Economic Indicators - Initial Jobless Claims decreased for the fourth consecutive week to 227K, down from a near-term high of 250K four weeks ago, marking the lowest level since May 17th [2] - Continuing Claims increased to 1.965 million from a revised 1.955 million, the highest since November 2021, with four of the last five weeks above 1.95 million [3][4] Company Earnings - Delta Air Lines (DAL) reported Q2 earnings of $2.10 per share, beating expectations by 9 cents, although down from $2.36 per share a year ago, with revenues of $16.6 billion, slightly above the expected $16.01 billion [5][6] - Delta raised its earnings guidance for Q3 to a range of $1.25-1.75 per share and for the full fiscal year to $5.25-6.25 per share, exceeding analysts' projections [6] - Conagra (CAG) missed fiscal Q4 earnings expectations, reporting 56 cents per share versus the expected 59 cents, with revenues of $2.78 billion below the anticipated $2.84 billion, leading to an 8% drop in shares [7]

Economic Indicators - Initial Jobless Claims decreased for the fourth consecutive week to 227K, down from a near-term high of 250K four weeks ago, marking the lowest level since May 17th [2] - Continuing Claims increased to 1.965 million from a revised 1.955 million, the highest since November 2021, with four of the past five weeks above 1.95 million [3][4] Company Earnings - Delta Air Lines reported Q2 earnings of $2.10 per share, beating expectations by 9 cents, with revenues of $16.6 billion, slightly above the expected $16.01 billion [5][6] - Delta raised its earnings guidance for Q3 to a range of $1.25-1.75 per share and for the full fiscal year to $5.25-6.25 per share, exceeding analysts' projections [6] - Conagra missed fiscal Q4 earnings expectations, reporting 56 cents per share against the expected 59 cents, with revenues of $2.78 billion below the anticipated $2.84 billion, leading to an 8% drop in shares [6]

Market Trends & Sentiment - The market is responding to momentum, led by mega-cap tech stocks [1] - Small caps outperformed, up over 1% [2] - Markets want to go higher in the absence of rockiness, with the VIX sub 16 [3] - The market got a charge from the Fed's potential rate cuts [5] - There's a good setup for the second half of the year with inflation coming down [7] - Retail investors are rushing into riskier areas like Bitcoin and Nvidia [8] Earnings & Growth - Q1 earnings were essentially a pass on uncertainty [2] - Growth is continuing to be strong, defying expectations of a fall [6] Investment Opportunities & Risks - There's still a lot of cash on the sidelines that could re-enter the market as shorter-term rates come down [7] - Nvidia's dominance in the AI space may be chipped away [10] - A company with 125% of sales from China saw its stock rise despite customer concentration risks and customers seeking alternative chip sources [9]

Earnings Season Overview - The report previews the second quarter earnings season, focusing on hot stocks and their potential to maintain momentum [1][2] - Zacks Investment Research will provide ongoing coverage of earnings season through YouTube videos, podcasts, and social media updates [22][23][24] Featured Stocks and Analysis - **Costco:** Exhibits steady growth with mostly double-digit earnings increases year after year, but shares are struggling to break out; valuation is high at 54 times earnings [3][4][5] - **Palo Alto Networks:** Demonstrates consistent earnings growth with no misses in the last five years; shares are attempting to break out to new highs, up 103% year-to-date [6][7][8] - **Microsoft:** Shows a strong earnings surprise track record with only one miss; shares are up 182% year-to-date, reaching new all-time highs; earnings growth is expected through 2027; trading at 33 times earnings [9][10][11][12] - **Royal Caribbean:** Has a perfect earnings track record since 2022, with shares up 442% year-to-date; strong bookings for 2025 and 2026 are driving growth; trading at 22 times earnings [13][14][15][16][17][18] - **D-Wave Quantum:** Shares are up 92% year-to-date with a 60% beat last quarter; guidance is a key factor; earnings are not yet positive [18][19][20] Key Themes - Consistent earnings growth and positive earnings surprises are common features among the highlighted hot stocks [8] - Consumer spending remains strong, particularly in the travel sector, despite tariff concerns [13][15] - The performance of the stock market influences consumer confidence and spending habits, impacting sectors like cruise lines [15]

Market Overview - The S\&P 500 and NASDAQ are at record highs, presenting a complex backdrop for the upcoming earning season [1] - Market sentiment has shifted from deeply negative to positive, with potential for further gains [2][3] - The S\&P 500 is trading at approximately 223 times forward earnings, near a 10-year high, while yield bond spreads are at 268 basis points, close to a 10-year tight [4] Economic Factors - The economy is in decent shape, supported by positive labor market data and low corporate defaults [3] - Disinflation, particularly from the housing market, is a significant factor [9] - Shelter represents about 23% of CPI readings, making it a crucial element [10] Housing Market Dynamics - The housing market is experiencing significant changes, with the largest supply since 2020 and slowing demand due to unaffordability and insurance costs [10] - Real-time measures of housing may lead to the Federal Reserve achieving its inflation target and resuming rate cuts [11] Bond Market Analysis - The market sees value in bonds at elevated rates, suggesting they are currently mispriced [8][11] - Disinflation from housing is considered more important than potential deficit increases in influencing bond market volatility [11] Earning Season Focus - The focus is shifting towards the earning season, with hopes that markets can move past political developments and concentrate on profits and earnings [6]

Market Momentum and Investor Sentiment - The market is currently driven by "Momo" (momentum), where trends are strong and investors believe "the trend is your friend" [2][3] - "FOMO" (fear of missing out) is prevalent, with investors joining the rally to avoid being left behind, potentially disregarding fundamentals [4] - The sustainability of the rally is questionable, as external forces could disrupt the current momentum [4][5] Potential Risks and External Factors - The expiration of tariff moratoria is mentioned, but considered a non-factor as they are likely to be rolled ahead [6] - The bond market's reaction to budget deficit concerns and "voterama" is a potential risk [7] - Earnings season is approaching, and while trend following is present, earnings ultimately matter [7] Earnings Season Outlook - There are conflicting signals regarding the upcoming earnings season, with some expecting a bumpy season based on corporate tax revenue, while others anticipate continued market momentum driven by earnings [7] - The extent to which expectations are factored into earnings results is a key uncertainty [8] - A weaker dollar could provide a tailwind for multinational earnings, but also indicates potential capital outflow from the US [8] - High expectations for earnings could lead to disappointment if results fall short, as seen with Micron [9]

The S&P 500 Index is on the cusp of a record high but with earnings season just weeks away, the foundation of the rally is about to get a major test https://t.co/HrOvWNSKH0 ...

Trade and Market Impact - Trade tensions are affecting market performance, with President Trump accusing China of violating tariff agreements and announcing a doubling of steel tariffs from 25% to 50% [1] - Cleveland-Cliffs (CLF) has seen a significant increase of +24% in stock price due to these developments [2] - Major indexes such as the Dow, Nasdaq, S&P 500, and Russell 2000 are experiencing declines, with the S&P 500 down -20 points [2] Labor Market Insights - The upcoming Jobs Week includes key reports such as Job Openings and Labor Turnover Survey (JOLTS), ADP private-sector payrolls, Weekly Jobless Claims, and the U.S. Employment Report [3][4] - Expectations for job gains are set at +112K for ADP and +125K for BLS, with potential narratives of labor market loosening if these figures show weakness [4] - The U.S. labor force has been underestimated, with a current unemployment rate expected to remain low at 4.2% despite recent increases [6] Company Earnings Reports - Campbell's Company (CPB) reported fiscal Q3 earnings of 73 cents per share, exceeding expectations by +12% but slightly below the previous year's quarter [7][8] - Revenues for Campbell's reached $2.48 billion, surpassing expectations by +1.55% and showing growth from $2.37 billion year-over-year [8] Economic Indicators - The S&P Manufacturing PMI is expected to remain above the key 50-level at +52.3, while ISM Manufacturing is projected to decrease to +48.5% [9] - Construction Spending for April is anticipated to show a positive change of +0.2% after a -0.5% decline in March [10]

Group 1: Earnings Season Overview - The 2025 Q1 earnings season is concluding, with most S&P 500 companies having reported results, which have been generally positive despite uncertainty from tariff discussions [1][19] Group 2: Netflix Performance - Netflix (NFLX) has seen a significant stock surge of 90% over the past year, attributed to strong results and reaffirmation of FY25 guidance [3][19] - Subscriber growth has been a key highlight, with only one quarter of negative growth in the last 12 quarters, and the introduction of ad-supported tiers has been successful [4][5] - The crackdown on password sharing has resulted in increased revenue opportunities, contributing to consistent double-digit percentage year-over-year sales growth for six consecutive periods [5] Group 3: Eaton Performance - Eaton (ETN) reported record Q1 adjusted EPS of $2.72 (up 13% YoY), record Q1 sales of $6.4 billion (up 7% YoY), and record segment margins of 23.9% (80 basis points increase YoY) [8] - Organic sales growth reached 9%, exceeding previous guidance, and backlog growth in the Electrical segment improved by 6% YoY, while Aerospace backlog surged by 16% [9] - The company has demonstrated a commitment to shareholder returns, with a 7% five-year annualized dividend growth rate [11] Group 4: Centene Performance - Centene (CNC) reported adjusted EPS of $2.90 and sales of $46.6 billion, exceeding consensus estimates with earnings up 28% YoY [13] - The company raised its 2025 premium and service revenues guidance by $6.0 billion due to higher-than-expected membership growth, reflecting a 17% YoY increase [13] - Analysts have adjusted sales expectations, with Centene now projected to achieve $179.6 billion in revenues for the current fiscal year [17]

Getty Images Target reported disappointing earnings on lower transactions (Photo by Mario Tama/Getty Images) Key Takeaways Stocks ended a six-day win streak on Tuesday. The S&P 500 and Nasdaq Composite both fell by 0.4%. The Dow Jones Industrial Average lost 0.3% and the Russell 2000 was unchanged. Although volumes were light, we are getting some interesting earnings reports in the retail sector. On Tuesday, Home Depot reported earnings that missed expectations, sending the stock down 0.5% for the day. This ...