On Wed, 23 Apr 2025, US stocks closed with back-to-back gains, though the Dow erased much of its 1,000+ points gained (intraday) in a rally sparked by hopes of easing US-China trade tensions faded toward 4pm.
At the closed of mid-week trading:
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DJIA: +1.07% (+419.59 TO 39,606.57).
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S&P 500: +1.67% (+88.10 TO 5,375.86). Posted 2 new 52-week highs and 2 new lows
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Nasdaq: +2.50% (+407.63 to 16,708.05). 3,277 stocks rose and 1,141 fell as advancing issues outnumbered decliners by a 2.87-to-1 ratio.
On Wednesday, trading volume on US exchanges was 17.40 billion shares, compared with the 19.18 billion average for the full session over the last 20 trading days.
At the Institute of International Finance event in Washington, D.C. Treasury Secretary Bessent at last, tried to tone down Trump’s backfired rhetorics, insisting that “‘America First’ does not mean America Alone”, rather it is a call for deeper collaboration & mutual respect among trade partners.
It is either (a) Bessent has a weak speech-writing team or (b) he is tone deaf to his poor command of English.
What “mutual respect” did US exhibit when Trump decided unilaterally to impose tariffs one day, freeze it the next, then pile on additional tariffs thereafter…
It is total disregard for its allies and world order. No wonder the rally momentum lost steam towards 4pm.
S&P Manufacturing PMI Report.
On the economic front, S&P Global's preliminary Manufacturing PMI for April 2025 edged up slightly to 50.7 from 50.2, indicating marginal growth in manufacturing
Price pressures intensified in April 2025 too.
Average prices charged for goods & services rose at the fastest rate in over a year, with manufacturing prices increasing at their steepest pace in nearly 2½ years.
Tariffs are the main driver of rising prices, but labour costs are also pushing up company pricing.
Big picture: Future of US economy is in question because of the trade wars.
Economists say that the longer they persist, the more likely US growth would slow.
Inflation and unemployment could also rise, leading to higher consumer inflation, making it harder for the Fed to cut interest rates despite signs of economic slowdown.
On Wednesday, I have covered quarterly earnings from $Northrop Grumman(NOC)$ and $RTX Corp(RTX)$. Click here ! for details, Repost to share - tks.
In this post, I will round up the 4th defense stock $General Dynamics Corp(GD)$ that released its quarterly report card on Wed, 23 Apr 2025.
For Q1 2025, GD has reported the followings:
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Revenue: came in at $12.22 billion vs market expectations of $11.94 billion vs Q1 2024’s $10.73; billion. This marked a +13.9% YoY gain.
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Earnings per share (EPS): came in at $3.66 vs $3.48 vs Q1 2024’s $2.88; making a +27.1%YoY gain, based on sustained defense demand.
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Net income: was $944 million vs Q1 2024’s $799 million, a +24.4% YoY gain.
All four business segments (Aerospace, Combat system, Marine system, Technologies) saw increases in revenue and operating earnings over the year-ago quarter.
Notably, Aerospace segment’s:
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Revenue was up +45.2%.
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Operating earnings up +69.4%.
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Margins expanded +210 basis points to 14.3%.
Guidance / Outlook.
Orders and Backlog:
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Company-wide basis, orders in the quarter totaled $10.2 billion.
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Backlog at the end of the quarter was $88.7 billion.
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Estimated potential contract value, representing management’s estimate of additional value in unfunded indefinite delivery, indefinite quantity (IDIQ) contracts and unexercised options, was $52.7 billion.
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Total estimated contract value, the sum of all backlog components, was $141.3 billion.
Outlook/Guidance:
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General Dynamics kept its full-year guidance unchanged, expecting continued revenue growth and modestly positive cash flow in Q2 2025.
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The company highlighted a strong backlog of $89 billion and total contract value of $141 billion, supporting future growth.
Despite handing in a stellar earnings report card, GD fell marginally on a day when US market rallied.
Factors weighing on investor sentiment:
(1) Tariff and Margin Concerns:
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Ongoing uncertainties about tariffs and their potential impact on the company’s margins, particularly in the Aerospace division.
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Book-to-bill ratio in this segment was also seen as a concern, suggesting future order growth may slow, which could limit near-term performance8.
(2) Unchanged Guidance:
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While the company beat earnings and revenue expectations, GD did not raise its full-year guidance, where some investors may have interpreted as a sign of caution about future growth or profitability.
(3) Broader Market & Geopolitical Uncertainty:
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Overall market environment remains volatile, with macroeconomic & geopolitical risks affecting (a) defense contracts and (b) investor risk appetite.
(4) Profit-Taking After Strong Run:
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Investors may have chosen to lock in profits, especially given the stock’s proximity to recent highs and the sector’s strong year-to-date performance.
With 3 of 4 defense stocks’earnings exceeding forecasts, are defense stocks still a sure-bet ?
Must Read: Click on below titles to access. Repost to share, Like as encouragement ok. Thanks.
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Do you think defense stocks are still a bet in the face of impending recession ?
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Do you think US market has more room for corrections in the near term ?
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Pls "Re-post" so that more get to know. Tks! Rating is important (to me).
Consider "Follow me" and get first hand read of my Daily new posts? Thanks!). Tks!!
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