Schwab Market Update

Published as of: April 25, 2025, 9:05 a.m. ET

(Friday market open) The three-day win streak looks threatened this morning despite solid results from Alphabet (GOOGL). Fresh comments from President Trump sounded hawkish, as he told Time magazine that 20% to 50% tariffs on imported goods would be a "total victory." It's unclear if that's a negotiating ploy, but White House pronouncements often move the market these days. Trump also said he's spoken to China's President Xi Jinping, but China denied talks have occurred, CNBC reported.

"While there have been initial talks with countries like India, Italy and Japan, no deals have been announced," said Michael Townsend, managing director, legislative and regulatory affairs at Schwab. "And while the president has said he is open to talks with China and even to pre-emptively reduce the 145% tariff on imports from China, there's no clarity on when that will happen. Members of Congress have been getting an earful in their home districts over the last couple of weeks from companies and voters upset about the tariffs, so they are eager to have some good news to share on that front."

Turning to other news, Treasury yields retreated after a slide yesterday helped lift stocks, including info tech. Pressure reflected dovish comments from two Federal Reserve policy makers. "Fed Chair Powell has generally pushed back on the idea of premature easing since inflation is still a problem, but some officials have suggested that they would favor rate cuts if the labor market did in fact deteriorate," said Collin Martin, director, fixed income strategy at the Schwab Center for Financial Research. "We expect the Fed to cut rates this year, but not until the second half."

1. Companies get cautious, expect consumer slowdown: Investors got walloped by a host of earnings yesterday, but quarterly numbers only told part of the story. Most companies are beating analysts' first-quarter revenue and profit estimates, but many delivered conservative outlooks. Firms treading cautiously included IBM (IBM), Merck (MRK), Procter & Gamble (PG), Chipotle (CMG), and Southwest (LUV). And that was just yesterday. Some say tariffs will raise costs, and that prices on store shelves will climb accordingly. Shelves could also empty if companies can't source goods from China. Others said they expect weaker demand, including airlines that trimmed capacity. Chipotle already sees a "slowdown" in consumer spending. IBM hinted that government spending cuts could hurt business, though it added that frugal clients are turning to the cloud and AI to get costs down. And actual data are starting to reflect trade concerns as recent freight shipments to the U.S. from China sagged noticeably. Earnings next week from consumer-facing firms like General Motors (GM), Royal Caribbean (RCL), Apple (AAPL), and Coca Cola (KO) could also be telling. The Magnificent Seven dominate next week's earnings, as four report.

2. Consumer sentiment seen gloomy: Recent consumer sentiment data were dismal, and analysts don't expect today's 10 a.m. ET final April University of Michigan Consumer Sentiment report to improve. In fact, it's seen worsening to a headline of 48.5 from 50.8, with inflation expectations also in focus after spiking the last two months. This report, once a backwater for Wall Street, made headlines a month ago and helped send stocks down the day it came out. Still, sentiment tracks what analysts call "soft" data, and they need to see "hard" data like employment and retail sales fall to confirm the gloom. "With consumers, I always say, watch what they do, and not what they say,” said Kathy Jones, chief fixed income strategist at Schwab.

3. Investors step back: The AAII Investor Sentiment Survey's bull-bear spread has stayed below –20 for nine consecutive weeks, the longest streak since the early 1990's. This could reflect investors building in lower expectations for 2025 corporate earnings growth, so today's earnings update from FactSet could be illuminating. Though the full year is a bit harder to gauge, analysts have started to dramatically pull back estimates for second quarter S&P 500 earnings per share gains. The average estimate was 7.2% last week, according to FactSet, down from 9.2% less than a month ago. Keep an eye on this report today and specifically the second quarter outlook to glean whether analysts grew more pessimistic after hearing from more than 100 S&P companies this week, some of which cut or pulled guidance amid U.S. policy turbulence that's made it harder for them to make business plans and to see how the year might play out. More than 100 report next week, as well. So far this quarter, only slightly around 60% of reporting firms have beaten analysts' revenue estimates, a relatively tepid showing.

- Alphabet climbed 4.3% in pre-market trading after earnings per share of $2.81 easily beat the $2.01 consensus from FactSet and revenue topped consensus by $1 billion. The company cited "healthy growth and momentum across the business," said it's "achieving breakthroughs in performance" with Gemini 2.5, its most intelligent AI model, and continues to invest in AI. Cloud growth of 28% was down from 30% the previous quarter, but double-digit gains in YouTube advertising and generally strong cloud and services momentum cheered investors.

- Intel (INTC) tumbled 7.3% despite beating analysts' quarterly earnings and revenue consensus. The chip firm's second quarter outlook missed analysts' estimates for top- and bottom line. "The current macro environment is creating elevated uncertainty across the industry, which is reflected in our outlook," Intel said in its release.

- T-Mobile (TMUS) dropped 5.4% ahead of the open despite better-than-expected earnings. A slowdown in closely watched postpaid phone customer growth may be the culprit, but profit-taking may also be a factor as the stock is up 60% over the last year, Barron's observed.

- Gilead Sciences (GILD) fell 3.3% as quarterly revenue came in just shy of Wall Street's expectations. Two key drugs—one for HIV and the other for breast cancer—missed analysts' forecasts, Investor's Business Daily noted.

- AbbVie (ABBV) added 3% ahead of the open after beating analysts' estimates for quarterly revenue and earnings and raising its fiscal 2025 EPS guidance.

- Apple (AAPL) fell 1.2% in pre-market trading. The company plans to make most iPhones sold in the U.S. in India by the end of 2026, Reuters reported.

- Crypto values, including bitcoin (/BTC), rose again early Friday, with bitcoin having a particularly strong week as risk appetite returned to the market. Bitcoin is back into positive territory for the year and topped $95,000 today for the first time since early March.

- Even if today ends up red, major indexes are on pace now for a positive week. The S&P 500 index (SPX) is up 3.8% and Nasdaq Composite ($COMP) is up 5.4%. Technical resistance for the SPX may be near 5,500, a level it approached yesterday. Monday's 5,100 low could be a near-term support point.

- Chances of a May Fed rate cut are 7% early today, according to the CME FedWatch Tool. June rate cut odds are 62%. Futures trading builds in high odds of three to four rate cuts this year, which would take the target range to well below 4% from the current 4.25% to 4.5%. The Fed soon enters its "quiet period" approaching the May 6–7 meeting. San Francisco Fed President Mary Daly speaks today.

- The 10-year Treasury note fell another basis point early today after falling seven basis points Thursday despite a $44 billon 7-year Treasury auction that saw soft demand, according to Briefing.com. That followed Wednesday's weak 2-year auction. However, hopes for progress on trade may be keeping a lid on yields.

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 S&P 500 index (SPX—candlesticks), closed just above its April 9 intraday high yesterday, the first time its eclipsed that level since the April 2 tariff "liberation day." While still well below its 50-day and 200-day moving averages (blue and orange lines), yesterday's close looked solid from a technical perspective, especially because the index closed near intraday highs. Relatively weak volume, however, raises questions about conviction, and 5,500 is still near-term resistance. Notice the 50-day moving average fell below the 200-day moving average last week, a technical pattern known as a "death cross." However, depressed sentiment combined with hope for trade progress possibly created recent short-covering and bullish positioning.

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

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).
May 1: April ISM Manufacturing Index and expected earnings from Eli Lilly (LLY), CVS Health (CVS), Mastercard (MA), McDonald's (MCD), Apple (AAPL), Amazon (AMZN), U.S. Steel (X), Roku (ROKU), Amgen (AMGN), and MicroStrategy (MSTR).
May 2: April nonfarm payrolls and expected earnings from ExxonMobil (XOM) and Chevron (CVX).