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Bank of America (BAC) and Citigroup (C) both exceeded Q1 consensus earnings estimates. Both stocks are trading higher in pre-market action, yet the futures for the major indices are trading lower.
Currently, the S&P 500 futures are down 11 points and are trading 0.2% below fair value, the Nasdaq 100 futures are down 14 points and are trading fractionally below fair value, and the Dow Jones Industrial Average futures are down 109 points and are trading 0.2% below fair value.
These aren't big moves, which is frankly nice to see, yet the lack of buying conviction despite the good earnings news out of Bank of America and Citigroup, as well as Johnson & Johnson (JNJ) for that matter, is connected to the ongoing tariff/trade war angst that has been captured in offsetting headlines this morning.
- Bloomberg reports that China has ordered airlines to stop accepting Boeing (BA) deliveries.
- The Department of Commerce has launched Section 232 investigations into imports of semiconductors, semiconductor manufacturing equipment, pharmaceuticals, and pharmaceutical ingredients.
- Germany's ZEW Economic Sentiment Index for April plunged to -14.0 from 51.6.
- The IEA lowered the 2025 global oil demand growth forecast by 300 kb/d, citing escalating trade tensions that have negatively impacted the economic outlook.
- The April Empire State Manufacturing Survey improved to -8.1 from -20.0 in March; however, the index for future general business conditions dropped 20 points to -7.4. The dividing line between expansion and contraction is 0.0.
These are all reminders that the full-year earnings outlook is very much in flux and is being driven at this time by a downside bias. That understanding has curtailed the willingness to pay up for current earnings estimates because confidence is lacking in those estimates. Consequently, there is a proclivity to sell into strength.
To that end, the market has been strong in recent sessions. The S&P 500 is up nearly 12% from its April 7 low, and the Nasdaq Composite is up nearly 14%. Those moves were catalyzed by President Trump's announcement of a 90-day pause on reciprocal tariffs for most countries, but the energy behind those gains has faded with "other" tariff actions still in play, China seemingly digging in for a trade war, and both the dollar and Treasury market exhibiting some skittish behavior.
