EB Daily Market Report - Thursday, April 17, 2025
Executive Summary
- Futures were mixed this morning, but mostly higher
- The Dow Jones was the clear laggard, falling more than 1% on the open due to a poor quarterly earnings report from UnitedHealth Group, Inc. (UNH, -22.65%)
- Another Dow component, American Express (AXP, +0.23%) reported excellent earnings numbers, easily surpassing its EPS estimate, but its revenue did come up slightly shy of its estimate
- The UNH disaster has resulted in health care (XLV, -0.39%) being our worst-performing sector; health care providers ($DJUSHP, -11.77%) are being hit particularly hard
- 9 of 11 sectors are higher today, though our major indices are mostly led by defensive groups
- Energy (XLE, +3.02%) is having a very strong day, but so too is consumer staples (XLP, +2.00%) and utilities (XLU, +1.85%)
- Many commodities like gold ($GOLD, -1.07%) are lower today, but crude oil ($WTIC, +3.43%) isn't one of them
- The 10-year treasury yield ($TNX) is up 3 basis points to 4.31% after a fairly steady decline the past 3 days
- Netflix (NFLX, +0.87%) is among the best relative performers in the internet space ($DJUSNS, -0.87%) and will report its latest quarterly results after the closing bell this afternoon
Market Outlook
There's a lot of focus on interest rates right now and what the Fed may or may not do, but I can tell you that the 1-month U.S. treasury yield ($UST1M) is giving us ZERO clues as to the next move by the Fed. The UST1M has been trading in a very narrow range in 2025, as you can see below:
There's really not much to read into this, except to say that if inflation was truly expected to move higher in coming months, the UST1M is wearing its poker face. I just don't see it.
Sectors/Industries
Banks ($DJUSBK) do not need to be a leader for the U.S. stock market to perform well. We just don't want this group to lag. Going along for the ride is perfectly fine. Let's check out the latest in terms of both absolute and relative strength of this influential area:
Banks did very well on a relative basis during the 2nd half of 2024 and into early 2025, but this group flipped just like so many others during Q1 2025. The relative top here in February was just one more sign of what we're experiencing now. As I look at its current technical state, I'd watch relative support dating back to December. Those 4 green arrows clearly mark key relative support. Meanwhile, to the upside, we need to see banks break above the current 2+ month relative downtrend line. That would certainly be a much more bullish signal for U.S. equities.
ChartLists and Trading Strategies
Keeping individual stock trades to a minimum probably remains a solid idea, until we see further improvement in technical conditions.
Upcoming Earnings
Quarterly earnings reports will begin accelerating quite rapidly beginning next week. Netflix (NFLX) will be reporting after the bell today.
Economic Reports
Initial jobless claims: 215,000 (actual) vs. 225,000 (estimate)
March housing starts: 1,324,000 (actual) vs. 1,420,000 (estimate)
March building permits: 1,482,000 (actual) vs. 1,450,000 (estimate)
April Philadelphia Fed manufacturing index: -26.4 (actual) vs. 6.7 (estimate)
Happy trading!
Tom