Key Takeaways
- Tariff uncertainty continues to cloud short-term equity market direction
- Earnings show mixed results across tech and retail sectors
- Volatility remains elevated; watch VIX for clearer sentiment shift
Heading into Thursday morning, stocks looked set to rally following a ruling that placed most of President Trump’s tariffs on hold. However, the administration quickly sought an injunction against that ruling as they prepare to appeal. When Thursday was all said and done, the S&P 500 and Nasdaq both gained 0.4% while the Russell 2000 and Dow Jones Industrial Average added 0.3%.
We had a slew of earnings after the close Thursday. Companies in both the tech and retail sectors reported. On the tech side, Dell Technologies missed on earnings but beat on revenues. The company also issued a strong forecast which sent shares higher by nearly 2% in after-hours trading. At the opposite end of the spectrum, shares or Marvell Technology were lower by more than 3% after-hours despite posting a slight beat on earnings and offering a forecast in line with expectations.
Over on in the retail space, Gap Inc. saw its shares fall 15% after the close. Despite posting a solid quarter, executives warned tariffs could cost the company between $250 – $300 million if they are not mitigated. Much like we saw with Dell and Marvell, it’s a tale of two cities with Ulta Beauty. Those shares traded higher by nearly 8.5% after the company released earnings that beat forecasts and raised forward guidance.
As earnings season winds down, it’s been a strong quarter, but I think the question we all have is what the future holds with respect to tariffs. Should the Trump Administration be unsuccessful in appealing the ruling that paused tariffs, I think there’s a lot of reason to be optimistic. However, until we get that ruling, I would not be surprised if equities trade sideways.
Taking a look at the economic calendar, later this morning will get the latest Personal Consumption Expenditures (PCE) Index. According to Bloomberg, economists expect core prices to be up 0.1% from March. We’re also awaiting a few different iterations of the Michigan Consumer Expectations report. A month ago, I would have told you the PCE report for April would prove very important for the Federal Reserve and interest rates. However, in light of the uncertainty of tariffs at this point, I’m not as confident the PCE report has the same salience. I am; however, interested in what the consumer outlook is because given all the ups and downs of late with tariffs, I’m curious how consumers see the outlook.
For today, let’s see how markets digest the economic data and if there is any reaction. Also, as I mentioned on Wednesday, I’m watching volatility. The VIX still remains elevated, and I would really like to see it back down around 16 before feeling confident we’re past the pullback witnessed in April. As always, I would stick with your investing plan and long-term objectives.
tastytrade, Inc. commentary for educational purposes only. This content is not, nor is intended to be, trading or investment advice or a recommendation that any investment product or strategy is suitable for any person.
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