April 30th Market Overview

Happy Thursday

Wrapping up April with fresh highs and the S&P on pace for its best month since November 2020. Brent printed a four-year high overnight and we still ripped. The market keeps shrugging stuff off and I'm not arguing with the tape.

Caterpillar is carrying the market today, not Nvidia. The AI trade is now showing up in places nobody was looking six months ago. Apple earnings after the bell.

Let’s dig in...

Today's Big Picture

The Buried Story In Today's GDP

GDP came in at 2 against the 2.2 estimate, but that's the headline everyone got. The buried number is business investment contributing 1.48 points of growth versus 1.08 from consumers. The consumer normally drives two-thirds of US activity. AI capex is showing up in the actual GDP math now, not just narrative.

Dow Beat Nasdaq Today And CAT Is Why

Dow added more than 700 points while the Nasdaq lagged. Caterpillar is the second-largest component in the Dow by weighting. Its quarter pulled the index higher while Nvidia dragged on the Nasdaq. The rotation into industrial AI infrastructure is real money moving.

Apple Closes The Cycle

Apple reports after the bell. iPhone revenue is expected to clear $56.5 billion. Margins are the question because of memory cost pressure. I want to hear how Ternus talks about Siri and AI, since that's the real overhang going into September.

Market Overview

Index Performance

Stock Spotlight

Caterpillar $CAT ( ▲ 9.8% )  
delivered a Q1 beat and lifted its full-year outlook. Construction equipment sales had their best quarter in years and data center generator demand drove the surprise. CAT is the second-largest Dow component by weight, which is why the Dow beat the Nasdaq today.

Amazon $AMZN ( ▲ 0.75% )  
climbed after Q1 with cloud backlog hitting $364 billion. That number doesn't include the new $100 billion Anthropic deal. AWS spends on chips today and bills customers six to 24 months later, so this backlog is the demand answer to the capex question.

Microsoft $MSFT ( ▼ 4.07% )  
slid on the capex shock. Copilot now has 20 million paid users, up 5 million in just three months. That's the first real traction since launch in early 2023.

Nvidia $NVDA ( ▼ 3.6% ) fell on the day as Amazon's Trainium chips and Google's TPUs going to external customers started to register. The "AI equals only Nvidia" trade is no longer automatic.

Alphabet $GOOG ( ▲ 8.87% )  
closed higher with contracted backlog rising to $460 billion. That puts Google ahead of Amazon's $364 billion backlog, even with AWS still bigger in revenue. The cloud gap is closing faster than anyone expected.

Big Name Updates

Eli Lilly $LLY ( ▲ 9.94% )  
beat on Q1 and lifted full-year guidance to a $82 to $85 billion range. Mounjaro and Zepbound did the heavy lifting again.

Meta $META ( ▼ 7.9% )  
got hit on the higher capex guide and disappointing user growth. Management blamed the user issue on the Iran war and Russia restricting WhatsApp.

Qualcomm $QCOM ( ▲ 14.77% )  
closed sharply higher after revealing a custom silicon deal with a major hyperscaler. The Q1 print was in line and guidance was weak. Investors only cared about the data center pivot.

Stellantis $STLA ( ▼ 5.07% ) fell in Europe after the Q1 print. North America profit was inflated by a $468 million tariff refund from the Supreme Court ruling in February. Without it, the region would have lost money.

Other Notable Company News

Diageo $DEO ( ▲ 4.07% )  
climbed after Trump posted that he'll lift tariffs on Scottish whiskey. The stock has been getting hammered for years on weak spirits demand, so this is the first real relief in a while.

Altria $MO ( ▲ 6.06% )  
moved higher on stronger cigarette sales as gas prices pushed consumers to discount brands like Basic and Marlboro Cowboy Cut.

Lazard $LAZ ( ▲ 3.35% )  
is buying Campbell Lutyens for $575 million to bulk up in private capital advisory.

Blue Owl $OWL ( ▲ 9.35% )  
climbed double digits on AUM growth tied to data center financing.

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Sector Watch

Bond Market

The 10-year ticked higher after PCE came in line with expectations. Energy did most of the damage on the headline print. Initial jobless claims dropped to 189,000 versus 212,000 expected, which was the labor market surprise of the morning. Yesterday's 10-year auction went fine.

Policy Watch

Fed

Four of twelve officials dissented at yesterday's meeting. That was the most divided policy decision since 1992. Three wanted to drop the easing bias, one wanted to cut. Powell said he'll stay on the board past May 15 to push back on the administration's legal attacks on the Fed.

Government Shutdown

The House voted to reopen most of the Department of Homeland Security. Funding for ICE and Border Patrol comes in separate legislation in the coming weeks.

Iran And Energy

• Trump rejected Iran's offer to reopen the Strait of Hormuz

• He told aides to prepare for an extended blockade instead of bombing or walking away

• California gas hit $6 a gallon, the highest in over two years

• Brent pulled back from four-year highs to near $115

International

• ECB held rates and flagged the Iran energy shock as the main inflation risk

• Bank of England held the bank rate at 3.75%

• Japan stepped into FX markets after USD/JPY broke 160. The yen pulled back to 156 against the dollar

What to Watch

10 AI Stocks to Lead the Next Decade

MarketBeat did an excellent job on this AI infrastructure leaders report

Apple Earnings Tonight

The print drops at 4:30 ET. China is the wild card after a year of weakness there. Services growth and gross margin are the other reads that move the stock tomorrow.

Big Oil Earnings Friday

Exxon and Chevron report Friday morning. The question is how the wartime crude premium translated into actual Q1 cash flow.

Thanks for reading - you are now the more informed 🙂

- John

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