Monday, May 12, 2025
We are greeted this morning, in the pre-markets, with something of a revelation: a trade breakthrough between the U.S. and China, via negotiations over the weekend in Switzerland. What’s actually been agreed on is a 90-day pause on reciprocal tariffs — from +145% to +30% on Chinese imports, and from +125% to +10% on U.S. exports.
This de-escalation in the burgeoning trade war has opened the floodgates to stock buyers this morning. The Dow is up +1075 points at this hour, the S&P is +175 points and the Nasdaq +800 points. The small-cap Russell 2000 is +90 points. All major indexes are now up from April 2nd levels, which is when the White House launched its new tariff policy. The indexes are still shy of late-February highs at this hour. Amazon AMZN and Tesla TSLA are both over 8% in the pre-market.
The risk of recession has just gotten lower. If we see a permanent trade deal between the two top economies in the world sometime in the next 90 days, that should only send markets higher. We also see fewer interest rate cuts predicted for the Fed this year — moving the probability for a first cut (the most recent was in December of last year) from July to September.
We have an eventful week of trading in front of us, but we’re starting out on the quiet side. After today’s regular trading session gets underway, we’ll see the Monthly U.S. Budget for April (which is expected to increase to $256 billion from $210 billion reported a month ago).
Things get rolling in a bigger way tomorrow, with the latest Consumer Price Index (CPI), also from April. This will be the first month where we may see immediate effects of the current White House trade policy — one that investors hope will get wrapped up in short order with U.S. trading partners all around the world. Month over month is expected to swing back to positive +0.2% from -0.1% reported for March. Year over year is expected to tick down to +2.3% from +2.4% previously.
Earnings Reports This Morning: NRG, Sally Beauty
NRG Energy NRG posted a blowout Q1 ahead of today’s open, with earnings of $2.62 per share mounting a +45.6% beat from the Zacks consensus, while revenues of $8.59 billion were way ahead of estimates and the year-ago tally of $7.43 billion. Shares are up +10% on the news, adding to the +32% gains in the stock year to date. For more on NRG’s earnings, click here. (You can see the full Zacks Earnings Calendar here.)
Sally Beauty SBH also outpaced estimates on its bottom line this morning, with earnings of 42 cents per share surpassing estimates by 3 cents. Revenues in the quarter, however, were well below forecast: $883 million from $901 million anticipated. Comps for Q3 are now flat to down -2%, flat to down -1% for the full year. Shares are still up +4% on this strong trading morning. For more on SBH’s earnings, click here.
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NRG Energy, Inc. (NRG) : Free Stock Analysis Report
Sally Beauty Holdings, Inc. (SBH) : Free Stock Analysis Report
Tesla, Inc. (TSLA) : Free Stock Analysis Report
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