The S&P 500 Index ($SPX) (SPY) is up +0.02%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -1.62%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.32%.  June E-mini S&P futures (ESM25) are up +0.35%, and June E-mini Nasdaq futures (NQM25) are down -0.43%. 

Stock indexes today are mixed, erasing most of their early gains sparked by positive signals from initial US-Japan trade talks, as investors adopt a risk-off position ahead of the long holiday weekend. Weakness in health insurance stocks today is weighing on the Dow Jones Industrials, with UnitedHealth Group down more than -19% to lead health insurance stocks lower after cutting its full-year earnings outlook.

US weekly jobless claims unexpectedly fell to a 2-month low, though other US economic news was mixed; housing starts fell, but building permits rose, and the Philadelphia Fed business outlook survey fell to a 2-year low.

US March housing starts fell -11.4% m/m to 1.324 million, weaker than expectations of 1.420 million.  However, March building permits, a proxy for future construction, unexpectedly rose +1.6% m/m to 1.482 million, stronger than expectations of a decline to 1.450 million.

The US Apr Philadelphia Fed business outlook survey plunged -38.9 to a 2-year low of -26.4, weaker than expectations of 2.2.

New York Fed President Williams said the US economy is in a very good place, and he doesn’t see the need to change the fed funds rate anytime soon.

Last Friday, President Trump said he would temporarily exempt consumer electronics from reciprocal tariffs and the baseline 10% global tariffs. However, a 20% tariff still applies to electronics shipped from China.  Last Wednesday, President Trump announced a 90-day pause on higher reciprocal tariffs on 56 nations but left the new 10% baseline tariff on virtually all nations in place.  Meanwhile, the EU last Thursday said it will delay for 90 days the implementation of 25% tariffs on 21 billion euros worth of US goods sent to Europe.

Stocks have been under pressure over the past five weeks due to fears that US tariffs will weaken economic growth and corporate earnings. On March 4, President Trump imposed 25% tariffs on Canadian and Mexican goods and doubled the tariff on Chinese goods to 20% from 10%.  On April 2, President Trump signed a proclamation to implement a 25% tariff on US auto imports.  The tariffs will initially target vehicles fully assembled outside the US and, by May 3, will expand to include automobile parts made outside the US.  On April 5, a 10% baseline tariff for virtually all nations took effect. 

Last Friday, China raised tariffs on all US goods to 125% from 84% in retaliation for the US raising tariffs on Chinese goods to 145%. Tit-for-tat retaliation worsened US-China trade tensions after China on Tuesday ordered its airlines not to take any further deliveries of Boeing’s jets and the US government barred Nvidia from selling its H20 chips to China on Wednesday.

The US tariff turmoil has undercut the dollar and boosted gold.  The dollar index last Friday sank to a 3-year low, and gold prices soared to an all-time high today.  The markets are concerned about the effects of US trade policies, which have caused consumer confidence to plummet and have prompted many companies to suspend their capital spending plans, a negative factor for GDP growth.  Also, the dollar is facing a confidence crisis as the US weaponizes tariffs, diminishing the dollar’s reserve-currency status and prompting some foreign investors to liquidate their dollar assets. 

The markets are discounting the chances at 14% for a -25 bp rate cut after the May 6-7 FOMC meeting.

Q1 earnings reporting season began last Friday as big US banks reported their results.  According to data compiled by Bloomberg Intelligence, the market consensus is for Q1 year-over-year earnings growth of +6.7% for the S&P 500 stocks, down from expectations of +11.1% in early November.  Full-year 2025 corporate profits for the S&P 500 are seen rising +9.4%, down from the forecast of +12.5% in early January. 

Overseas stock markets today are mixed.  The Euro Stoxx 50 is down -0.64%.  China’s Shanghai Composite climbed to a 2-week high and closed up +0.13%.  Japan’s Nikkei Stock 225 closed up +1.35%.

Interest Rates

June 10-year T-notes (ZNM25) today are down -2 ticks.  The 10-year T-note yield is up +0.6 bp to 4.282%.  June T-notes today are modestly lower on reduced safe-haven demand as stocks climb on hopes that trade agreements can be reached with US trading partners after President Trump said late Wednesday that there was “big progress” in talks to strike a deal for Japan.  T-notes are under continued pressure from Wednesday when Fed Chair Powell warned that trade tensions could spur inflation and slow growth and that the Fed was in no hurry to cut interest rates.  However, T-notes recovered from their worst levels due to carryover support from a rally in European government bonds after the ECB cut interest rates.

European bond yields today are moving lower.  The 10-year German bund yield is down -1.6 bp to 2.493%.  The 10-year UK gilt yield is down -2.2 bp to 4.581%.

German Mar PPI fell -0.2% y/y, weaker than expectations of +0.4% y/y and the biggest decline in 5 months.

As expected, the ECB cut the deposit facility rate by -25 bp to 2.25% from 2.50%.  The post-meeting statement dropped the word “restrictive” to describe monetary policy and said, “The Eurozone economy has been building up some resilience against global shocks, but the outlook for growth has deteriorated owing to rising trade tensions.”

Swaps are discounting the chances at 74% for a -25 bp rate cut by the ECB at the June 5 policy meeting.

US Stock Movers

Energy producers are climbing today, with the price of WTI crude up more than +1% at a 1-1/2 week high.  Diamondback Energy (FANG) is up more than +4% to lead gainers in the Nasdaq 100, and APA Corp (APA) is up more than +3%.  Also, Haliburton (HAL), Conoco Phillips (COP), Baker Hughes (BKR), Marathon Petroleum (MPC), Phillips 66 (PSX), Devon Energy (DVN), and Occidental Petroleum (OXY) are up more than +2%.  In addition, Chevron (CVX) is up more than +2% to lead gainers in the Dow Jones Industrials.

Eli Lilly (LLY) is up more than +14% to lead gainers in the S&P 500 after saying a late-stage trial of its oral GLP-1 drug, orforglipron, met key efficacy goals and could become the first approved oral diabetes and weight-loss treatment.

Fidelity National Information (FIS) is up more than +6% after selling its stake in Worldpay to Global Payments for $6.6 billion.

Huntington Bancshares (HBAN) is up more than +4% after reporting Q1 net interest margin of 3.10%, above the consensus of 2.97%.

Charles Schwab (SCHW) is up more than +3% after reporting Q1 total net new assets of $132.4 billion, well above the consensus of $115.69 billion. 

HB Fuller (FUL) is up more than +2% after Baird upgraded the stock to outperform from neutral with a price target of $60. 

Health insurance stocks are under pressure today, led by a -19% slump in UnitedHealth Group (UNH) after cutting its full-year earnings outlook to $26.00-$26.50 from $29.50-$30.00, well below the consensus of $29.73.  Also, Humana (HUM) is down more than -8%, and Elevance Health (ELV) and CVS Health (CVS) are down more than -6%.  In addition, Centene (CNC) is down more than -4%, Molina Healthcare (MOH) is down more than -3%, and Cigna (CI) is down more than -1%. 

Global Payments (GPN) is down more than -14% after acquiring Worldpay for $24.3 billion.

Snap-on Inc (SNA) is down more than -6% after reporting Q1 net sales of $1.14 billion, weaker than the consensus of $1.20 billion.

QXO Inc (QXO) is down more than -7% after announcing it intends to offer $500 million of shares of its common stock. 

Alcoa (AA) is down more than -3% after saying the 25% tariff on metal imports has already cost it $20 million since the tariffs went into effect.

AngloGold Ashanti Plc (AU) is down more than -3% after HSBC downgraded the stock to reduce from hold with a price target of $35.

Earnings Reports (4/17/2025)

American Express Co (AXP), Blackstone Inc (BX), Charles Schwab Corp/The (SCHW), DR Horton Inc (DHI), Fifth Third Bancorp (FITB), Huntington Bancshares Inc/OH (HBAN), KeyCorp (KEY), Las Vegas Sands Corp (LVS), Marsh & McLennan Cos Inc (MMC), Netflix Inc (NFLX), Regions Financial Corp (RF), Snap-on Inc (SNA), State Street Corp (STT), Truist Financial Corp (TFC), UnitedHealth Group Inc (UNH).