): EBITDA beat; order growth and ad revenue offset AOV pressure.
- Booking Holdings, Norwegian Cruise: Noted select softening in U.S. travel demand.
Health Care
- Dexcom (DXCM +16.2%): U.S. revenue strength; announced $750M buyback; margin headwinds seen as temporary.
- Exact Sciences (EXAS +9.3%): Beat and raised FY guide; positive outlook tied to new product adoption.
- Amgen (AMGN): Slight beat; pipeline remains key investor focus.
- BrightSpring Health (BTSG +16.6%): Strong Provider and Pharmacy results; raised guidance.
Financials
- Visa, Mastercard: Commentary pointed to stable consumer spending.
- Credit cards: Sector broadly strong on positive macro tone.
Industrials
- Ingersoll Rand (IR): Missed Q1; cut full-year EPS guide.
- Team (TEAM -9%): Cloud revenue only modestly ahead; billings and guidance missed.
- Mohawk (MHK -1.7%): Q1 beat, but Q2 guide cautious; remodeling slowdown noted.
- Logistics, trucking, airlines: Benefited from improved sentiment and trade headlines.
Materials
- Westlake (WLK -13.4%): Missed on weak volumes; global cost curve delays pricing actions.
- Copper & Aluminum: Outperformed on China optimism.
Energy
- ExxonMobil (XOM): Strong beat on Upstream and Energy Products.
- Chevron (CVX): Revenue miss; slowed share repurchase pace.
- WTI crude -1.6%: Volatile on speculation OPEC+ may raise output 400K bpd in June
Eco Data Releases | Monday May 5th, 2025
S&P 500 Constituent Earnings Announcements | Monday May 5th, 2025
Data sourced from FactSet Research Systems Inc.
