Stock Market Update

The S&P 500 futures are up 124 points and are trading 2.4% above fair value, the Nasdaq 100 futures are up 504 points and are trading 2.8% above fair value, and the Dow Jones Industrial Average futures are up 681 points and are trading 1.7% above fair value.

Early trading features a strong positive bias. Tuesday's rally is poised to continue after President Trump told reporters that he has no intention of firing Fed Chair Powell. The president also said he will not "play hardball" in trade talks with China, adding that tariff rates will come down substantially if the two sides reach a deal. 

Pre-open gains are led by mega caps and tech stocks. Tesla (TSLA) is a winning standout despite reporting below-consensus earnings and revenue in Q1. CEO Elon Musk said he would spend less time on government issues. 

Treasury yields are sharply lower, responding to the comments by President Trump. The 10-yr yield is down nine basis points to 4.30%. 

The weekly Mortgage Applications Index dropped 12.7% following a 8.5% decline last week. 

In corporate news:

• Tesla (TSLA 255.20, +17.13, +7.2%): misses by $0.14, misses on revs, total automotive revenue down 20%; Reiterates that Cybercab is scheduled for volume production starting in 2026; CEO Elon Musk on conference call said his time with Department of Government Efficiency will drop “significantly.” He said he will continue to spend a “day or two per week” on government issues “for as long as the president would like me to do so.”
• SAP SE (SAP 273.19, +20.79, +8.3%): beats by EUR 0.14, misses on revs; provides FY25 guidance
• Boeing (BA 169.00, +6.48, +4.0%): beats by $0.68, reports revs in-line; results driven by higher deliveries; 737 program gradually increased production
• GE Vernova (GEV 349.78, +23.71, +7.3%): beats by $0.46, beats on revs; reaffirms FY25 revs guidance
• Philip Morris International (PM 171.00, +6.89, +4.2%): beats by $0.08, beats on revs; guides Q2 EPS mostly above consensus; guides FY25 EPS above consensus
• AT&T (T 28.01, +1.05, +3.9%): misses by $0.02, reports revs in-line; reaffirms FY25 EPS guidance; plans to commence share repurchases in the second quarter
• Intuitive Surgical (ISRG 496.00, +17.26, +3.6%): beats by $0.07, beats on revs, procedure growth of +17%; raises FY25 procedure growth forecast, lowers margin guidance; tariffs to impact margins; continues to see healthcare spending constraints in several key markets

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region climbed on Wednesday, following the rally on Wall Street. Japan's Nikkei: +1.9%, Hong Kong's Hang Seng: +2.4%, China's Shanghai Composite: -0.1%, India's Sensex: +0.7%, South Korea's Kospi: +1.6%, Australia's ASX All Ordinaries: +1.4%.
  • In economic data:
    • Japan's flash April Manufacturing PMI 48.5 (expected 48.7; last 48.4) and flash Services PMI 52.2 (last 50.0). February Tertiary Industry Activity Index -0.90 (last -8.6)
    • South Korea's April Consumer Confidence 93.8 (last 93.4)
    • India's flash April Manufacturing PMI 58.4 (last 58.1) and flash Services PMI 59.1 (last 58.5)
    • Singapore's March CPI -0.1% m/m (last 0.8%); 0.9% yr/yr (expected 1.0%; last 0.9%). March Core CPI 0.5% yr/yr (last 0.6%)
    • Hong Kong's March CPI 0.0% m/m (last -0.1%); 1.4% yr/yr (last 1.4%)
    • Australia's flash April Manufacturing PMI 51.7 (last 52.1) and flash Services PMI 51.4 (last 51.6)
    • New Zealand's March Credit Card Spending 0.8% yr/yr (last 0.8%)
  • In news:
    • Markets drew some relief from President Trump's remarks that he does not intend to fire Fed Chairman Powell after all.
    • Automakers and technology stocks in Japan had a strong showing while China's Shanghai Composite (-0.1%) finished slightly lower.
    • Flash April Manufacturing PMI readings from the region showed the tenth consecutive month of contracting activity in Japan (48.5).
• Major European indices trade on a firmly higher note. STOXX Europe 600: +1.7%, Germany's DAX: +2.7%, U.K.'s FTSE 100: +1.4%, France's CAC 40: +2.2%, Italy's FTSE MIB: +1.1%, Spain's IBEX 35: +1.1%.
  • In economic data:
    • Eurozone's February Construction Output -0.48% m/m (last 0.58%). February Trade surplus EUR24.0 bln (last surplus of EUR800 mln). Flash April Manufacturing PMI 48.7 (expected 47.4; last 48.6) and flash Services PMI 49.7 (expected 50.4; last 51.0)
    • Germany's flash April Manufacturing PMI 48.0 (expected 47.5; last 48.3) and flash Services PMI 48.8 (expected 50.3; last 50.9)
    • U.K.'s flash April Manufacturing PMI 44.0, as expected (last 44.9) and flash Services PMI 48.9 (expected 51.5; last 52.5). March Public Sector Net Borrowing GBP16.44 bln (expected GBP15.40 bln; last GBP12.31 bln)
    • France's flash April Manufacturing PMI 48.2 (expected 47.9; last 48.5) and flash Services PMI 46.8 (expected 47.7; last 47.9)
  • In news:
    • Germany's DAX (+2.7%) received a strong boost from a 10% post-earnings rally in SAP.
    • Flash April PMI readings from the region showed ongoing contraction in Germany's Manufacturing PMI (48.0) and a dip into contraction in Services (48.8).
    • There are some concerns in the region about the strength of bank earnings during the remainder of the year despite a strong showing in Q1.