Stock Market Update

The S&P 500 futures are down 16 points and are trading 0.3% below fair value, the Nasdaq 100 futures are down 42 points and are trading 0.2% below fair value, and the Dow Jones Industrial Average futures are down 219 points and are trading 0.6% below fair value.

Contracts linked to the S&P 500, Nasdaq 100, and Dow industrials are lower. Earnings news since yesterday's close has garnered mixed responses. IBM (IBM) and Chipotle Mexican Grill (CMG) are lower in reaction to quarterly results while Texas Instruments (TXN) and ServiceNow (NOW) are higher ahead of the open after reporting results. 

Participants are reacting to news that President Trump is planning to exempt car parts from tariffs on China, but will leave 25% tariffs on autos in place. Also, automakers will be exempt from steel and aluminum tariffs, according to FT.

The 10-yr yield is five basis points lower at 4.35% and the 2-yr yield is down four basis points to 3.82%.

In corporate news:

• Texas Instruments (TXN 164.98, +12.83, +8.4%): beats by $0.16, beats on revs; guides Q2 EPS in-line, revs above consensus
• IBM (IBM 228.25, -17.23, -7.0%): beats by $0.18, beats on revs; guides Q2 revs above consensus; reaffirms FY25 revenue and FCF guidance; No material change in client buying behavior but macro situation is fluid
• Chipotle Mexican Grill (CMG 47.01, -1.75, -3.6%): beats by $0.01, misses on revs; provides FY25 guidance; Q1 comps -0.4%
• ServiceNow (NOW 878.00, 65.03, +8.0%): beats by $0.21, reports revs in-line; and Aptiv (APTV) to drive intelligent automation and operational resilience across telco, automotive, enterprise, and industrial sectors
• Lam Research (LRCX 68.99, +2.26, +3.4%): beats by $0.04, beats on revs; guides Q4 EPS above consensus, revs above consensus
• O'Reilly Auto (ORLY 1380.50, -0.0, -0.0%): misses by $0.51, reports revs in-line, comps +3.6%; guides FY25 EPS below consensus, reaffirms FY25 revs guidance, reaffirms FY25 comp guidance

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region ended Thursday on a mixed note. Japan's Nikkei: +0.5%, Hong Kong's Hang Seng: -0.7%, China's Shanghai Composite: UNCH, India's Sensex: -0.4%, South Korea's Kospi: -0.1%, Australia's ASX All Ordinaries: +0.6%.
  • In economic data:
    • Japan's February Corporate Services Price Index 3.1% yr/yr (expected 3.0%; last 3.2%)
    • South Korea's Q1 GDP -0.2% qtr/qtr (expected 0.1%; last 0.1%); -0.1% yr/yr (expected 0.2%; last 1.2%)
  • In news:
    • There was some uncertainty related to yesterday's indications from the White House that the tariff rate on imports from China could be reduced as part of broader negotiations.
    • On a related note, President Trump may exempt automakers from paying some tariffs on imports of auto parts.
    • South Korean chipmaker SK Hynix beat quarterly expectations.
    • South Korea's GDP contracted for the first time since Q4 of 2020 in the reading for Q1.
• Major European indices trade on a mixed note. STOXX Europe 600: UNCH, Germany's DAX: -0.1%, U.K.'s FTSE 100: -0.1%, France's CAC 40: -0.3%, Italy's FTSE MIB: +1.0%, Spain's IBEX 35: +0.1%.
  • In economic data:
    • Germany's April ifo Business Climate Index 86.9 (expected 85.1; last 86.7). April Current Assessment 86.4 (expected 85.5; last 85.7) and Business Expectations 87.4 (expected 85.0; last 87.7)
    • U.K.'s April CBI Industrial Trends Orders -26 (expected -36; last -29)
    • France's April Consumer Confidence 92 (expected 91; last 92)
    • Spain's March PPI 4.9% yr/yr (last 6.6%)
  • In news:
    • Dealing with conflicting signals regarding potential U.S.-China trade talks tempering investor optimism.
    • Unilever and Roche reported positive results, while lender BNP Paribas and luxury group Kering saw shares decline after their results.
    • Germany's Finance Minister Kukies said that there is a sense of urgency to reach a trade deal with the U.S. while European Central Bank policymaker Rehn said that the ECB should not rule out larger interest rate cuts.