- S&P 500 Wipes Out 2% Drop for First Time Since ‘22: Markets Wrap
The great Wall Street rebound resumed in earnest as stocks staged a late-day comeback even as fears grow
that the US economy will buckle under the weight of Donald Trump’s trade war. A month of historic volatility
ended on that same note, with the S&P 500 wiping out a 2% slide for the first time since 2022. Hopes that trade
talks will prove constructive firmed up sentiment, after a report that the US has been proactively reaching out
to China through various channels. At the same time, a cohort of investors is betting the Federal Reserve will
administer its policy medicine to forestall a recession. - Dow rises more than 100 points, S&P 500 books third straight losing month
The S&P 500 posted narrow gains Wednesday in a bout of volatile trading after data showed that the U.S.
economy contracted in the first quarter and investors’ recession fears ramped up. The broad market index
advanced 0.15% to close at 5,569.06, while the Nasdaq Composite slipped 0.09% to end at 17,446.34. The Dow
Jones Industrial Average added 141.74 points, or 0.35%, settling at 40,669.36. While the S&P 500 and the Dow
ultimately notched their seventh consecutive winning day, investors endured a rocky session. At their lows,
the S&P 500 was down nearly 2.3%, while the Dow slid more than 780 points. - Oil prices take breather after prospect of increased supply triggered selloff
Oil prices steadied in early Asian trade on Thursday, finding footing a day after a steep decline triggered by
signs that Saudi Arabia could increase output and data showing the U.S. economy contracted. Brent
crude futures gained 7 cents, or 0.1%, at $61.13 a barrel as at 0318 GMT. U.S. West Texas Intermediate crude
futures were up 1 cent or 0.02%, at $58.22. WTI closed at its lowest since March 2021 on Wednesday. “In the
near term, the path of least resistance remains tilted to the downside,” said Sugandha Sachdeva, founder of
SS WealthStreet, a New Delhi-based research firm. “The dual impact of deteriorating demand and looming
supply expansion has created a pessimistic outlook for crude, with Brent crude appearing vulnerable to test
$55 per barrel,” Sachdeva said. Saudi Arabia is telling allies and industry experts that it is unwilling to prop up
the oil market with supply cuts and can manage a prolonged period of low prices, sources told Reuters. Several
OPEC+ members will suggest the group accelerates output hikes in June for a second consecutive month, three
people familiar with OPEC+ talks have said. Eight OPEC+ countries will meet on May 5 to decide a June output
plan. - Gold slips to two-week low as trade tensions ease; US payrolls data on tap
Gold eased on Thursday to hit its lowest level in two weeks as the dollar’s strength and easing trade tensions
dulled the metal’s safe-haven allure, while investors looked forward to the U.S. non-farm payrolls report due
this week. Spot gold fell 1.8% to $3,228.70 an ounce as of 0411 GMT, after hitting its lowest level since mid
April. U.S. gold futures lost 2.5% to $3,236.10. The dollar index rose 0.4% against its peers, making gold less
attractive for buyers holding other currencies. U.S. President Donald Trump said he has “potential” trade
deals with India, South Korea and Japan as he sought to convert his tariff policy into trade agreements. “Gold
retraced as trade war concerns eased, but market confidence remains shaky with investors reacting to
headlines daily,” said Ilya Spivak, head of global macro at Tastylive. The non-yielding metal, which is considered
a hedge against political and financial turmoil and tends to thrive in a low interest rate environment, scaled
multiple record peaks in April due to elevated uncertainties. - Bank of Japan holds rates steady for second straight meeting as Trump tariffs threaten exports
Japan’s central bank held its policy rate at 0.5% Thursday, for a second straight meeting, as U.S. President
Donald Trump’s tariffs weigh on the outlook for the country’s economy. The move was in line with a Reuters
poll of economists, and comes at a time of global trade tensions as the U.S. pressures countries to sign business
deals under threats of “reciprocal” tariffs. Japan has seen headline inflation staying above the BOJ’s 2% target
for 36 straight months, offering the central bank room to raise rates as it seeks to normalize its monetary policy
on the back of a virtuous cycle of wage and price growth. Trump tariffs, however, have complicated plans to
raise rates.In its policy decision, the central bank highlighted that it will continue to raise its policy rate “if our
economic and price forecasts are realised.” It also flagged that Japan’s growth is likely to moderate due to a
slowdown in other economies and a decline in domestic corporate profits. Meanwhile, the central bank expects
inflation to range between 2-2.5% in fiscal year 2025 and 1.5 to 2% in fiscal year 2026. CPI is likely to come in
around 2% in fiscal year 2027, it added in a statement on its policy decision. Japan’s fiscal year runs from April
to March. The country is scheduled to release fiscal first-quarter GDP numbers on May 16. The Japanese
economy grew 1.2% year-on-year in the fourth quarter, while full-year GDP growth in 2024 slowed to 0.1%, a
sharp fall from the 1.5% growth seen in 2023. BOJ’s latest decision comes after trade discussions between
Washington and Tokyo two weeks ago reportedly did not lead to a breakthrough. The Nikkei 225 rose 0.54%
as at 12.30 p.m. Japanese time following the decision, while the broad-based Topix index added 0.23%.
Meanwhile, the yen weakened 0.29% to trade at 143.49 against the U.S. dollar. - U.S. economy shrank 0.3% in the first quarter as Trump policy uncertainty weighed on businesses
The U.S. economy contracted in the first three months of 2025 on an import surge at the start of
President Donald Trump’s second term in office as he wages a potentially costly trade war. Gross domestic
product, a sum of all the goods and services produced from January through March, fell at a 0.3% annualized
pace, according to a Commerce Department report Wednesday adjusted for seasonal factors and inflation. This
was the first quarter of negative growth since Q1 of 2022. Economists surveyed by Dow Jones had been looking
for a gain of 0.4% after GDP rose by 2.4% in the fourth quarter of 2024. However, over the past day or so some
Wall Street economists changed their outlook to negative growth, largely because of an unexpected rise in
imports as companies and consumers sought to get ahead of the Trump tariffs implemented in early April.
Indeed, imports soared 41.3% for the quarter, driven by a 50.9% increase in goods, for the biggest growth
outside the Covid pandemic since 1974. Imports subtract from GDP, so the contraction in growth may not be
viewed as negatively given the potential for the trend to reverse in subsequent quarters. Imports took more
than 5 percentage points off the headline reading. Exports rose 1.8%. A slowdown in consumer spending and
a sharp decline in federal outlays also contributed to the weak GDP number amid Elon Musk’s efforts at the
Department of Government Efficiency. “Maybe some of this negativity is due to a rush to bring in imports
before the tariffs go up, but there is simply no way for policy advisors to sugar-coat this. Growth has simply
vanished,” said Chris Rupkey, chief economist at Fwdbonds. - U.S. and Ukraine sign economic deal that includes terms for natural resources in the war-torn country
The White House announced Wednesday night that it signed an economic partnership with Ukraine that
includes an agreement on the ownership and extraction of natural resources from the war-torn nation.
Treasury Secretary Scott Bessent said the agreement, established as the United States-Ukraine Reconstruction
Investment Fund, will allow the U.S. to “invest alongside Ukraine” to unlock its growth assets and ultimately
accelerate its economic recovery. “As the President has said, the United States is committed to helping
facilitate the end of this cruel and senseless war. This agreement signals clearly to Russia that the Trump
Administration is committed to a peace process centered on a free, sovereign, and prosperous Ukraine over
the long term,” Bessent said. “President Trump envisioned this partnership between the American people and
the Ukrainian people to show both sides’ commitment to lasting peace and prosperity in Ukraine.” “To be clear,
no state or person who financed or supplied the Russian war machine will be allowed to benefit from the
reconstruction of Ukraine,” he added. Yulia Svyrydenko, Ukraine’s economy minister, provided more details on
the minerals deal outlined in the agreement, first noting in a post on X that “it is the Ukrainian state that
determines what and where to extract” and that “subsoil remains under Ukrainian ownership.” Ukraine and
the U.S. will jointly manage and maintain co-ownership of the investment fund, with neither side holding a
dominant vote, Svyrydenko said. It will be financed by new Ukrainian oil, gas and critical mineral licenses, with
50% of all revenue from the licenses going toward the fund. Svyrydenko indicated in her post that the U.S. will
also contribute to the fund, through it is unclear exactly how much. - Rivian stock rises on reports of strategic battery reserves
Shares of Rivian Automotive Inc (NASDAQ:RIVN) climbed 1.9% following a Bloomberg report that the electric
vehicle manufacturer had proactively built a reserve of electric-vehicle batteries, potentially safeguarding
against the current trade policy upheaval impacting the automotive supply chain. Rivian’s strategic move to
acquire a significant supply of lithium iron phosphate cells from China’s Gotion High-Tech Co. occurred late last
year, prior to the US election. This foresight has provided the company with a buffer against the tariffs
introduced by President Donald Trump that are now challenging the industry. In a further step to secure its
supply chain, Rivian collaborated with Samsung SDI (KS:006400) to transport a substantial quantity of battery
inventory to the United States from South Korea. These efforts were designed to ensure a steady supply and
to mitigate potential complications and costs associated with the tariffs. The company’s preemptive actions
have been well-received by the market, as reflected in the stock’s positive performance. Rivian’s approach to
managing its supply chain risks showcases a level of strategic planning that may provide it with a competitive
edge in the rapidly growing electric vehicle market. Investors appear to value the company’s proactive
measures to navigate the uncertain trade environment. The ability to maintain production without significant
disruption due to supply chain issues is critical in the automotive industry, particularly for a company like Rivian
that is focused on the competitive EV sector. While the company has not publicly commented on these specific
supply chain strategies, the market’s response to Rivian’s stock suggests confidence in the company’s ability to
manage external pressures and maintain its operational momentum. - Microsoft shares jump 9% on earnings and revenue beat, uplifting forecast
Microsoft shares rose about 9% in extended trading on Wednesday after the company reported better-than
expected quarterly results, driven by its Azure cloud business, and issued surprisingly strong guidance. Here’s
how the company performed in comparison with LSEG consensus: Earnings per share: $3.46 vs. $3.22
expected; Revenue: $70.07 billion vs. $68.42 billion expected. Microsoft called for revenue in the range of
$73.15 billion to $74.25 billion. The middle of the range was higher than LSEG’s $72.26 billion consensus. The
company sees 34% to 35% in Azure growth at constant currency, compared with StreetAccount’s 31.5%
consensus. Management reiterated that capital expenditures will grow in the new fiscal year, though at a
slower rate than the current 2025 fiscal year. The company’s implied operating margin of 43.35% was just shy
of StreetAccount’s 43.5% consensus. Revenue increased 13% year over year in the fiscal third quarter, which
ended on March 31, according to a statement. Net income climbed 18% to $25.8 billion from $21.9 billion, or
$2.94 per share, a year earlier. While earnings and revenue topped estimates, those results are backward
looking. President Donald Trump’s sweeping tariffs were announced in early April, so the company’s optimistic
forecast provided some relief to investors who have been concerned about how tech businesses will fare the
remainder of the year. CEO Satya Nadella said earlier this year that Microsoft plans to spend $80 billion in fiscal
2025 on construction of data centers that can handle artificial intelligence workloads. That requires hefty
imports from overseas, meaning costs could rise depending on where tariffs land. Microsoft continued to
invest heavily in AI infrastructure during the quarter. Capital expenditures, excluding finance leases, reached
$16.75 billion, up nearly 53%. Analysts surveyed by Visible Alpha had expected $16.37 billion. The company’s
Azure revenue grew 33%, with 16 points of the growth associated with AI. Analysts polled by StreetAccount
and CNBC had anticipated 30.3% and 29.7% growth, respectively. - Meta’s Reality Labs posts $4.2 billion loss in first quarter
Meta is continuing to sink billions of dollars a quarter into the metaverse. In its first-quarter earnings report on
Wednesday, Meta said its Reality Labs unit recorded an operating loss of $4.2 billion in the period while
bringing in $412 million in sales. Analysts were projecting an operating loss of $4.6 billion on revenue of $492.7
million. Meta’s Reality Labs unit is responsible for the company’s Quest-branded virtual reality headsets and
Ray-Ban Meta Smart Glasses. It’s the key business unit that anchors CEO Mark Zuckerberg’s plans to build a
new computing platform involving digital worlds accessible via VR and augmented reality devices. Reality Labs
has reported cumulative losses of more than $60 billion since late 2020, including a loss of $3.85 billion in the
first quarter of last year. In late 2021, Zuckerberg changed the name of his company from Facebook to Meta.
Wall Street has questioned Meta’s big spending on the metaverse, which Zuckerberg has said could take many
years to turn into a real business. The company must now also contend with sweeping new tariffs
from President Donald Trump and the likely increase in costs that will follow, potentially leading to higher
priced devices. Last week, Meta said that an unspecified number of Reality Labs employees were laid off. Those
workers were part of the Oculus Studios unit, which creates VR and AR games and content for Quest VR
headsets. - Albemarle (NYSE:ALB) Removed From FTSE All-World Index As Stock Dips 8% Over The Past Month
Albemarle experienced a 7% decline over the past month, a move significantly impacted by its removal from
the FTSE All-World Index. This change in status likely affected investor sentiment, contributing to the stock’s
performance. Additionally, general market volatility has intensified due to escalating global trade tensions and
a tariff-induced sell-off, which pushed the Dow Jones and Nasdaq into correction and bear market territories,
respectively. Amid this widespread market downturn, Albemarle’s stock movement aligns with broader
economic concerns, overshadowing potential company-specific developments or prospects within the
chemical sector. Over the past five years, Albemarle (NYSE:ALB) reported a total shareholder return of 4.89%.
Recent challenges, such as a full-year net loss of US$1.18 billion for 2024, contributed to a lackluster longer
term performance. These financial results marked a significant change from a net income of US$1.57 billion
previously. Additionally, Albemarle’s drop from the FTSE All-World Index may have compounded the recent
investor sentiment, influencing both short-term and long-term returns. During this period, Albemarle’s
strategic efforts included a collaboration with Caterpillar Inc. on sustainable lithium mining operations, an
initiative reflecting an attempt to strengthen its growth potential. However, despite these efforts, Albemarle’s
stock underperformed both the US market and the chemicals industry over the last year, with challenges such
as being perceived as expensive relative to peers and operating at a loss. The absence of stock buybacks in
recent quarters further amplifies shareholder concerns about financial priorities. - Qualcomm forecasts Trump tariffs will dent revenue, shares fall 6%
Mobile chip designer Qualcomm on Wednesday forecast third-quarter revenue that would not meet estimates,
joining other tech companies such as Snap and Samsung that voiced concerns about the effects of U.S.
President Donald Trump’s trade war. Qualcomm third-quarter estimates reflected the impact of the tariffs “as
they stand today,” Chief Financial Officer Akash Palkhiwala said in a conference call with analysts following the
results. But he said the situation could change due to rapid developments in U.S.-China trade tensions. “We do
not see any material, direct impact – there is smaller direct impact and some minor changes in demand,”
Palkhiwala said, in reference to the tariffs. “(It’s) difficult for us to predict.” Qualcomm forecast third-quarter
revenue just shy of Wall Street estimates, expecting tepid demand for its smartphone chips. Apple, which is
known to be Qualcomm’s largest customer, has also begun to produce its own modem chips and is expected
by analysts to buy fewer of Qualcomm’s modems as it introduces its home-grown chips into more products.
Qualcomm’s stock, which was already down more than 3% year to date, sank 6% more in extended trading, as
investors have worried about global trade turmoil. The company’s chips are currently excluded from Trump’s
steep tariffs but slower economic growth will likely hit demand. In a securities filing on Wednesday, Qualcomm
said it was uncertain about the effects tariffs and other “related actions” might have on its business. “Tariff
uncertainties will definitely have an impact to its topline outlook as Qualcomm is exposed to the smartphone,
consumer IoT and the automotive end-markets,” Summit Insights Group analyst Kinngai Chan said.
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