CWS Market Review – April 29, 2025

(This is the free version of CWS Market Review. If you like what you see, then please sign up for the premium newsletter for $20 per month or $200 for the whole year. If you sign up today, you can see our two reports, “Your Handy Guide to Stock Orders” and “How Not to Get Screwed on Your Mortgage.”)

Wall Street continues to chill out from the recent turbulence, but I’m not ready to sound the “all clear” alarm — at least not yet. The trade war is still causing problems, but even there, tensions are subsiding.

There was a minor kerfuffle today between the White House and Amazon. The online retail giant said it was going to start listing the tariff costs of each item sold. The White House was furious, and President Trump called Jeff Bezos to voice his displeasure. Amazon said it’s not happening, and it was merely a proposed idea.

The lesson here is that investors are picking up on the idea that tariffs hit consumers directly in the wallet. The Trump administration is looking to ease the “effect of auto tariffs by lowering taxes on foreign parts used in U.S.-made cars.”

The softening in the trade war has helped the bulls finally gained some momentum. On Tuesday, the S&P 500 rose 32 points, or 0.58% for its sixth daily gain in a row. Combined, that’s a gain of 7.8%. The index is now less than 1% away from breaking above its 50-day moving average (the blue line). The Volatility Index dropped below 24 earlier today. A week ago, it was over 32.

While that news is good to see, I’m not convinced that we’re out of the woods just yet. We’re in earnings season and the stock market just registered its worst gain of the first 100 days of a presidency in 50 years.

As you know, I’m skeptical of any relief rally until it breaks above the 200-day moving average (the red line). We still need a gain of close to 3.4% to hit that level.

Tariff politics have unnerved traders. Gold, for example, is near an all-time high, and the dollar is in rough shape. For the first time in many years, foreign stock markets are beating the U.S. market.

We got the Consumer Confidence report today and it was ugly. The index fell 7.9 points to 86. That’s the lowest it’s been in five years. Wall Street had been expecting a fall to 87.7.

The report also looks at “expectations” for the next six months, and that report cratered. The expectations index fell 12.5 points to 54.4. Expectations for stock market gains fell to a 14-year low. Respondents expect inflation to hit 7%.

Earlier today, the Labor Department said that job openings fell last month by 288,000 to 7.192 million. The number for February was revised lower by 88,000 to 7.48 million.

We’re in the thick of earnings season and so far, our Buy List’s earnings results have been quite good. Nine of our stocks have reported, and eight have beaten expectations.

Rollins, the owner of Orkin, was the only exception, and it reported in line with Wall Street’s forecast. At one point, Rollins was down 7% for the day even though it was a perfectly fine report. Cooler heads prevailed and Rollins made back everything it lost. In fact, it’s rallied from there. We now have a 21.5% YTD gain in Rollins and the stock hit a new 52-week high today.

This week, 180 stocks in the S&P 500 are due to report earnings, plus 11 stocks in the Dow Jones Industrial Average are due to report. Overall, earnings season is going well. For the fourth quarter in a row, net profit margins are running above 12%.

It’s still early, but the latest numbers I’ve seen indicated that 36% of the companies in the S&P 500 have reported earnings Q1 earnings. Of those, 73% have beaten expectations. That may sound impressive, but it’s below the average beat rate of 77% for the last five years.

Even though the beat rate is a tad below average, the size of the beats is quite good. The beat size is running at 10%. That compares with an average of 8.8% over the last five years, and 6.9% over the last 10 years.

Bear in mind that Wall Street is very adept at getting expectations exactly where it wants them. They do this so they can later claim they’re beating expectations.

Earnings growth for Q1 is currently tracking at 10.1%. That’s up from 7% last week and 7.2% at the end of Q1.

Of the companies that have reported so far, 64% have beaten on revenue which is below the five-year average of 69%. Overall, companies are reporting sales that are 1% below expectations.

For Q1, revenue growth is tracking at 4.6%. If this holds up, it will mark the 18th quarter in a row of revenue growth. For 2025, Wall Street expects earnings growth of 9.7%.

Apple’s 20 Lost Years

Over the weekend, I posted on X:

I’ve posted that stat a few times before. This time, the tweet took off. At last count, the tweet has 4,100 “likes.”

There were some replies that told me I had to be incorrect or that I was purposely posting wrong information to get attention.

This is very odd to me because, as you surely know, your humble editor is a mild cupcake. I was even told that I was incredibly and unbelievably stupid because I failed to account for stock splits. You’d be amazed at how angry some people were.

Well, the information I posted is right, and my critics are wrong. Over a 20-year run, Apple’s stock fell 16%. Here are the details:

On June 6, 1983, Apple closed at an unadjusted price of $62.75 per share. Since then, Apple has split 224-1 giving it an adjusted price of 28 cents per share.

On April 17, 2003, Apple closed at an unadjusted price of $13.12 per share. Since then, Apple has split 56-1 giving it an adjusted price of 23.4 cents per share.

I did leave out dividends, but that was a very minor factor. Apple paid out a small dividend from 1987 to 1995, and then it stopped. The company didn’t resume a dividend payment until 2012.

The important lesson here is that the largest publicly traded company in the world, one that is valued at more than $3 trillion, was dead money for more than 20 years. Over the following 22 years, it rose 900-fold. The big change came in 1997 when Bill Gates bailed out Apple with an investment of $150 million. It sounds incredible, but it really happened. That’s something to bear in mind the time next you enter a trade.

This will be a particularly busy week for Wall Street. In addition to many more earnings reports, tomorrow we’ll get our first look at the Q1 GDP report. There’s a chance it could be negative although I’m expecting a number that’s low but positive. The consensus on Wall Street is for growth of 0.4%. Also on Wednesday, we’ll see the ADP report on private payrolls. Wall Street expects a gain of 140,000.

On Thursday, May 1, we’ll get the initial claims report. If we see any weakness in the labor market, it may show up here first. We’ll also get a look at the ISM Manufacturing Index. This has been weak but nothing too bad.

Then on Friday, we’ll get the April jobs report. Economists are expecting a gain of 133,000 and for the unemployment rate to hold at 4.2%. For wages, the consensus expects a gain of 0.3%.

The Federal Reserve meets again next week. Don’t expect any activity with interest rates, although a rate cut may be coming in June.

That’s all for now. I’ll have more for you in the next issue of CWS Market Review.

– Eddy

Posted by on April 29th, 2025 at 5:49 pm


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.