The U.S. stock markets experienced gains today, with the S&P 500 Index ascending by 0.46%, while the Dow Jones Industrial Average saw a modest increase of 0.07%. The Nasdaq 100 Index led the major indices with a rise of 0.58%. Notably, the S&P 500 reached a one-week high, and the Nasdaq 100 achieved its highest point in three months. These market movements come on the heels of a pivotal court ruling that impeded the import tariffs imposed by the previous administration, along with strong earnings reports from technology firms.
The favorable market response followed a unanimous decision from the U.S. Court of International Trade late Wednesday. The ruling determined that former President Donald Trump had improperly invoked an emergency declaration to justify the so-called “Liberation Day” tariffs that imposed a flat 10% rate on many global goods. The court’s order specifically targets the tariffs directed at China and other nations, effectively blocking elevated duties and tariffs related to fentanyl on imports from China, Canada, and Mexico. However, tariffs levied under different legal frameworks, such as the Section 232 and Section 301 tariffs on steel, aluminum, and automobiles, remain unaffected. The court has given the Biden administration a period of ten days to enforce its order.
Markets maintained their upward trajectory following several economic indicators that pointed to a weaker labor market, further supporting expectations for a more dovish U.S. Federal Reserve policy. The revision of the Q1 core Personal Consumption Expenditures (PCE) price index revealed a decrease from the previous estimate of 3.5% to 3.4%. Concurrently, initial weekly jobless claims rose by 14,000 to reach 340,000, surpassing economists’ expectations of 230,000 new claims. Additionally, the number of continuing claims unexpectedly increased by 22,000, hitting a three-and-a-half-year high of 1.919 million.
The upward revision of Q1 GDP to -0.2% from a prior reading of -0.3% indicated a slight improvement, though the data overall highlighted challenges in the economy. Pending home sales in April recorded a significant drop of 6.3% month-over-month, marking the largest decline in over two and a half years, in stark contrast to the anticipated 1.0% decrease.
Interest rates reacted to the economic landscape as well. The yield on the 10-year Treasury note fell by approximately 3 basis points to 4.45%, influenced by easing inflation expectations and decreasing demand for safe-haven assets. T-note prices gained as market participants anticipated a less aggressive approach from the Fed, anticipating just a 2% probability of a 25 basis point rate cut at the upcoming Federal Open Market Committee (FOMC) meeting.
Overseas markets exhibited mixed performances. The Euro Stoxx 50 declined by 0.17%, while China’s Shanghai Composite closed up by 0.70%. Japan’s Nikkei Stock 225 was up significantly, closing at a two-week high with an increase of 1.88%.
The earnings season is nearing its conclusion, with over 90% of S&P 500 companies having reported their quarterly results. Remarkably, 77% of these companies exceeded analysts’ earnings expectations, the highest percentage observed since the second quarter of 2024. This quarter’s earnings growth is running at 13.1%, surpassing prior estimates of 6.6%. Projections for corporate profits in the S&P 500 for the full year of 2025 have been adjusted to a 9.4% increase, down from a previous forecast of 12.5% made earlier in January.
On the technology front, semiconductor stocks demonstrated robust performance, notably Nvidia, which surged by over 5% after announcing Q1 revenues of $44.06 billion, exceeding expectations. Other key players in the semiconductor ecosystem such as Advanced Micro Devices, ON Semiconductor, ASML Holding, and Qualcomm all saw more than 1% increases, reflecting investor confidence in the continuing demand for chips, particularly in artificial intelligence applications.
Positive surprises in earnings reports were also recorded in other sectors. Nordson saw its shares rise by over 8% after reporting quarterly sales that outstripped forecasts, projecting continued strong performance for the upcoming quarter. Elf Beauty jumped over 25% following its own strong sales report and a strategic acquisition that bolstered its market presence. Veeva Systems reported a significant earnings beat and raised its revenue guidance for future periods, causing its stock to climb by over 18%.
Conversely, not all equities shared in the market’s buoyancy. Salesforce, the cloud-based software company, fell by over 6% after being downgraded by RBC Capital Markets, which contributed to limiting the overall gains of the Dow Jones Industrial Average. Best Buy experienced a decline of more than 9% after cutting its earnings outlook for the upcoming year, reflecting broader challenges facing the retail sector.
Market participants will be looking ahead to key economic indicators, including personal spending and income data expected to be released on Friday. The anticipated figures include a month-over-month increase in personal spending of 0.2% and personal income growth of 0.3%. The core PCE price index, more closely watched by the Fed, is expected to show a 0.1% month-over-month rise and a year-over-year increase of 2.5%.
As U.S. markets continue to grapple with shifts in economic indicators, interest rates, and corporate earnings, closely monitoring developments in trade policy and potential tariff adjustments will be critical for investors. The evolving landscape will shape trading strategies and inform longer-term investment decisions, underscoring the interconnectedness of market dynamics.
The analysis of economic data and corporate earnings will be essential for financial professionals and investors as they navigate a landscape marked by uncertainty, regulatory changes, and rapid technological advancements. As the markets adjust, understanding these variables will be key in formulating forward-looking strategies that align with evolving economic realities and investor sentiment.