Schwab Market Update

Published as of: April 23, 2025, 9:12 a.m. ET

(Wednesday market open) Three weeks after "liberation day," President Trump soothed investor tensions on trade and the Federal Reserve. Stocks, led by technology, are soaring while Treasury yields dip. The trade war is far from over, but Trump indicated wiggle room on tariffs against Chinese imports and said he doesn't plan to fire Fed Chairman Jerome Powell. Trump's backtrack lifted a weight on Wall Street that had this month on pace to be the worst April for stocks since 1932, and overshadowed Tuesday's dismal first quarter results from Tesla (TSLA).

"It seems that the president has gotten the message—perhaps from the markets—that trade wars and threatening to remove the Fed Chair are not great ideas," said Kathy Jones, chief fixed income strategist at Schwab. "It is a welcome break from the recent aggressive stance, but until there is actual clarity on what the deals are, the market is likely to remain cautious."

While it's not surprising that Magnificent Seven stocks like Amazon (AMZN) and Tesla benefited from sunnier trade talk that began with remarks from Treasury Secretary Scott Bessent yesterday, don't overlook the industrial and financial sectors, as well as homebuilders. These are cyclical stocks that tend to perform better when the economy improves. Leading names Tuesday included mining company Freeport-McMoRan (FCX), steel makers Alcoa (AA) and Cleveland-Cliffs (CLF), industrial conglomerate 3M (MMM), home builders PulteGroup (PHM) and Toll Brothers (TOLL), and financials like Morgan Stanley (MS), Visa (V), and Mastercard (MA).

1. New home sales, Treasury auctions ahead: Today features March new home sales shortly after the open, and analysts expect a seasonally adjusted annual total of 684,000, up from 676,000 in February. Last week was challenging for home builders as March housing starts came in well below analysts' expectations and D.R. Horton (DHI) said spring demand was off to a slow start. The Fed's Beige Book on economic conditions around the country is due this afternoon and might give early indications on how businesses are handling any trade-related weakness in demand and their hiring plans. A 5-year Treasury note auction is on tap today, as well, after demand for a 2-year note auction yesterday didn't impress, and several Fed speakers are scheduled.

2. Tesla falls short: Tesla's results missed analysts' revenue and earnings per share estimates by quite a bit. The company's earnings per share of $0.27 compared with consensus of $0.40, while revenue of $19.34 billion was below the consensus $21.2 billion. Tesla now has missed average earnings and revenue estimates in several recent quarters. Still, shares didn't initially move much in pre-market trading, perhaps because they were already down 40% from the last time Tesla reported. Quarterly operating margin fell to 2.1%, from 5.5% a year ago. Tesla blamed reduced vehicle prices, declining vehicle deliveries, and an increase in operating expenses. The company also left investors guessing on how the rest of the year might go, saying it plans to revisit guidance when it reports second-quarter results in three months. That calls previous talk from the company of possible 20% to 30% sales growth in 2025 into question. Even so, shares climbed more than 7% in the pre-market hours, spurred in part by trade hopes as Trump eased his stance, but also possibly by CEO Elon Musk's promise to spend more time on the company and less in Washington, D.C.

3. Crypto enjoys bounce: While a recent rally in Bitcoin (/BTC) hasn't extended across all cryptocurrencies, it's drawn attention in a very rough time for stocks and Treasuries. Since dipping below its 200-day moving average near $79,000 a few weeks ago, Bitcoin has been on the warpath, surging above $90,000 yesterday for the first time since early March. The rally accompanies a recent surge in gold (/GC), suggesting some investors may be shifting into both for perceived "safety" even as the Treasury market and the dollar—traditional "safety" plays—struggle thanks to trade worries. Also, the sharp climb in Bitcoin on Monday that accompanied a dive in stocks eased recent worries that the two had become overly linked. Crypto's advocates have touted it as an alternative that can move in different directions from stocks, though that's not always been the case. "It appears that /BTC is breaking, or in the process of breaking, its historical relationship as a risk asset, though it's probably still early to declare victory," said Nathan Peterson, director of derivatives analysis at the Schwab Center for Financial Research. "But it looks very encouraging thus far." He added that the uptrend remains intact. Technically, Bitcoin's move yesterday took it above its 50-day moving average near $87,000, the first time it's traded above that since late February. Coming along for the ride were crypto-related names MicroStrategy (MSTR) and Coinbase (COIN). MicroStrategy reports earnings next week. The test for crypto might come the next time there's a major negative trade development or if the SPX backtracks to recent lows near 4,835.

- Major U.S. indexes began reversing Monday's losses yesterday even before Trump's comments, encouraged by a Bloomberg report that Treasury Secretary Bessent had called the current 145% tariffs on Chinese goods "unsustainable" and said he expects a "de-escalation." Investors might get more color on trade from Bessent when he speaks at 10 a.m. ET today.

- Boeing (BA) climbed 5.5% in early trading after its first quarter loss was narrower than analysts' expectations, helped by a nearly 60% rise in airplane deliveries. Boeing also said it would seek Federal Aviation Administration (FAA) approval to increase 737 Max production, CNBC reported.

- Philip Morris (PM) rose 4.5% in pre-market action following better-than-expected quarterly earnings and revenue. The consumer products firm also lifted spirits by guiding for above-consensus fiscal 2025 earnings per share.

- AT&T (T) climbed 3.7% ahead of the open as first quarter phone subscriber growth exceeded Wall Street's expectations at 324,000 postpaid net additions. That stood out from competitor Verizon's (VZ) loss of 289,000 wireless postpaid phone business and consumer subscribers VZ reported yesterday. AT&T's first quarter revenue also beat analysts' consensus view.

- Nvidia (NVDA) surged 5% in early trading, lifted by hopes that trade relations might warm between the U.S. and China. Other semiconductor stocks on the rise today include Broadcom (AVGO), Micron (MU), Advanced Micro Devices (AMD), and Intel (INTC), all up between 4% and 5%. The chip sector has suffered dramatically from worries about trade-related impact on business, though export restrictions against certain chip sales to China existed well before April 2.

- Apple (AAPL) added 3.1% and Amazon rose 5% in pre-market trading. Those two are, along with Tesla, the Magnificent Seven companies most widely expected to suffer from trade woes with China. Apple builds most of its iPhones there and Amazon's Chinese sellers have had to hike prices on their goods.

- Shares of European software company SAP SE (SAP) climbed 8% after earnings surpassed analysts' expectations, highlighted by strong cloud market growth. This could augur well for U.S. firms with cloud businesses including IBM (IBM) and Alphabet (GOOGL), which report this afternoon and tomorrow, respectively.

- The U.S. 10-year Treasury note yield (TNX:CGI) fell nearly 10 basis points early Wednesday to below 4.3%. Yields soared Monday when the market was fretting over Trump's recent criticism of Fed Chairman Powell, which appeared to threaten Fed independence. Yesterday Trump said he had no intention to fire Powell, whose term expires in just over a year.

- Chances of a May Fed rate cut slipped all the way down to 6% early today, according to the CME FedWatch Tool. June rate cut odds are 68%. In the wake of recent cautious comments from Fed officials, it increasingly appears that a May rate cut is off the table.

Turbulent market conditions can make anyone worried about their portfolio, and Schwab offers several perspectives that provide ideas to keep in mind at such times:

Market Volatility: What to Do During Turbulence
Bear Market: Now What? 
Market Volatility in Retirement: Are You Prepared? 
Navigating the Markets: Tariffs and Trade

The 10-year Treasury note yield (TNX:CGI—candlestick) continues to hover around its 50-day moving average (blue line), currently near 4.32%. It hasn't strayed much above or below that since some large swings earlier this month. But it also hasn't been able to find enough buying interest in Treasuries to get back below that level in recent days (yields climb when underlying Treasuries fall). A weak 2-year note auction yesterday didn't help, and investors await a 5-year note auction today.

Check out the Investors' Calendar for a summary of the top economic events and earnings reports on tap this week.

April 24: March durable goods, March existing home sales, and expected earnings from American Airlines (AAL), PepsiCo (PEP), Merck (MRK), and Intel (INTC).
April 25: University of Michigan April Consumer Sentiment—final.
April 28: U.S. Treasury refinancing estimates and expected earnings from Waste Management (WM).
April 29: March Job Openings and Labor Turnover Survey (JOLTS), April Consumer Confidence, and expected earnings from Coca-Cola (KO), UPS (UPS), Pfizer (PFE), Royal Caribbean (RCL), Honeywell (HON), Archer-Daniels-Midland (ADM), Altria Group (MO), General Motors (GM), Kraft Heinz (KHC), Starbucks (SBUX), and Visa (V).
April 30: March PCE and Core PCE Prices, first estimate of Q1 GDP, Bank of Japan interest rate decision, and expected earnings from Caterpillar (CAT), Microsoft (MSFT), Meta Platforms (META), Qualcomm (QCOM), MGM Resorts (MGM), and Allstate (ALL).