The S&P 500 Index ($SPX) (SPY) Tuesday closed up +2.51%, the Dow Jones Industrials Index ($DOWI) (DIA) closed up +2.66%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +2.63%.  June E-mini S&P futures (ESM25) are up +2.52%, and June E-mini Nasdaq futures (NQM25) are up +2.46%. 

Stock indexes rallied sharply on Tuesday and recovered most of Monday's losses.  Stocks found support Tuesday on trade deal optimism after US trade negotiators said they have made "significant progress" toward a bilateral trade deal with India following talks between Vice President Vance and Indian Prime Minister Modi.  Stocks raced to their highs Tuesday on hopes of a thaw in the US-China trade war when Bloomberg News reported that Treasury Secretary Bessent told a closed-door investor summit that the tariff standoff with China is unsustainable and he expects the situation to de-escalate. 

Better-than-expected Q1 corporate earnings results also lifted stocks on Tuesday.  Equifax rose more than +13% after reporting better-than-expected Q1 operating revenue. Also, 3M Co jumped more than +8% after reporting Q1 adjusted EPS continuing operations above consensus and maintaining its full-year earnings guidance.  In addition, Danaher climbed more than +3% after reporting stronger-than-expected Q1 sales. 

Limiting the upside in stocks is concern over the independence of the Federal Reserve, with President Trump contemplating the possible firing of Fed Chair Powell over the Fed's interest rate decisions.  The dollar sank to a 3-year low Monday, and gold rallied to a new record high Tuesday as the prospect of firing Powell further reduces confidence in the dollar and may spark foreign investors to liquidate their dollar holdings, including stocks and Treasuries.

Tuesday's US economic news was negative for stocks after the Apr Richmond Fed manufacturing survey current conditions index fell -9 to a 5-month low of -13, weaker than expectations of -7. 

Minneapolis Fed President Kashkari said tariffs are likely to be at least somewhat inflationary, but it's too soon to judge what will happen with the path of interest rates. 

Richmond Fed President Barkin said that due to tariffs, firms are defensive, delaying and deferring investments, and there are a lot of reasons to be worried about consumer spending.

On Tuesday, the International Monetary Fund (IMF) cut its global 2025 GDP forecast to +2.8% from a January estimate of +3.3% and warned that the outlook could deteriorate further due to US tariffs sparking a global trade war.   The IMF cut its 2025 US GDP forecast to +1.8% from a January estimate of +2.7% and cut its Eurozone 2025 GDP forecast to +0.8% from a January estimate of +1.0%.  The IMF also cut its 2025 China GDP estimate to +4.0% from +4.6% in January and cut its Japan 2025 GDP estimate to +0.6% from +1.1% in January.

Bitcoin (^BTCUSD) rallied more than +4% Tuesday to a 6-week high as this week's plunge in the dollar to a 3-year low bolstered demand for cryptocurrencies as President Trump's criticism of Fed Chair Powell and threats to fire him raises concerns about the Fed's independence and weighs on the dollar and dollar assets.

The markets are discounting the chances at 11% for a -25 bp rate cut after the May 6-7 FOMC meeting.

This week's market focus will be on Q1 corporate earnings results and any changes to US trade policies.  On Wednesday, March new home sales are expected to climb +0.7% m/m to 681,000.  The Fed Beige Book will also be released on Wednesday.  Thursday brings the March capital goods new orders nondefense ex-aircraft and parts report (expected +0.1% m/m).  Also, March existing home sales on Thursday are expected to fall -2.8% m/m to 4.14 million.  Friday brings the revised University of Michigan April consumer sentiment index (expected no change at 50.8).

Q1 earnings reporting season is in full swing.  According to data compiled by Bloomberg Intelligence, the market consensus is for Q1 year-over-year earnings growth of +6.7% for the S&P 500 stocks, down from expectations of +11.1% in early November.  Full-year 2025 corporate profits for the S&P 500 are seen rising +9.4%, down from the forecast of +12.5% in early January.  

Overseas stock markets on Tuesday settled mixed.  The Euro Stoxx 50 closed up +0.53%.  China's Shanghai Composite climbed to a 2-1/2 week high and closed up +0.25%.  Japan's Nikkei Stock 225 closed down -0.17%.

As a summary of recent tariff developments, President Trump said on April 4 that he would temporarily exempt consumer electronics from reciprocal tariffs and the baseline 10% global tariffs.  However, a 20% tariff still applies to electronics shipped from China. On April 9, President Trump announced a 90-day pause on higher reciprocal tariffs on 56 nations but left the new 10% baseline tariff on virtually all nations in place. Meanwhile, the EU on April 10 said it would delay for 90 days the implementation of 25% tariffs on 21 billion euros worth of US goods sent to Europe.

On March 4, President Trump imposed 25% tariffs on Canadian and Mexican goods and doubled the tariff on Chinese goods to 20% from 10%.  On April 2, President Trump signed a proclamation to implement a 25% tariff on US auto imports.  The tariffs will initially target vehicles fully assembled outside the US and, by May 3, will expand to include automobile parts made outside the US.  On April 5, a 10% baseline tariff for virtually all nations took effect. 

On April 4, China raised tariffs on all US goods to 125% from 84% in retaliation for the US raising tariffs on Chinese goods to 145%. Tit-for-tat retaliation worsened US-China trade tensions after China last Tuesday ordered its airlines not to take any further deliveries of Boeing's jets, and the US government barred Nvidia from selling its H20 chips to China last Wednesday.

Interest Rates

June 10-year T-notes (ZNM25) Tuesday closed down -0.5 of a tick.  The 10-year T-note yield fell -1.8 bp to 4.393%.  June T-notes Tuesday recovered from a 1-week low and settled little changed, and the 10-year T-note yield fell from a 1-week high of 4.434% and turned lower.  Short covering in T-notes emerged Tuesday after 10-year European government bonds rallied to 2-week highs.  Also, Tuesday's action by the IMF to cut its 2025 global GDP forecast supported T-notes. T-notes maintained modest gains after the Apr Richmond Fed manufacturing survey of current conditions fell more than expected to a 5-month low, a dovish factor for Fed policy.

T-notes on Tuesday initially moved lower on concerns that President Trump may move to seek the removal of Fed Chair Powell, which would question the Fed's independence, raise inflation expectations, erode confidence in the dollar, and could spark foreign selling of dollar assets, including Treasuries. Also, weak demand for the Treasury's $69 billion auction of 2-year T-notes on Tuesday weighed on prices, with a bid-to-cover ratio on the auction at 2.52, well below the 10-auction average of 2.67.

European government bond yields on Tuesday moved lower.  The 10-year German bund yield fell to a 2-week low of 2.435% and finished down -2.8 bp to 2.443%.  The 10-year UK gilt yield slid to a 2-week low of 4.534% and finished down -2.1 bp to 4.545%.

The Eurozone Apr consumer confidence index fell -2.2 to a 17-month low of -16.7, weaker than expectations of -15.1.

ECB Governing Council member Rehn said Eurozone inflation is stabilizing at the 2% target, and he sees the total tariff impact on Eurozone inflation as "modest."

Swaps are discounting the chances at 93% for a -25 bp rate cut by the ECB at the June 5 policy meeting.

US Stock Movers

Magnificent Seven stocks rallied Tuesday and supported gains in the broader market.  Tesla (TSLA) closed up more than +4%, and Apple (AAPL), Amazon.com (AMZN), and Meta Platforms (META) closed up more than +3%.  Also, Nvidia (NVDA), Alphabet (GOOGL), and Microsoft (MSFT) closed up more than +2%. 

Chip stocks moved higher Tuesday and boosted the overall market.  Micron Technology (MU) closed up more than +5%, and ARM Holdings Plc (ARM) and Intel (INTC) closed up more than +3%.  Also, KLA Corp (KLAC) closed up more than +2%.  In addition, ASML Holding NV (ASML), ON Semiconductors (ON), Marvell Technology (MRVL), Microchip Technology (MCHP), Applied Materials (AMAT), NXP Semiconductors NV (NXPI), Analog Devices (ADI), Lam Research (LRCX), and Qualcomm (QCOM) closed up more than +1%. 

Cryptocurrency-linked stocks surged Tuesday after the price of Bitcoin jumped more than +4% to a 6-week high.  MARA Holdings (MARA) closed up more than +14%, and Riot Platforms (RIOT) closed up more than +12%.  Also, Coinbase Global (COIN) closed up more than +8%, and MicroStrategy (MSTR) closed up more than +7% to lead gainers in the Nasdaq 100.

Equifax (EFX) closed up more than +13% to lead gainers in the S&P 500 after reporting Q1 operating revenue of $1.44 billion, above the consensus of $1.42 billion. 

3M Co (MMM) is up more than +8% to lead gainers in the Dow Jones Industrials after reporting Q1 adjusted EPS continuing operations of $1.88, better than the consensus of $1.77 and maintaining its full-year guidance.

Invesco Ltd (IVZ) closed up more than +8% after reporting Q1 operating revenue of $1.53 billion, stronger than the consensus of $1.41 billion.

Pentair Plc (PNR) closed up more than +9% after reporting Q1 adjusted EPS of $1.11, better than the consensus of $1.01.

Quest Diagnostics (DGX) closed up more than +6% after reporting Q1 net revenue of $2.65 billion, above the consensus of $2.63 billion. 

Danaher (DHR) closed up more than +3% after reporting Q1 sales of $5.74 billion, stronger than the consensus of $5.59 billion. 

Northrop Grumman (NOC) closed down more than -12% to lead losers in the S&P 500 after cutting its full-year adjusted EPS forecast to $24.95 to $25.35 from a previous estimate of $27.85 to $28.25, well below the consensus of $28.12. 

RTX Corp (RTX) closed down more than -9% after forecasting full-year adjusted sales of $83 billion to $84 billion, below the consensus of $84.21 billion.

Halliburton (HAL) closed down more than -5% after reporting Q1 adjusted operating income of $787 million, weaker than the consensus of $815.2 million.

Kimberly-Clark (KMB) closed down more than -1% after reporting Q1 net sales of $4.84 billion, weaker than the consensus of $4.90 billion.

Zions Bancorp (ZION) closed down more than -1% after reporting Q1 total deposits of $75.69 billion, below the consensus of $76.41 billion.

Earnings Reports (4/23/2025)

Amphenol Corp (APH), AT&T Inc (T), Avery Dennison Corp (AVY), Boeing Co/The (BA), Boston Scientific Corp (BSX), Chipotle Mexican Grill Inc (CMG), CME Group Inc (CME), Discover Financial Services (DFS), Edwards Lifesciences Corp (EW), FirstEnergy Corp (FE), GE Vernova Inc (GEV), General Dynamics Corp (GD), International Business Machine (IBM), Lam Research Corp (LRCX), Las Vegas Sands Corp (LVS), Lennox International Inc (LII), Masco Corp (MAS), Molina Healthcare Inc (MOH), Newmont Corp (NEM), NextEra Energy Inc (NEE), Norfolk Southern Corp (NSC), Old Dominion Freight Line Inc (ODFL), O'Reilly Automotive Inc (ORLY), Otis Worldwide Corp (OTIS), Philip Morris International In (PM), Raymond James Financial Inc (RJF), ResMed Inc (RMD), Rollins Inc (ROL), ServiceNow Inc (NOW), TE Connectivity PLC (TEL), Teledyne Technologies Inc (TDY), Texas Instruments Inc (TXN), Thermo Fisher Scientific Inc (TMO), Tyler Technologies Inc (TYL), United Rentals Inc (URI), Westinghouse Air Brake Technol (WAB).