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Market Report for Friday, April 25, 2025

Stocks stormed higher Thursday, stretching a rebound on decent earnings, a Fed not yet kidnapped by the White House, and the novel idea that fewer tariffs might be better than more. The S&P 500 climbed out of correction territory on the shoulders of bruised but beloved tech names.

And yet, skepticism abounds. This feels less a final-bottom bounce than a smoke break before the next fire drill.

Level Change 4/24/25 (%)
– – – – – – – – – – – – – – –
+1.2 Dow
+2.7 Nasdaq
+2.8 Nasdaq 100
+2.0 S&P 500
+2.1 S&P 400
+2.0 S&P 600

Investors flagged three big catalysts for three big sessions that lifted the S&P 500 by 6.3% and the Nasdaq by 8.2% since Monday’s crash:

Back Away One—President Trump assured financial stability hawks that he has no plans of firing Fed Chair Jerome Powell. He might ring him up, might suggest it’s a nice little central bank he’s running there be a shame if anythin’ happened to it, but for now, no shanghai in the works. It seems investors prefer their Fed un-seized.

Trade War Off-Ramp Two—The wheeler-dealer-in-chief is supposedly hard at it, beating back the bushes of tariff tax he Miracle-Gro’d into a monster. Something’s still growling in there, though. More below.

Still-Breathing Businesses Three—Turns out, corporate HQs planned to keep making money, trade war or no. They’ve been working around tariffs, to the tune of 80% beating earnings estimates, per Fundstrat’s green eyeshade brigade.

About that growling in the bushes.

Earlier in the week, Trump hinted negotiations with China were underway and that his 145% tariff wall would soon come down “substantially.” Everything, he said, was “active.”

This was news to China.

A foreign ministry spokesperson flatly denied it: “China and the US are not having any consultation or negotiation on tariffs, still less reaching a deal.” A commerce official added that reports of progress were “as groundless as trying to catch the wind.”

Asked by a reporter about the contradiction, Trump replied, “Well, they had a meeting this morning.” When pressed—who’s they?—he said, “I can’t tell you. It doesn’t matter who ‘they’ is. We may reveal it later.”

Ah. Good as gold, that deal.

Elsewhere in our corridors of financial illusion, the nominally independent Fed lurches forward, one weary step closer to the next ambush.

Governor Christopher Waller warned of more layoffs and higher unemployment “if the big tariffs … come back on.” A silver lining for investors is that he “would expect more rate cuts, and sooner, once I started seeing some serious deterioration in the labor market.” So, that’s something to root for.

He doubts tariffs will be felt by the economy before July and figures any inflationary impact would be temporary. Transitory, shall we say, with all the confidence that term instills.

Cleveland Fed President Beth Hammack said it’s time for patience, data scrutiny, and, by golly, she chirped the hard data “are actually really good.” Sure, the central bank might have a date with a rock and a hard place known as higher inflation, lower employment—but that’s summer’s problem.

Minneapolis Fed President Neel Kashkari is “nervous” about layoffs, and you know how that goes: “[I]f we all get nervous at the same time … it can really bring down the economy, really slow it down.” Aside from that, being nervous is great.

Meanwhile, in megatech, the algos are humming and the margins sing.

Google (GOOG +2.4%) beat expectations last night. In Q1, it poured a record $17.2B into artificial intelligence. Gemini 2.5, its flagship brain, now tops the industry, according to CEO Sundar Pichai—second opinions not encouraged. Its Waymo robotaxi service logged a fivefold increase in weekly paid rides, likely half of them passengers catatonically circling the block, dissociating in the backseat just to get away from it all.

— Jason Kelly

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Market Report for Thursday, April 24, 2025

Wall Street rallied again Wednesday, catching its breath between presidential pronouncements. Trump offered trade optimism and Fed restraint—enough for two green days—but markets remain trapped in the White House Whiplash Waltz: speak, splat, retract, rebound.

Level Change 4/23/25 (%)
– – – – – – – – – – – – – – –
+1.1 Dow
+2.5 Nasdaq
+2.3 Nasdaq 100
+1.7 S&P 500
+1.3 S&P 400
+1.3 S&P 600

Stocks have lately been more driven by the Orange jawbone than hard numbers, a stance as solid as a Jell-O diving board.

In just two days, the S&P 500 climbed 4.2% and the Nasdaq 5.3% on the strength of two presidential promises: Fed Chair Powell keeps his job (this week), and tariffs on China may come down. Apparently, the White House is considering slashing China tariffs by more than 50% even without a deal, so the tariff-talk two-step looks set to keep twirling long after the music should have stopped.

To what end remains anyone’s guess—and evidently, a distant one. Treasury Secretary Scott Bessent clarified that China tariffs won’t come down unilaterally and, just casually, added that a full trade deal might take two to three years. Investors, mid-prance across the hot coals of volatility, blinked. Years?

Meanwhile, outside the dance hall of jawboning and policy feints, actual commerce is still suiting up and showing up.

America’s manufacturers are gripping the bar of this tilt-a-whirl economy. S&P’s April flash composite PMI missed expectations, and year-ahead outlooks are skimming pandemic-era lows, but there’s still a faint pulse of growth. What passed for good news is that we may not be so much barreling toward recession as we are trading in the sports car for a golf cart. It’s looking like a slow-growth summer ahead.

But at least home buyers decided, the heck with it, let’s live indoors.

March new home sales hit a seasonally adjusted annual rate of 724,000, well above the 685,000 expected and higher than February’s 676,000. A blip down in mortgage rates from “Are you kidding me?” at 7% to “The kids’ll be fine on two meals a day” at 6.6% was apparently enough to get folks off the dime.

Vertiv Holdings (VRT +8.6%), purveyor of data center chillers, posted strong Q1 earnings and raised its full-year sales forecast, proof the AI trade ain’t dead yet. It also showed that companies can, in fact, tiptoe through the tariff minefield. CEO Giordano Albertazzi called the trade backdrop complicated, but said they’re managing with “a detailed tariff playbook” of if-this-then-that scenarios for presidential postings and rate roulette.

German software giant SAP (SAP +7.6%) beat earnings estimates and reiterated its full-year forecast, brushing off economic uncertainty like lint from a tailored blazer. CFO Dominik Asam told Barron’s the company is quite pleased with its strong start, especially “in light of the macroeconomic backdrop, which is anything but easy.” For a German CFO, that’s just short of popping champagne.

Investors expected a lousy report from Tesla (TSLA +5.4%), and they got it, with earnings down 71% in Q1.

But the bad news was good news, because it suggested CEO Elon Musk had finally received the message that his Washington extracurriculars were unbuttering his bread. He opened the dunk-tank earnings call by saying that, starting in May, his time spent with Trump’s so-called Department of Government Efficiency—DOGE, naturally—“will drop significantly.”

Investors liked the sound of that, along with Tesla confirming it will launch its long-teased robotaxi service in Austin this June, with “maybe 10 to 20 vehicles,” Musk offered, as offhandedly as if he were guessing how many hot dogs to bring to a picnic. Once it’s rolling, operations should “scale up rapidly after that.” He’s confident in Tesla’s edge, swiping at rival Waymo by saying their cars cost “‘way mo’ money,” and declaring he sees no serious competition in the space.

And speaking of cost, Tesla promises cheaper models are on the way this quarter. Its localized supply chains give it a tariff-war advantage. Parting ways with his political pals, Musk said he supports “predictable tariff structures” and is “generally… pro-trade and lower tariffs.”

No wonder he’s clearing out his Beltway condo.

— Jason Kelly

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Market Report for Wednesday, April 23, 2025

Stocks v-bounced on Tuesday, erasing Monday’s crash, as the Treasury secretary suggested a full trade shutdown with China might not be ideal, and the president said he won’t fire the Fed chair—just badger him for now.

Level Change 4/22/25 (%)
– – – – – – – – – – – – – – –
+2.7 Dow
+2.7 Nasdaq
+2.6 Nasdaq 100
+2.5 S&P 500
+2.6 S&P 400
+2.6 S&P 600

After three drops in four sessions, the S&P called time on the slide. The Nasdaq did one better, breaking a four-day losing streak.

Even American exceptionalism caught a breeze, with Treasuries drawing a few tepid buyers despite Washington’s fiscal freak show, and the greenback picking itself up from Monday’s three-year low. Uncle Sam may have wandered into traffic, but he’s still dodging the cars—and occasionally flipping one off.

A low bar for trade helped. When you’ve throttled commerce with the world’s largest trading economy, the only surprise left is sanity. Treasury Secretary Scott Bessent suggested just that, telling investors behind closed doors at a JPMorgan-hosted meeting in Washington that the tariff war with China was “unsustainable” and likely to “de-escalate,” Bloomberg reported. It’s a spectacle when one of the hands on the matchbox wonders aloud if maybe things got a little warm.

President Trump chimed in that he, too, thought a deal with China was possible, promising to be “very nice” in negotiations. “If we don’t make a deal, we’ll just set the number,” he told reporters, none of whom attempted to translate. He also mentioned something about a golden age, though he didn’t specify whether it was past, future, or entirely imaginary.

But his market-moving musing wasn’t about trade, it was about sparing Jerome Powell. After days of hinting he might fire the Fed chair, Trump clarified Tuesday he has “no intention of firing” him, though he wishes the “major loser” whose “termination cannot come fast enough” would be “a little more active” in cutting rates. Ideally to zero. Lower if he can swing it. Maybe straight through the floor.

Amid Trump’s trade war, it’s easy to see why. The damage is showing, and the sooner the Fed starts slapping on plaster, the better.

The latest tariff-trampled data came from the April Richmond Fed manufacturing index, which sank nine points this month to -13 after a ten-point drop in March. That’s the worst two-month drop-off since early 2022. It missed the forecast of -6, and anything below zero means contraction. The report added a southern drawl to the stagflation narrative, with manufacturers reporting rising prices received and expecting more of the same over the next 12 months.

This could not have sat well with Minneapolis Fed President Neel Kashkari. He told the US Chamber Global Summit that “near-term inflation expectations have increased quite a bit in response to the trade wars.” He was comforted, however, that long-run expectations haven’t yet. Somewhere beyond the visible horizon, maybe just past the unicorn pasture, things will look up. Meantime, he frets American appeal. Investors aren’t exactly fleeing, “but is it as true today that we are the destination of choice as we were a month ago?”

Fed Governor Adriana Kugler didn’t seem much happier in remarks at the University of Minnesota. Tariffs, she said, were much bigger than expected, and their effects—plus the uncertainty they’ve stirred up—are “likely to be larger than anticipated.” And in case anyone was buying the White House spin that this mess is the Fed’s fault, she made it clear: “The uncertainty is not coming from us.”

— Jason Kelly

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Market Report for Tuesday, April 22, 2025

Stocks fell sharply Monday under the weight of one man’s economic vision. President Trump wants the Federal Reserve to serve at the pleasure of his pleasure, another wing of the West Wing, slashing rates on command. With Fed independence foundational to US financial credibility, investors bailed…

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Dispatches from the Front Seat

Just when we were settling into a schedule, something you could rely on, yours truly caught a spring travel bug and hit the road.

That’s great news for your correspondent. From the top Portuguese fare of Newark to the rolling hills of Pennsylvania, the bureaucratic charm of Albany, the colonial eccentricities of Providence, and the sizzle of heels and headphones in Manhattan, the miles and memories are piling up for this man from Japan dusting off his English.

What it’s not great news for, however, is a consistent publishing schedule.

For a while, market reports will appear on a schedule of their own, to go along with that mind of their own you’ve come to know and, if not love, at least greet with a bemused nod. Some might show up in the morning. Some not at all. Then one might flutter back into your inbox like that persistent pigeon who keeps bobbing his head into our metaphors.

It’ll all be worth it, as this financial flâneur refuels the mind with madness, just in time to regale Kelly Letter subscribers at our Manhattan Meet and Greet on May 4.

From behind the wheel, gazing over the hood—and hopefully not missing my exit—I’ll be in touch with all the regularity of roadside diner hours and construction zone speed limits.

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