Good Morning Investors,
Stocks are in rally mode. The S&P 500 is up more than 6% in the last three sessions, the Nasdaq over 8%. Alphabet’s strong earnings added fuel to the bounce, helping extend a week-long recovery that began when Trump signaled a willingness to ease tariff pressure. There’s still no formal negotiation with China, but even softening rhetoric has been enough to calm markets.
As I said earlier this month, high-quality tech names like Nvidia, Google, IGV, and Amazon were oversold. These are compounders, not meme stocks. They’re not immune to volatility, but the underlying businesses are resilient. Google’s report last night only confirmed that — more on that below.
Futures are lower this morning after a Time Magazine interview with Trump revealed he’d consider a “total victory” to be tariffs of 20–50% still in place a year from now. That spooked bond yields and trimmed some of the week’s gains. But unless those remarks are followed by action, the market may treat it as bluster.
In my view, we’re still in the late stage of a correction — not entering a new bear phase. The big names have reset expectations, valuations have pulled back, and earnings season could help reignite sentiment. If more of the Magnificent Seven deliver beats, especially Meta, Microsoft, Amazon and Apple next week, I think we see a continuation of the short-term QQQ rally.
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BEFORE THE BELL
Futures dipped Friday morning following a strong three-day run. S&P 500 futures were down 0.2%, Nasdaq futures slipped 0.3%, and Dow futures dropped 0.4%. The modest pullback followed Trump’s latest comments in Time Magazine where he said tariffs of 20–50% on foreign imports a year from now would be a “total victory.”
Despite the dip, the broader trend remains positive. The Nasdaq is up 5.4% for the week, the S&P 500 up 3.8%, and the Dow 2%. Bond yields were stable, but Trump’s remarks rekindled concerns about trade-related inflation.
Meanwhile, sentiment continues to improve. Cleveland Fed President Beth Hammack suggested a June rate cut was possible if data aligns. Treasury Secretary Scott Bessent hinted a deal with South Korea and India may be near, while China paused some tariffs — even as they publicly denied formal talks were underway.
ALPHABET EARNINGS VALIDATE THE TECH BOUNCE
Alphabet reported a clean beat across revenue and earnings last night, adding momentum to the week’s rally. EPS came in at $2.81 vs. $2.01 expected (+46% YoY), while revenue hit $90.23B vs. $89.12B expected. Net income surged to $34.54B, up from $23.66B a year ago.
Search, advertising, and cloud all delivered. Search grew nearly 10%, cloud revenue jumped 28% YoY, and margins expanded to 17.8%. YouTube ads came in just shy of estimates, but the ad business overall was strong, showing Alphabet’s ability to monetize AI without disrupting core segments.
Importantly, Alphabet announced a $70B buyback and raised its dividend. That sends a strong message of balance sheet strength and shareholder confidence.
The result reinforces what I wrote earlier this month — Alphabet is a foundational growth stock, not a cyclical trade. With expectations reset and tariff fears priced in, it could lead a broader Mag 7 rebound. Watch Meta, Microsoft, and Amazon next week.
CHINA EXEMPTS SOME U.S. GOODS FROM TARIFFS
In the clearest sign yet that Beijing is concerned about the economic fallout of the trade war, China exempted some U.S. imports from its 125% tariffs and has asked firms to identify critical goods they want levy-free. It’s not a pivot, but it’s a pause — and that’s enough for now.
China’s Ministry of Commerce also reiterated that no formal talks are underway and dismissed “all sayings” about bilateral progress. Still, these moves suggest pressure is building behind the scenes.
STOCKS TO WATCH TODAY
Alphabet (GOOG): Pops 5% post-earnings after EPS and revenue beat. $70B buyback announced. Dividend raised.
Intel (INTC): Falls 7% after weak guidance. CEO Lip-Bu Tan’s first earnings call.
T-Mobile (TMUS): Misses subscriber additions, but raises EBITDA forecast.
Skechers (SKX): Withdraws forecast due to trade war; China sales slump 16%.
Digital Realty (DLR): Lifts full-year FFO forecast on AI-driven data center demand.
ANALYSTS' RECOMMENDATIONS
• Alphabet Inc: Wells Fargo raises target to $175 from $167 post-earnings.
• Comcast: Oppenheimer cuts to $38 from $55 on weak broadband adds.
• Intel: JPMorgan lowers to $20 from $23 after soft Q2 outlook.
• PepsiCo: Piper Sandler drops to $160 from $167 over tariff concerns.
• P&G: TD Cowen trims to $175 from $189 following guidance cut.
STRATEGIC OUTLOOK
The rally in tech — particularly the Nasdaq — may have more legs. The selloff in March and early April crushed expectations. Now, those expectations are being exceeded. With Alphabet setting the tone and more heavyweights reporting next week, we may be setting up for a continuation move in the QQQs.
But it won’t be linear. Trump’s tariff comments could continue to whip sentiment around. Still, earnings have a way of cutting through the noise. And the setup heading into May looks better than it did just three weeks ago.
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Please feel free to reach out to me on LinkedIn or by email if you would like help navigating this market environment or have any planning-related questions.
Dan Sheehan
This newsletter is for informational purposes only and should not be considered as investment advice. Please consult with your financial advisor about your specific situation.