Another decent U.S. jobs report gave Wall Street an early lift but diminished rate cut hopes. The U.S. economy created 177,000 jobs in April, above expectations of 130,000 and little changed from the downwardly revised March gain. Unemployment stayed at 4.2%. The ho-hum data could counter worries that the trade war is hurting the labor market, at least in the early going.
"Overall, it shows the labor market is softening but not substantially deteriorating," said Cooper Howard, director, fixed income strategy, at the Schwab Center for Financial Research. "Nothing in this report should give the Fed a reason to think they should start cutting rates in the near-term. It's likely they'll stay on hold for the time being."
In other news, enthusiasm bubbled overnight here and in Asia on reports that China was considering trade talks with the U.S. But in an ominous note, Japan's finance minister said its U.S. Treasury holdings could be a card in trade talks, Bloomberg reported. That doesn't necessarily mean Japan is considering sales of its more than $1 trillion in U.S. Treasury note holdings. But coming after pressure on Treasuries last month that coincided with the trade war, it could reignite concerns of overseas buyers growing less enamored with U.S. assets. Any heavy sales in Treasuries, whether domestic or overseas, would drive yields higher, raising borrowing costs for U.S. consumers and businesses and bumping up Washington's interest bills.
Morning Rush
-The 10-year U.S. Treasury yield (TNX) is up today to 4.29%.
-The U.S. Dollar Index ($DXY) is down slightly to 99.53
-The CBOE Volatility Index® (VIX) continues to contract to 22.92.
-WTI Crude Oil (/CL) continues its descent, down 1.55% to $58.34//barrel.
-Bitcoin (BTC) is higher by 1.14% to $98,270.
-Ethereum (ETH) is holding steady at $1,861.
Source: Schwab Center for Financial Research
Today's Bullish Activity
Shares of Riot Platforms Inc. (RIOT + $0.81 to $8.57) are up over 10.00% today after the bitcoin mining firm posted Q1 revenue growth that exceeded analyst estimates but still reported net losses, as it continues its strategic pivot toward AI and high-performance computing. Riot Platforms generated $161.4 million in total revenue in Q1, up 103.5% year-on-year and higher than the analyst expectation of $157.8 million, primarily driven by a $71.5 million increase in bitcoin mining revenue. This increase in revenue, however, wasn't enough to cover costs which led to a net loss of $296.4 million, compared to net income of $211.8 million during the same period last year.
Riot management attributes much of the revenue gain to "the multi-year development of the first phase of our Corsicana Facility, significantly expanding our hash rate, and further enhancing our operating efficiency". This has helped the company begin its transition from solely bitcoin mining to AI and high-performance computing.
These latest figures have received mix reviews from the analyst community. Needham maintained its Buy rating on the shares but cut its price-target to $12.00 from $13.50. Piper Sandler maintained its Overweight rating on the shares and cuts its price target from $23.00 to $18.00.
Option trading in RIOT currently stands at 237,924 contracts, 5x the daily average, with calls outpacing puts nearly 3:1. Leading the way are the following trades, expirations, and strikes.
-May 2nd, 2025, 8.50 call accounted for 26,962 contracts; open interest is 27,225 contracts.
-December 19th, 2025, 11.00 call accounted for 26,132 contracts; open interest is 41,640 contracts.
-May 2nd, 2025, 8.00 call accounted for 15,029 contracts; open interest is 14,600 contracts.
New 52-week highs (105 new highs today): Haleon PLC (HLN + $0.39 to $10.72), Adaptive Biotechnologies Corp. (ADPT + $2.60 to $9.96), Amphenol Corp. (APH + $1.34 to $79.97), Berkshire Hathaway Cl B (BRK.B + $7.58 to $537.81)
Notable Call Activity
Unusual call activity is noted today in Rigetti Computing Inc. (RGTI + $1.25 to $10.39), as call volume currently stands at 55,757 contracts, 8x the average daily volume. Much of the activity can be attributed to call buying at multiple strikes in the May 2nd, 2025, expiration month. Traders have especially targeted the 9.50, 10.00, 10.50, and 11.00 strikes where the collective volume has exceeded 22,000 contracts. Implied volatility has risen by nearly four points today and the put/call ratio has decreased to 0.28. Both are potential signs of call buying by traders (suggesting bullish intent).
Other call activity of note can be seen today American Axle & Manufacturing Inc. (AXL + $0.18 to $3.98), as call activity has spiked to 6,249 contracts in morning trading (6x daily average). Traders have been especially active in the May 16th, 2025, expiration month at the 4.00 strike. Multiple block order buys, totaling over 5,300 contracts, have occurred with prices ranging from $0.25 to $0.30, primarily on the offers. These trades represent new positions, given the open interest of 436 contracts (suggesting bullish intent). Shares of AXL are up over 10% today after the company announced Adjusted EPS that beat analyst estimates.
Today's Bearish Activity
Shares of Block Inc. (XYZ - $12.70 to $45.78) are getting hammered today, down over 21%, the most since March 2020, after the financial services and digital payments company reported first-quarter earnings, revenue and key financial metrics that missed Wall Street targets and cut its gross profit guidance for fiscal year 2025. Block generated EPS for the period ended March 31 of $0.56 on an adjusted basis, up 19% from the year-earlier period, on net revenue of $5.77 billion, down 3% from a year earlier, amid slower Bitcoin-related growth. These figures came in well below analysts' estimates for EPS of $0.97 on revenue of $6.19 billion.
Forward guidance didn't help either, as Block said it now expects gross profit to grow 12% to $9.96 billion this year, down from its previous expectation of at least $10.22 billion. The reduced guidance was attributed to softer Cash App card spending, particularly in discretionary categories, and a decline in year-over-year growth in active users.
Analysts moved their price targets and recommendations following the results. Wells Fargo cut their price target to $50 from $95 and changed their recommendation to Equal Weight from Overweight. BMO lowered its price target to $58 from $80 and changed its recommendation to Market Perform from Outperform. Finally, Benchmark went as far as removing its price target altogether and changed its recommendation to Hold from Buy.
Option trading in XYX currently stands at 250,404 contracts in early morning trading, on pace for 14x the daily average, with puts outpacing calls 2:1. Leading the way are the following trades, expirations, and strikes:
-May 9th, 2025, 52.00 call accounted for 10,768 contracts; open interest is 150 contracts.
-May 2nd, 2025, 62.00 call accounted for 10,434 contracts; open interest is 11,430 contracts.
-May 2nd, 2025, 68.00 call accounted for 10,392 contracts; open interest is 10,834 contracts.
New 52-week lows (23 new lows today): Block Inc. (XYZ - $12.70 to $45.78), Organon & Co. (OGN - $0.05 to $9.40), UnitedHealth Group Inc. (UNH - $3.46 to $397.22), Beckton Dickinson & Co. (BDX - $2.70 to $166.84)
Notable Put Activity
Some unusual put activity is noted today in Zoominfo Technologies (ZI + $0.23 to $8.86). This activity equates to over 14,178 put contracts, 150x average daily put volume. Much of this volume can be attributed to two block orders totaling 11,000 contracts in the May 16th, 2025, expiration month. In total, traders have sold over 12,700 of the May 16th, 2025, 8.50 put strike for $0.56 when the bid/ask was $0.55 x $0.65. These are new positions given the open interest of 3,636 contracts (suggesting neutral to bullish intent). Earnings for ZI are expected on May 12th, so these options will be in play. It is possible traders expect the recent bounce from the April 7th 52-week low price of $7.01 to continue.
Another example of unusual put activity occurred in Arbor Realty Trust Inc. (ABR - $0.25 to $10.83), as put volume stands at 15,522 contracts in morning trading, 8x average daily volume. Nearly all the volume can be attributed to activity in the May 9th, and May 16th, 2025, expiration months, particularly at the 10.50 and 10.00 strikes. Volume at those strikes has totaled 12,000 contracts collectively, with most of the activity on the sell side. One big block trade caught our attention. Traders sold 5,604 of the May 16th 10.00 puts of 40.20 when the bid/ask was $0.198 x $0.24. This could have been a closing trade of a long-put position, given the open interest of 13,563. The trades in the May 9th expiration were also sales but were likely opening transactions. Either way, traders appear to be selling downside and selling volatility following the company's latest earnings announcement which beat estimates (suggesting neutral to bullish intent).
Gauging Volatility
The Cboe Volatility Index (VIX - 1.71 to 22.89) has traded lower throughout the morning, as equity markets are up across the board (DJI + 398, SPX + 66, COMPX + 229). VIX movement has occurred within a fairly narrow range today (the intraday range is 22.49 – 24.32). VIX option volume is tepid today, given its omission from the "Top Volume by Underlying" list. The volume put/call ratio is currently 0.41, and the highest volume contract is the May 21st, 2025, 75.00 call (volume is 32,931 vs. open interest of 178,400).
