- Stocks extend the recovery after +2% gains yesterday.
- Trump softens his stance on Powell & China.
- Tesla jumps despite missing earnings forecast.
- Oil holds onto yesterday’s gains.
Stocks Extend the Recovery as Trump’s Stance Softens
U.S. stock indices are set to open sharply higher as Trump walked back threats to fire Powell and appears to soften his stance on China. Tesla also jumps post-earnings.
Trump said on Tuesday he had no intention of firing Federal Reserve chair Jerome Powell, reversing his comments from the weekend, which had unnerved the market and sent stocks lower on Monday.
The Trump administration also appeared to be changing its tone toward China amid hopes for trade negotiations between the two largest economies. Trump expressed optimism that a trade deal with China could substantially lower tariffs on Chinese goods, helping ease fears and unwind the sell America trade.
Mega caps raise family within Nvidia (NASDAQ:NVDA), gaining over 5%, and Apple (NASDAQ:AAPL) rising over 2%.
Looking ahead, attention will be on the US PMI data, which could show a sharp decline in business activity this month if it follows in the footsteps of Europe and the UK. This may limit the recovery.
Several Fed speakers will also be in the spotlight, with Goolsbee and Governor Waller due to speak. According to the CME Fed watch tool, the market season has a 92.6% chance of no change in policy at the May meeting. Last week, Fed Chair Powell supported a wait-and-see approach to further rate cuts.
Corporate News
Boeing (NYSE:BA) is set to open 5% higher after reporting a narrower loss in Q1. Boeing reported a loss of $31 million in the first quarter, improving on the $355 million loss in the same period last year. The loss per share of $0.49 was better than the $1.18 expected by analysts. Meanwhile, the CEO said the company will ask the Federal Aviation Administration to approve an increased production of 737 Max jets.
Tesla Inc (NASDAQ:TSLA) is 7% higher despite Q1 results missing Wall Street’s forecasts. EPS was $0.22 per share or revenue of $19.34 billion, which was below the $0.39 per share and $21.1 billion in revenue that analysts had forecast. CEO Elon Musk also said that the time he spends with the Department of Government Efficiency will reduce significantly next month.
German software firm SAP (NYSE:SAP) is gaining 8% after posting EPS of €1.44, ahead of the €1.32 EUR per share the company had forecast, which would have missed expectations.
Nasdaq 100 Forecast – Technical Analysis
The Nasdaq is recovering from yesterday’s low of 17,580, rising above 18,300 and testing the falling trendline as it heads towards 19000. Buyers will need to rise above 19,300, the April 10 high, to create a higher high and confirm a breakout. Failure to rise above the rising trendline could see the price rebound lower to test 18,300 and below 17580.
FX Markets – USD Falls
The US dollar is falling, giving back some of yesterday’s gains, and remains close to the 3-year low despite Trump’s softening stance towards China and Trump’s backing off from Fed Chair Powell, whom he attacked earlier in the week.
The EUR/USD is falling towards 1.14 after mixed PMI data. The manufacturing PMI ticked higher to 48.7 in April, ahead of the 47.5 forecast. Meanwhile, the service sector PMI slipped to 49.7 in April, down from 51 in March, falling into contraction.
GBP/USD is easing back below 1.33 after UK PMI data showed the first clear signs of the Trump trade tariff impact. The composite PMI, which is considered a good gauge for business activity, fell into contraction, dropping to a 2.5-year low of 48.9, well below the 51.3 expected. The level 50 separates expansion from contraction.
Oil Holds Yesterday’s Gains Ahead of Stockpile Data
Oil prices are holding on to yesterday’s strong gains after the US applied a fresh round of sanctions on Iran, after a drop in US crude stockpiles and a softer tone from Trump on China.
According to API data, US crude oil inventories fell by 4.6 million barrels last week while gasoline stocks declined by 2.2 million barrels. The US government data is due later today.
Injecting optimism into the demand side of the equation, Trump stoked hopes of lower tariffs on Chinese imports. Any sense of an easing in the trade war between the world’s largest oil consumers would be good news for the demand outlook.