Tariff Update

Markets have been climbing on hopes of a trade breakthrough, bolstered by White House signals that a major deal is near and a softer tone from the administration on tariffs and Fed independence. The optimism was further supported by Trump’s latest move to ease the burden of auto tariffs, aiming to reduce overlapping duties on foreign-made vehicles and parts. While trade developments have fueled recent market gains, tariffs will take a back seat today as investors shift their focus to economic data this morning.

GDP Contracts, Labor Market Cools  

The U.S. economy unexpectedly contracted in the first quarter, with GDP falling at a 0.3% annualized pace—well below expectations for modest growth. Economists point to a mix of factors behind the decline, including a sharp 41% surge in imports as companies rushed to get ahead of President Trump’s newly implemented tariffs, as well as broader uncertainty around trade policy and its impact on consumer and business behavior. That same unease is now showing up in the labor market: private employers added just 62,000 jobs in April, according to ADP, the weakest monthly gain since July 2024 and a steep drop from March. Job losses in education, information, and professional services offset modest gains elsewhere. “Unease is the word of the day,” said ADP’s chief economist Nela Richardson, citing the difficulty businesses face in making hiring decisions amid policy shifts. Markets now await Friday’s official jobs report for a fuller picture of where things stand.

Precious Metals Recover, Cyclical Commodities Slide

Precious metals took a hit overnight, but both gold and silver managed to claw back much of their losses following this morning’s weaker-than-expected economic data. That rebound, however, didn’t extend to cyclical commodities—oil continued its downward drift for the week, and copper is getting hammered, with a steep selloff driven by dismal Chinese factory data. China’s PMI slipped into its worst contraction since December 2023, adding pressure to the copper complex. Meanwhile, in a bit of a curveball, Treasury yields are rising despite the soft economic tone, thanks to hotter-than-expected inflation signals in both the GDP and ADP reports. Notably, the Advanced GDP Price Index soared to 3.7%, up from 2.3% in the prior quarter. On top of that, wage growth for job-changers accelerated to 6.9%, the highest since December, a development that could keep the Fed on edge given its inflationary implications.

AI Story Alive and Well – Microsoft and Meta Earnings on Deck

At Meta’s first-ever LlamaCon, Microsoft CEO Satya Nadella revealed that AI is now writing as much as 30% of the company’s code—and that number is climbing. Chatting with Meta CEO Mark Zuckerberg, Nadella pointed out how AI is steadily becoming a bigger part of software development. Zuckerberg added that while Meta doesn’t have a precise figure yet, he expects AI could handle half of all coding tasks within a year. The comments highlight how fast AI is reshaping the developer role at tech giants like Microsoft and Meta, both of which are set to report earnings after the bell on Wednesday.

Story Five – Earnings Blitz

Super Micro Computer (SMCI) prereleases earnings and tanks after reports results. for the third quarter that were well below analysts’ estimates.

Caterpillar (CAT) reported earnings of $4.25 per share on revenue of $14.25 billion for the first quarter ended March 2025. The consensus earnings estimate was $4.30 per share on revenue of $14.54 billion. The Earnings Whisper number was $4.25 per share. The company reported in-line with expectations while revenue fell 9.81% compared to the same quarter a year ago.

Starbucks (SBUX) reported earnings of $0.41 per share on revenue of $8.76 billion for the fiscal second quarter ended March 2025. The consensus earnings estimate was $0.49 per share on revenue of $8.80 billion. The Earnings Whisper number was $0.50 per share. The company missed expectations by 18.00% while revenue grew 2.32% on a year-over-year basis.

Snap (SNAP) reported a loss of $0.08 per share on revenue of $1.36 billion for the first quarter ended March 2025. The consensus earnings estimate was $0.04 per share on revenue of $1.35 billion. The Earnings Whisper number was $0.06 per share. The company missed expectations by 233.33% while revenue grew 14.10% on a year-over-year basis.

First Solar (FSLR) reported earnings of $1.95 per share on revenue of $844.57 million for the first quarter ended March 2025. The consensus earnings estimate was $2.50 per share on revenue of $851.85 million. The Earnings Whisper number was $2.38 per share. The company missed expectations by 18.07% while revenue grew 6.35% on a year-over-year basis.

Humana (HUM) reported earnings of $11.58 per share on revenue of $32.11 billion for the first quarter ended March 2025. The consensus earnings estimate was $9.98 per share on revenue of $32.22 billion. The Earnings Whisper number was $9.95 per share. The company beat expectations by 16.38% while revenue grew 8.45% on a year-over-year basis.

What’s Coming Up at Tackle Trading?

The Trader’s Lounge will be held at 1:00 PM EST today as we hold another Macro Monday edition of the lounge. Come start your trading week off right!

Team Phoenix will be held today at 8:30 PM EST. Coach Gino will be helping his trading lab navigate these volatile markets through a variety of time-tested techniques!

WalMart (WMT)

WalMart had a decent pattern mid-week and a clear breakout level that we are monitoring.