Here is Schwab's early look at the markets for Wednesday, April 23:
Earnings season rolls on following a trade-related mood shift Tuesday that clawed back most of Monday's sharp losses. Investors continue to mull weaker-than-expected earnings from Tesla (TSLA) released late yesterday and look for any further news on the tariff front.
"Markets are still waiting on deal announcements, and this is an overhang on stocks," said Nathan Peterson, director of derivatives analysis at the Schwab Center for Financial Research. "VIX at 30 still conveys the high uncertainty around trade and the potential economic impact." The Cboe Volatility Index (VIX) hovered near 30 late Tuesday, down from recent highs near 60, but still well above the historic average of 20.
U.S. Treasury Secretary Scott Bessent told a closed-door investor summit that the tariff standoff with China is unsustainable and he expects the situation to de-escalate, Bloomberg reported Tuesday. That followed headlines earlier citing progress in U.S./India trade talks, and then word that Bessent will speak today at 10 a.m. ET on the "state of the global financial system." Depending on his tone and any nuggets he shares, especially regarding China, the speech might move markets.
On the less hopeful side, the International Monetary Fund (IMF) warned Tuesday that "the swift escalation of trade tensions and extremely high levels of policy uncertainty are expected to have a significant impact on global economic activity."
Also less hopeful were results from Tesla (TSLA) that missed analysts' revenue and earnings per share estimates by quite a bit. The company's earnings per share of $0.27 compared with consensus of $0.40, while revenue of $19.34 billion was below the consensus $21.2 billion. Tesla now has missed average earnings and revenue estimates in several recent quarters. Still, shares didn't initially move much in after-hours trading, perhaps because they were already down 40% from the last time Tesla reported. Quarterly operating margin fell to 2.1%, from 5.5% a year ago. Tesla blamed reduced vehicle prices, declining vehicle deliveries, and an increase in operating expenses.
Investors await quarterly results today from Boeing (BA), AT&T (T), Philip Morris (PM), IBM (IBM), and Texas Instruments (TXN). That's a healthy mix of sectors that could provide color on macro trends in tech, telecommunications, and industrial parts of the economy. Boeing came under pressure recently as China instructed airlines not to buy the jet maker's planes. First quarter deliveries for Boeing's Defense, Space & Security division totaled 26, up from 14 during the same quarter a year earlier.
IBM could be watched for an early read on quarterly cloud market conditions ahead of earnings later this week and next from leading cloud providers. Alphabet (GOOGL), another major cloud name, reports this Thursday, but focus there is likely to be on how it resolves its case with the Justice Department as the government looks to break up parts of the company.
Today also features March new home sales soon after the open, and analysts expect a seasonally adjusted annual rate of 684,000, up from 676,000 in February. Last week was a challenging one for the housing market as March housing starts came in well below analysts' expectations and home builder D.R. Horton (DHI) said spring demand was off to a slow start. S&P Global U.S. manufacturing and services data might also get a close look today.
The Fed's Beige Book on economic conditions around the country is due this afternoon. It might give early indications on whether the many businesses surveyed by regional Fed banks have seen any trade-related weakness in demand for their products and how they plan to approach hiring.
Tomorrow's initial weekly jobless claims will be watched, as always, for any signs of tariff-related economic struggles showing up in the labor market. Recent readings have been light, below 230,000. Anything 240,000 or above might catch attention. The Briefing.com consensus is 220,000.
The benchmark 10-year Treasury note stayed below 4.4% yesterday but remains well above recent lows near 4%. Chances of a May rate cut slipped below 10% late Tuesday, according to the CME FedWatch tool, as investors appear convinced recent hawkish Fed talk means little chance of a trim. June rate cut odds fell to 66%.
The IMF now sees global growth at 2.8% this year, down from 3.3% in 2024. The estimate was down from 3.3% in January. The projection for 2026 growth fell to 3% from 3.3%. The weak IMF data handed some early support to Treasuries on Tuesday, but that diminished later following weak demand for a $69 billion 2-year Treasury note auction. Foreign demand for 2-year notes auctioned yesterday was the weakest in two years, Briefing.com said, adding to worries about foreign interest in U.S. assets. A 5-year note auction comes today, with results due at 1 p.m. ET. Poor auction demand typically pressures Treasuries and lifts yields, which move the opposite direction.
As major indexes rose yesterday on sunnier trade talk, it's illuminating to see which companies and sectors led the way. Though one day isn't a trend, it's presumably useful to highlight positive performance related to trade in case progress continues. Industrials and financials had a good day, and so did consumer discretionary sub-sectors like homebuilders. These are cyclical parts of the market that tend to perform better when the economy improves.
Leading names Tuesday included mining company Freeport-McMoran (FCX), steel makers Alcoa (AA) and Cleveland-Cliffs, industrial conglomerate 3M (MMM), home builders Pulte Group (PHM), KB Home (KBH), and Toll Brothers (TOLL), and financial names like Morgan Stanley (MS), Visa (V), and Master Card (MA).
Defense contractors saw their stocks head different directions as investors scrutinized their earnings and how they expect tariffs to hit their businesses. Lockheed Martin (LMT) rallied after reporting better-than-expected first quarter earnings and revenue. Lockheed said it's confident it can achieve the financial guidance it shared in January.
Northrop Grumman (NOC) shares tumbled, however, as EPS fell far short of analysts' expectations and the company cut full-year guidance. Sales fell 7% year over year. Higher manufacturing costs and a "previously disclosed wind-down of work on certain Space Systems programs" partly accounted for the weak quarter, the company said.
So far, 81 of 500 S&P companies have reported, and average revenue growth is 4.62%. Average earnings growth is 6.06%, but six of the "Magnificent Seven" report this week and next and many are seen growing EPS by double digits. Analysts expect technology firms to grow earnings on average more than 14% for the quarter, FactSet said, and they report in earnest starting this week.
Technically, the S&P 500 index appeared to get support after testing 5,100, a level that represented the intraday low from last August's sell-off, Schwab's Peterson said. Above the market, 5,500 remains key intermediate-term resistance. "While the near-term technicals may be contributing to today’s bounce, we’re still in intermediate-term bearish downtrends essentially across the board, so there is some work to do here for the bulls," he added. For the SPX, 4,835 is key intermediate-term support and 5,500 is key intermediate-term resistance.
The Dow Jones Industrial Average® ($DJI) added 1,016.57 points (+2.66%) to 39,186.98; the SPX rose 129.56 points (+2.51%) to 5,287.76, and the Nasdaq Composite® ($COMP) gained 429.52 points (+2.71%) to 16,300.42.
