Market Rebound
The stock market made a strong rebound today, recovering all of yesterday’s losses and more. The initial gains had no specific news catalyst, but the situation changed in the early afternoon. Bloomberg reported that Treasury Secretary Bessent expects a de-escalation in the China tariff situation, sparking hope for a resolution to the U.S.-China trade impasse. However, it’s important to note that negotiations have not yet started, and today’s comments lacked substance. The market was already on an upward trajectory before the Bessent report, driven by short-covering and contrarian buying due to a prevailing bearish sentiment.
Investor Sentiment
The level of bearish sentiment among individual investors has been over 50% for eight consecutive weeks, the longest streak since 1987, according to the American Association of Individual Investors. The rebound was further supported by a rally in the U.S. Dollar Index (+0.7% to 98.97) and a two-basis-point drop in the 10-year note yield to 4.39%, despite a weak 2-year note auction. These moves eased the “sell America” trend that affected the market on Monday, when the Dow, Nasdaq, and S&P 500 fell by 971, 415, and 124 points, respectively.
Market Drivers
Mega-cap stocks played a crucial role in today’s market performance, led by Tesla (TSLA 237.97, +10.47, +4.6%) ahead of its earnings report. Advancers significantly outnumbered decliners, with a nearly 9-to-1 margin at the NYSE and a better than 4-to-1 margin at the Nasdaq. Both the market cap-weighted and equal-weighted S&P 500 indices rose by 2.5%. All 11 S&P 500 sectors posted solid gains, with eight sectors increasing by at least 2.1%.
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Today’s News
Tesla (TSLA, Financial) shares experienced a slight decline in after-hours trading following the company’s announcement of missed earnings expectations for the first quarter. The electric vehicle giant reported a profit of $0.27 per share, falling short of the consensus estimate of $0.42. Additionally, the company withdrew its full-year guidance but reassured investors of its commitment to producing more affordable models and the Cybertruck. Tesla’s total revenue decreased by 9% to $19.34 billion, with automotive revenue down 20% to $13.97 billion. However, energy generation and storage revenue saw a significant increase of 67%.
Intuitive Surgical (ISRG, Financial) reported strong first-quarter results, with non-GAAP EPS of $1.81, surpassing expectations by $0.08. The company’s revenue increased by 19% year-over-year to $2.25 billion, exceeding estimates by $60 million. Intuitive Surgical provided a positive outlook for 2025, projecting worldwide da Vinci procedure growth of 15% to 17% and a gross profit margin of 65% to 66.5%, despite the impact of tariffs.
RTX (RTX, Financial) shares dropped by 11% after the company announced disappointing sales guidance for the year. The aerospace and defense company projected adjusted sales between $83 billion and $84 billion, lower than Wall Street’s average estimate of $84.2 billion. RTX also highlighted potential impacts from newly enacted tariffs, which could result in an $850 million reduction in pretax operating profit.
Hims & Hers Health (HIMS, Financial) was affected by the U.S. FDA’s warning regarding compounded versions of the drug finasteride in topical form. The FDA emphasized the lack of an approved topical version of finasteride, which is marketed by some telemedicine platforms, including Hims & Hers, for treating hair loss. The warning may impact the company’s product offerings and market strategy.
YouTube, part of Alphabet (GOOGL, Financial) (GOOG, Financial), captured 12% of overall TV viewing in March, according to Nielsen’s “Media Distributor Gauge” report. Warner Bros. Discovery (WBD, Financial) also saw a significant increase in viewership, driven by shows like “The White Lotus” and “The Pitt.” Disney (DIS, Financial) benefited from events like The Oscars, which contributed to its 10.5% share of TV watch time.
Warner Bros. Discovery (WBD, Financial) introduced a new member add-on feature for its Max platform, allowing users to add an extra member for $7.99 per month. This move is aimed at curbing password sharing and mirrors similar strategies by Netflix (NFLX, Financial) and Disney (DIS, Financial). The feature is available to direct Max subscribers and provides added flexibility for account management.
Northrop Grumman (NOC, Financial) reported a record backlog of $92.8 billion, despite delays in certain awards impacting its Q1 sales ramp. The company recorded a $477 million pre-tax loss related to the B-21 program due to higher manufacturing costs. However, Northrop Grumman anticipates improvements throughout the year and reaffirmed its full-year sales guidance of $42 billion to $42.5 billion.
Enphase Energy (ENPH, Financial) missed earnings expectations for Q1, with non-GAAP EPS of $0.68, short of estimates by $0.04. Revenue increased by 35.2% year-over-year to $356.08 million but fell short by $4.56 million. The company provided a mixed outlook for Q2, with expected revenue between $340.0 million to $380.0 million and gross margins impacted by new tariffs.
Lockheed Martin (LMT) reported a 4% year-over-year sales increase in Q1 2025, driven by strong contract wins, including missile programs valued at up to $10 billion. The company highlighted robust cash generation, enabling significant R&D and capital expenditures. Lockheed Martin reaffirmed its full-year guidance, expecting mid-single-digit sales growth and double-digit free cash flow growth per share.
SAP SE (SAP) shares rose 5% after reporting Q1 results that exceeded expectations, with revenue up 12% year-over-year to €9.01 billion. Cloud revenue grew by 27% to €4.99 billion, contributing to the company’s strong performance. SAP maintained its positive outlook for the 2025 fiscal year, despite uncertainties from the ongoing trade war.
Halliburton (HAL) shares fell by 5.5% following a nearly 10% drop after Q1 results revealed a 6.6% year-over-year revenue decline. The company’s North American revenues fell 12%, and it warned of potential earnings impacts from tariffs and reduced oilfield activity. CEO Jeff Miller noted that customer evaluations of activity scenarios could lead to higher-than-normal gaps in equipment scheduling.
