Two days of optimism turned into "show me the money" as investors grew impatient awaiting trade progress and China denied it's in talks with the U.S. Major indexes fell despite President Trump's recent softer rhetoric over trade and the Federal Reserve and as Wall Street digested a mixed batch of earnings. So far this quarter, 90% of reporting companies mentioned tariffs, Reuters said, and several this morning cited slowing consumer and government demand.
Alphabet (GOOGL) reports this afternoon at a critical juncture for the company. Federal courts have ruled that Alphabet violated antitrust laws, putting legal troubles at the forefront. From an earnings perspective, Alphabet's cloud business growth and outlook is in focus, along with trends in digital ad spending. Digital ad spend tends to be one of the first places to get cut if there are concerns about economic growth.
Before the open, initial weekly jobless claims came in at 222,000, compared with the 220,000 Briefing.com consensus. These reports are snapshots, and no single data point is a trend, but next week's April nonfarm payrolls report is approaching and could offer a deeper look at labor trends. "The next unemployment report is likely to reflect some impact of the recent job cuts at the federal government level and limited hiring by companies uncertain about the outlook," said Kathy Jones, chief fixed income strategist at Schwab.
Source: Schwab Center for Financial Research
Morning Rush
The 10-year U.S. Treasury yield (TNX) is lower by ~6 basis points to 4.327%.
The U.S. Dollar Index ($DXY) is lower by 0.29 to 99.55.
WTI Crude Oil (/CL) is higher by 0.13% to $62.35/barrel.
Gold prices have traded in a range of $3,301.30-$3,377.00, last seen trading higher by 1.22% to $3,334.40/oz.
Natural Gas prices have traded in a range of $2.858-3.016 and were last seen trading lower by 4.47% to $2.887.
Bitcoin (BTC) is lower by ~0.29% over the past 24 hours to $93,375.98.
Today's Bullish Activity
Shares of ServiceNow Inc. (NOW + $120.03 to $932.73) are gapping up to six-week highs this morning after the provider of cloud-based digital workflow software reported Q1 earnings of $4.04 per share, excluding non-recurring items ($0.21 beat) on revenue that rose 18.6% year-over-year to $3.09B (slightly above the $3.08B FactSet consensus estimate). Looking ahead, the company said that Q2 subscription revenue is expected to be $3.03-3.04B (slightly above the $3.02B FactSet consensus estimate) and full-year 2025 subscription revenue to come in a range of $12.64-12.68B (vs. the $12.65B FactSet consensus estimate). Calls are outnumbering puts ~4:3 with the April 25th 1000.00 call being the highest volume contract (volume is 3,253).
Also trading to the upside this morning is Texas Instruments Inc. (TXN + $9.91 to $162.06) after the chip maker reported Q1 earnings of $1.23 per share ($0.16 beat) on revenue that rose 11.1% year-over-year to $4.07B (above the $3.91B FactSet consensus estimate). The company also issued upside guidance as Q2 EPS is expected to come in a range of $1.21-1.47 on Q2 revenue that is expected to come in a range of $4.17-4.53B, above the respective $1.21 & $4.1B FactSet consensus estimates. Calls are outnumbering puts ~2:1 with the April 25th 162.50 call seeing the most action from traders (volume is 2,327).
New 52-week highs (30 new highs today): EZCORP Inc. (EZPW + $0.26 to $6.28), Newmarket Corp. (NEU + $29.46 to $605.49), Netflix Inc. (NFLX + $34.56 to $1,084.15)
Notable Call Activity
Some unusual call activity (~25:1 calls over puts) is being seen in Newell Brands Inc. (NWL + $0.14 to $5.08) as option traders primarily target the June 20th 5.00 call. Volume on this contract is 1,852 versus open interest of 114, so we know that the activity primarily represents fresh positioning. The majority of the transactions consisted of various-sized blocks that were bought at various times for between $0.66-0.70 each, which suggests bullish intent.
Today's Bearish Activity
Moving lower this morning is IBM Corp. (IBM - $15.59 to $229.89) after the tech giant beat quarterly estimates but revealed that 15 of its government contracts were canceled during the quarter by the Department of Government Efficiency (DOGE). IBM reported Q1 earnings of $1.60 per share, excluding non-recurring items ($0.18 beat) on revenue that rose 0.5% year-over-year to $14.54B (above the $14.39B FactSet consensus estimate). The company guided Q2 revenue to a range of $16.40-16.75B versus the $16.31B FactSet consensus estimate. Puts are slightly outnumbering calls with the April 25th 225.00 put being the highest volume contract (volume is 10,141).
Dropping to a 52-week low this morning is PepsiCo Inc. (PEP - $5.46 to $136.80) after the beverage and snack maker reported Q1 earnings of $1.48 per share, excluding non-recurring items ($0.01 miss) on revenue that fell 1.8% year-over-year to $17.92B (above the $17.75B FactSet consensus estimate). The company lowered guidance as fiscal 2025 core earnings is now expected to decline 3% year-over-year versus the prior forecast of low-single-digit increase. Calls are outnumbering puts ~3:2 with the April 25th 142.00 call leading the way (volume is 2,063).
New 52-week lows (35 new lows today): Apogee Enterprises Inc. (APOG - $1.10 to $136.13), Helen of Troy Ltd. (HELE - $18.59 to $270.40), Tractor Supply Company Inc. (TSCO - $2.32 to $48.41)
Notable Put Activity
Some unusual put activity (~35:1 puts over calls) is being seen in cloud-based digital banking services provider Alkami Technology Inc. (ALKT + $0.57 to $26.78) as option traders primarily target the May 16th 25.00 put. Volume on this contract is 1,533 (vs. open interest of 11), which included a 750 contract block that was bought at the ask price of $1.05. We know that this block is a new position based on the open interest figure and we can assume that the intent is bearish in nature since the trades took place at the ask price.
Volume Signals
Fortrea Holdings Inc. (FTRE + $0.34 to $5.66): Option volume is running at over 180x the daily average on this contract research organization which is primarily being driven by a couple of large blocks that simultaneously traded on the December 19th expiration earlier this morning:
- 7.50 call (open interest is 94): A 1,500 contract block was bought for $0.85 when the bid/ask spread was $0.70 x $0.90.
- 17.50 call (open interest is 1,215): A 1,500 contract block was sold at the bid price of $0.05.
We know that both these blocks are new positions based on the respective open interest figures and it appears that a $10.00-wide bull call spread was established for a net debit of $0.80 (x 1,500 contract x 100 multiplier, excluding commissions). The positioning suggests that the block trader believes that FTRE will close above the break-even price of $8.30 at expiration.
Informatica Inc. (INFA + $0.34 to $5.66): Option volume is running at ~28x the daily average on this software firm which is primarily being driven by a couple of large blocks that simultaneously traded on the December 19th expiration earlier this morning:
- 20.00 call (open interest is 148): A 1,000 contract block was bought for $2.10 when the bid/ask spread was $1.95 x $2.20.
- 22.50 call (open interest is 133): A 1,000 contract block was sold for $1.25 when the bid/ask spread was $1.20 x $1.45.
We know that both these blocks are new positions based on the respective open interest figures and it appears that a $2.50-wide bull call spread was established for a net debit of $0.85 (x 1,000 contract x 100 multiplier, excluding commissions). The positioning suggests that the block trader believes that INFA will close above the break-even price of $20.85 at expiration.
XP Inc. (XP + $0.34 to $5.66): Option volume is running at ~8x the daily average on this Brazil-based financial services provider which is primarily being driven by a couple of large blocks that simultaneously traded on the June 20th expiration earlier this morning:
- 18.00 call (open interest is 148): A 1,500 contract block was bought at the ask price of $0.25.
- 20.00 call (open interest is 133): A 1,500 contract block was sold for $0.06 when the bid/ask spread was $0.05 x $0.30.
We know that both these blocks are new positions based on the respective open interest figures and it appears that a $2.00-wide bull call spread was established for a net debit of $0.19 (x 1,500 contract x 100 multiplier, excluding commissions). The positioning suggests that the block trader believes that XP will close above the break-even price of $18.19 at expiration.
Gauging Volatility
The Cboe Volatility Index (VIX - 0.76 to 27.69) has been on both sides of the unchanged line today (intraday range is 26.98-29.66), as equity markets are higher across the board around the midday mark (DJI + 358, SPX + 85, COMPX + 354). VIX option volume is below average today as the index is currently missing from the "Top Volume by Underlying" list. The volume put/call ratio is currently 0.53 with the highest volume contract being the May 21st 45.00 call (volume is 15,625 vs. open interest of 98,147).
