The S&P 500 Index ($SPX) (SPY) today is down -0.27%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.04%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.55%.  March E-mini S&P futures (ESH25) are down by -0.18%, and March E-mini Nasdaq futures (NQH25) are down by -0.48%. 

Stock indexes today are under pressure due to weakness in megacap technology stocks stemming from disappointing earnings.  Alphabet is down more than -7% after reporting weaker-than-expected Q4 revenue as growth in its cloud business slowed.  Also, Advanced Micro Devices is down more than -10% after reporting Q4 data center revenue that was below consensus.

Concern about US-China trade relations is also weighing on stocks, with Apple down more than -1% after Bloomberg reported that China’s antitrust watchdog is weighing a probe into the company’s App Store policies.  On Tuesday, the US imposed a 10% tariff on Chinese goods, and China retaliated immediately and announced 15% tariffs on US coal and liquified natural gas, as well as 10% levies on US oil and agriculture equipment.  

Stocks found some support on a decline in bond yields after the 10-year T-note yields fell to a 7-week low today as supply concerns eased after the Treasury said it will sell $125 billion of T-notes and T-bonds in its February quarterly refunding, unchanged from last quarter and, “based on current projected borrowing needs, anticipates maintaining nominal coupon and auction sizes for at least the next several quarters.”

US labor market strength is positive for stocks after the Dec ADP employment change rose +183,000, stronger than expectations of +150,000 and Nov was revised upward to +176,000 from the previously reported +122,000.

The US Dec trade deficit of -$98.4 billion was the largest deficit in 2-3/4 years and was wider than expectations of -$96.8 billion, a negative factor for Q4 GDP.

Richmond Fed President Barkin said policymakers need more time to understand where the US economy and inflation are headed amid elevated uncertainty about President Trump’s policies, signaling he wants to hold interest rates steady.

Earnings season is in full swing as companies report Q4 earnings results.  Qualcomm will release earnings after today’s close.  Amazon.com will release its quarterly results on Thursday.  According to Bloomberg Intelligence, analysts estimate S&P 500 earnings grew by +7.5% y/y in Q4, the second-highest pre-season forecast in the past three years.

The markets are discounting the chances at 17% for a -25 bp rate cut at the next FOMC meeting on March 18-19.

Overseas stock markets today are mixed.  The Euro Stoxx 50 is down -0.09%.  China’s Shanghai Composite Index closed down -0.65%.  Japan’s Nikkei Stock 225 closed up +0.09%.

Interest Rates

March 10-year T-notes (ZNH25) today are up +12 ticks.  The 10-year T-note yield is down -6.2 bp to 4.448%.  March T-notes today rallied to a 7-week high, and the 10-year T-note yield fell to a 7-week high of 4.442%.   T-notes are climbing today on positive carryover from strength in European government bonds.  Gains in T-notes accelerated after the Treasury announced no change in the size of its refunding auctions for “at least the next several quarters,” reducing concern about increased Treasury supply.

On the negative side for T-notes is today’s stronger-than-expected Dec ADP employment report, a hawkish factor for Fed policy.  Also, comments today from Richmond Fed President Barkin signal he wants to keep Fed policy steady for the foreseeable future. 

European government bond yields today are moving lower.  The 10-year German bund yield dropped to a 1-month low of 2.344% and is down -4.9 bp to 2.348%.  The 10-year UK gilt yield fell to a 7-week low of 4.441% and is down -7.5 bp to 4.446%.

Eurozone Dec PPI rose +0.4% m/m and was unchanged y/y, close to expectations of +0.5% m/m and -0.1% y/y.

Swaps are discounting the chances at 100% for a -25 bp rate cut by the ECB at the March 6 policy meeting.

US Stock Movers

Alphabet (GOOGL) is down more than -7% after reporting Q4 revenue ex-TAC of $81.62 billion, below the consensus of $82.82 billion. 

Advanced Micro Devices (AMD) is down more than -10% to lead losers in the Nasdaq 100 after reporting Q4 data center revenue of $3.86 billion, weaker than the consensus of $4.09 billion.

Apple (AAPL) is down more than -1% after Bloomberg reported that China’s antitrust watchdog is weighing a probe into the company’s policies and the fees it charges app developers.

FMC Corp (FMC) is down more than -33% to lead losers in the S&P 500 after forecasting 2025 adjusted EPS of $3.26-$3.70, well below the consensus of $4.40. 

Match Group (MTCH) is down more than -7% after forecasting full-year revenue of $3.38 billion-$3.50 billion, weaker than the consensus of $3.52 billion. 

Uber Technologies (UBER) is down more than -6% after reporting Q4 adjusted Ebitda of $1.84 billion, below the consensus of $1.85 billion.

UnitedHealth Group (UNH) is down more than -3% to lead losers in the Dow Jones Industrials after activist investor Bill Ackman said he would short the stock while questioning the firm’s profitability.

Chipotle Mexican Grill (CMG) is down more than -4% after reporting Q4 comparable sales rose +5.40%, weaker than the consensus of +5.67%. 

Harley-Davidson (HOG) is down more than -1% after reporting Q4 revenue of $688 million, below the consensus of $712 million.

Mattel (MAT) is up more than +15% after reporting Q4 net sales of $1.65 billion, stronger than the consensus of $1.63 billion and forecasting full-year adjusted EPS of $1.66-$1.72, well above the consensus of $1.56. 

Johnson Controls International Plc (JCI) is up more than +13% to lead gainers in the S&P 500 after boosting its gull-yea adjusted EPS forecast to $3.50-$3.60 from a previous forecast of $3.40-$3.50, above the consensus of $3.50. 

Bio-Techne (TECH) is up more than +8% after reporting Q2 adjusted EPS of 42 cents, stronger than the consensus of 39 cents.

CDW Corp (CDW) is up more than +8% to lead gainers in the Nasdaq 100 after reporting Q4 net sales of $5.19 billion, above the consensus of $5.03 billion. 

Amgen (AMGN) is up more than +5% to lead gainers in the Dow Jones Industrials after reporting Q4 adjusted EPS of $5.31, above the consensus of $5.08.

Electronic Arts (EA) is up more than +6% after reporting Q3 net bookings of $2.22 billion, above the consensus of $2.21 billion.

Fiserv (FI) is up more than +6% after reporting Q4 adjusted EPS of $2.51, better than the consensus of $2.48, and forecast 2025 adjusted EPS of $10.10-$10.30, the midpoint above the consensus of $10.17.

Cirrus Logic (CRUS) is up more than +3% after reporting Q3 net sales of $555.7 million, better than the consensus of $510.1 million, and forecast Q4 revenue of $350 million-$410 million, the midpoint above the consensus of $359.9 million. 

Workday (WDAY) is up more than +2% after announcing it will cut 8.5% of its current workforce as part of a restructuring plan. 

Broadcom (AVGO) is up more than +2% after a higher-than-expected capital spending forecast from customer Alphabet, which accounts for 9% of the company’s sales. 

Earnings Reports (2/5/2025)

Aflac Inc (AFL), Align Technology Inc (ALGN), Allstate Corp/The (ALL), AvalonBay Communities Inc (AVB), Bio-Techne Corp (TECH), Boston Scientific Corp (BSX), Bunge Global SA (BG), CDW Corp/DE (CDW), Cencora Inc (COR), Cognizant Technology Solutions (CTSH), Corpay Inc (CPAY), Corteva Inc (CTVA), Dayforce Inc (DAY), Emerson Electric Co (EMR), Fiserv Inc (FI), Ford Motor Co (F), Globe Life Inc (GL), Hologic Inc (HOLX), Illinois Tool Works Inc (ITW), Johnson Controls International (JCI), McKesson Corp (MCK), MetLife Inc (MET), Mid-America Apartment Communities (MAA), Molina Healthcare Inc (MOH), News Corp (NWSA), Old Dominion Freight Line Inc (ODFL), O’Reilly Automotive Inc (ORLY), PTC Inc (PTC), QUALCOMM Inc (QCOM), Skyworks Solutions Inc (SWKS), Stanley Black & Decker Inc (SWK), STERIS PLC (STE), T Rowe Price Group Inc (TROW), Uber Technologies Inc (UBER), UDR Inc (UDR), Walt Disney Co/The (DIS).