Market Recap – Thursday, April 24, 2025

US Equities Rally Amid Trade and Earnings Optimism

Stocks finished higher in today’s trading, continuing the upward momentum from earlier this week. Major indices added to their solid gains, with the S&P 500 and Nasdaq both posting notable increases. The rally was supported by a strong showing from tech, with stocks like ServiceNow (NOW-US) standing out. Other outperformers included semiconductors, autos, industrials, and asset managers, with retail favorites also faring well. Despite the overall strength, sectors such as media, food and beverage, and healthcare lagged behind.

Macroeconomic and Trade Developments

The market took its cues from a mix of earnings surprises, positive commentary on tariff mitigation, and a more supportive environment for risk assets. Trade concerns remained a theme, with mixed news on US-China relations. While reports suggested potential de-escalation in the trade war, the Chinese Ministry of Commerce reiterated that no formal negotiations were ongoing, pushing back on claims of progress. This uncertainty kept the market cautious, though hopes for tariff reductions and de-escalation with other countries like India provided some optimism.

On the economic front, March durable goods orders came in well above expectations, rising 9.2% month-over-month, driven largely by transportation equipment. Core capital goods, however, were slightly under expectations. Initial jobless claims were slightly higher than expected, but continuing claims were lower, signaling some stability in the labor market. Meanwhile, existing home sales missed expectations, reflecting ongoing challenges in the housing market amid high mortgage rates.

Federal Reserve and Market Outlook

Federal Reserve commentary added to the mixed sentiment, with Governor Waller cautioning that focusing too much on data could risk policy delays. He noted that tariffs would likely lead to a one-time upward price adjustment, with the labor market potentially feeling the strain in the near term. The market remains uncertain about the timing of Fed rate cuts, with some analysts expecting action as soon as June, depending on economic data. The Fed’s stance remains largely dovish, though concerns about inflation and trade policy continue to loom large.

Earnings Activity: A Mixed Bag

Earnings results continued to drive market moves, with several companies showing resilience despite macroeconomic challenges. ServiceNow (NOW-US) reported strong cRPO growth and positive momentum in AI adoption, while Texas Instruments (TXN-US) and Lam Research (LRCX-US) benefited from industrial recovery. However, there were notable disappointments in consumer sectors, with Procter & Gamble (PG-US) and PepsiCo (PEP-US) missing earnings expectations, citing weaker demand and cost pressures.

Investment Takeaways

Today's market rally was fueled by strong earnings reports and optimism over trade negotiations, but the overall macroeconomic picture remains clouded by tariff uncertainties and Fed policy risks. While the market has found support in tariff mitigation efforts and a solid earnings season, investors should remain cautious about the potential for near-term volatility. The mixed economic data and geopolitical tensions underscore the need for a diversified portfolio that can weather both macro and company-specific risks. Focus on companies with strong fundamentals, earnings growth, and solid risk mitigation strategies, while remaining aware of the broader market volatility that could arise from trade tensions and shifts in monetary policy.