US Market saved by US Banks. This week How?
In a twist of fate, US stocks climbed Fri, 11 Apr 2025 as Wall Street wrapped up a historically wild week.
This as US big banks ‘officially’ kicked off Q1 2025 quarter earnings season, with positive earnings charming US market in the process (more of that later).
By the time market called it a week: (see above)
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DJIA: +1.56% (+619.05 to 40,212.71).
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S&P 500: +1.81% (+95.31 to 5,363.36).
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Nasdaq: +2.06% (+337.14 to 16,724.46).
Market Drivers.
Below are some of the factors that helped to push US market to close on a ‘high’.
(1) Bank Earnings Exceeded Expectations
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2 of 5 major US financial institutions reported stronger-than-expected profits for Q1 2025, respectively.
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These results boosted confidence in Financial sector, with $JPMorgan Chase(JPM)$ shares rising +4% and Morgan Stanley (MS)$ up +1.44%.
JP Morgan Q1 2025:
JPMorgan Q1 2025 earnings topped estimates on higher-than-expected revenue, helped by booming equity trading activity.
According to LSEG, earnings details were:
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Earnings: $5.07 a share
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Revenue: rose by +8.0% to $46.01 billion vs expected $44.11 billion.
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Net income: rose +9.0% to $14.64 billion.
Q2 2025 Guidance.
Guidance / Outlook is Wall Street’s most hawk over item in quarterly earnings reporting.
It makes or breaks a stock’s price thereafter, regardless whether the stock locked in a profit or loss, for past quarter.
For Q2 2025., the bank expects slower growth in net interest income (NII) due to ongoing deposit margin compression and lower rates, that will likely weigh on profitability in the coming quarter.
Additionally, Dimon highlighted challenges such as macroeconomic uncertainty and potential impacts from tariffs, that could (a) affect credit demand and (b) overall financial performance6.
Although specific quantitative targets for Q2 were not disclosed, the broader tone of the guidance suggests a focus on managing risks amid economic headwinds.
Analysts have also noted that JPMorgan's full-year EPS growth forecast has been revised downward from 14% to 9.8%, reflecting tempered expectations for the remainder of 2025.
Morgan Stanley Q1 2025.
In similar fashion, Morgan Stanley’s Q1 2025 earnings results also came in better than analysts’ consensus.
Q1 2025 results that topped estimates as stock trading revenue surged +45% amid rising global volatility.
According to LSEG, earnings results were:
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Earnings: $2.60 a share vs $2.20 a share.
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Revenue: climbed by +17.0% to record $17.74 billion vs expected $16.58 billion.
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Net income: rose +26% to $4.32 billion.
Q2 2025 Guidance.
MS did not provide specific quantitative guidance for Q2 2025 but shared a cautiously optimistic outlook. (How could that be good ?)
CEO Ted Pick emphasized the bank’s strong pipeline of prospective deals, particularly in mergers and acquisitions (M&A), despite lingering market uncertainties caused by US tariffs and global economic volatility
CFO Sharon Yeshaya reiterated MS remains focused on navigating macroeconomic challenges while leveraging its diversified business model to sustain durable growth.
In summary, Morgan Stanley anticipates steady performance from its core businesses but remains cautious about external risks affecting deal activity and market stability.
(2) Tariffs Halt.
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On Tues, 8 Apr 2025, 4 hours after Trump’s reciprocal tariffs went into effect, he suddenly announced a 90-day pause on tariffs for most countries, except China.
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In placed of that, he set a flat 10% tariff for all other countries, except China.
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The pause helped to offset negative sentiment (for now) from the still simmering US-China trade tensions.
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Just over the weekend, Trump suddenly had an epiphany and decided to exempt goods (mobile phones, computers and chips etc…) from China from reciprocal tariffs, although the baseline 20% tariffs remains in-tagged. (see above)
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This is a great pressure relief for US’s industry and businesses that depended heavily on Chinese imports.
(3) Cooling Inflation.
(a) Consumer Price Index.
It helped that consumer price index for March 2025 came in much cooler than expected. (see above)
Both MoM and YoY, headline and core inflation were all lower across the board. (see below)
Cooling components.
The dip came about primarily due to:
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Energy prices (-2.4% MoM) steep declines, including gasoline (-6.3%) and fuel oil (-7.6%).
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Shelter inflation moderated (4% YoY vs 4.2% prior).
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Car (used) falling prices (0.6% YoY) and New vehicle flat prices contributed to the core undershoot.
(b) Producer Price Index.
A day after the CPI report, US Producer Price Index (PPI) was released on Fri, 11 Apr 2025. (see below)
US wholesale prices fell for March 2025.
New data on Fri, 11 Apr 2025 showed that inflationary pressures were not necessarily building before they reach the consumer.
The better-than-expected headline inflation data, (prices paid to producers) fell:
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0.4% in March from the month before.
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slowed sharply to an annual rate of 2.7%, from 3.2%; providing a snapshot before Trump’s aggressive trade policies fully kick in.
Economists were expecting monthly prices to rise by 0.2% and to accelerate to 3.3% on an annual basis.
March 2025’s PPI data offer little comfort in the face of significant uncertainty, major trade policy changes and financial market turmoil.
Cooling components.
Energy for final demand index sank -4% in March, in an untypical movement at this time of the year due to (a) a supply-demand imbalance as well as (b) recession concerns weighing on crude oil prices.
Final demand services that fell -0.2% in March, implied a slow down in US economy, according to Raymond James, Chief economist, Eugenio Alemán.
Parting “good” news is companies are not seeing more pressure on prices, which will (hopefully) help counteract any pressures that will start to build as tariffs go into effect.
Week 14 Apr 2025.
With another week down, below is what’s in-store for week beginning 14 Apr 2025.
(1) Economic Reports.
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Tue, 14 Apr 2025. US Import price index.
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Wed, 15 Apr 2025. US retail sales and Home builder confidence index.
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Thu, 16 Apr 2025. US weekly jobless claims.
(2) Q1 2025 Earnings.
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Mon, 14 Apr 2025. $Goldman Sachs(GS)$. RCAT.
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Tue, 15 Apr 2025. $Bank of America(BAC)$. Citibank. United airline.
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Wed, 16 Apr 2025. $ASML Holding NV(ASML)$.
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Thu, 17 Apr 2025. Taiwan semiconductor (TSM)$. UnitedHealth Group (UNH)$. $Netflix(NFLX)$.
Hope it will be a less “eventful” week, this week and next week and the week after….
We are entering a new era of trading US stocks going forward for the next 4 years and maybe beyond, with a change in trading dynamics and global supply chain - thank you Trump !
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Do you think APPL will “recover” this week ?
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Do you think there should still be concerns when it comes to Trump’s policies but discount them at face value and wait for different market forces to take care of it ?
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