Market Pulse with Dan Sheehan

Good morning investors,

The S&P 500 and Dow posted modest gains yesterday, with the S&P adding 0.1% and the Dow rising 0.3%, while the Nasdaq slipped slightly by 0.1%. That marks a fifth straight day of gains for the S&P 500, even if the mood feels more "grinding through" than "breaking out." With the index now over 500 points off its lows for the year, the resilience of the broader market remains notable despite the prevailing tariff noise.

Today, the focus sharpens on a heavy slate of corporate earnings, fresh labor market data, and any signs of meaningful progress on U.S.–China trade discussions.

Investors continue to balance solid earnings results against rising tariff uncertainty. Futures are slightly weaker ahead of the open, as markets digest last night’s results from GM, Coca-Cola, PayPal, Spotify and others. Big Tech earnings later this week — Microsoft, Meta, Apple, and Amazon — will be critical for sentiment heading into May.

Bond yields are stable, the dollar is slightly firmer, and oil prices are slipping as concerns mount over weaker global demand.

Meta Platforms will report this week. Analysts expect adjusted EPS of $5.21 on revenues of $41.22 billion, both showing healthy double-digit growth. However, over the past month, analysts have trimmed earnings forecasts by around 7%, reflecting some caution about advertising trends and growing competition.

Ad revenue remains the engine, with WhatsApp, Instagram and Facebook continuing to deliver strong user growth and engagement. AI-driven recommendations and tools like Advantage+ have also helped advertisers boost returns. However, rising costs linked to Reality Labs and AI investments could weigh on margins. Investors will focus heavily on forward guidance, particularly around ad growth, cost discipline, and any scaling back of metaverse spending. The ability to monetize AI remains a question for the mega-cap tech players that have invested so heavily in it.

I believe Meta will see a bounce after earnings due to the size of its drawdown from highs, and a lot of bad news already baked into the name.

Given Meta's scale and importance in the S&P 500, the results — and management's tone — could have a meaningful ripple effect across tech stocks more broadly.

The White House will move today to soften the impact of Trump’s automotive tariffs by removing the stacking of levies on foreign parts used in U.S. manufacturing, and by reimbursing some already-paid tariffs. The change, confirmed by Commerce Secretary Howard Lutnick, rewards companies investing in domestic production while providing breathing room for manufacturers amid growing trade tension. General Motors and Ford both welcomed the move, suggesting it could help offset pricing pressure and supply chain disruption. Trump is expected to make the announcement official during his trip to Michigan later today.

Elsewhere, General Motors beat expectations but suspended its full-year guidance, Coca-Cola topped earnings forecasts with stable demand, and PayPal delivered an earnings beat but missed slightly on revenue. Spotify missed guidance expectations, and SoFi announced a return to cryptocurrency investing later this year following regulatory shifts.

Coca-Cola reported adjusted earnings of 73 cents per share, ahead of consensus, with revenue of $11.22 billion beating expectations. Management reaffirmed its full-year outlook, citing minimal disruption expected from tariffs and noting that strong demand, particularly across Latin America, continues to underpin performance.

General Motors beat Wall Street forecasts with adjusted EPS of $2.78 and revenue of $44.02 billion. However, GM withdrew reliance on its January 2025 guidance, citing the tariff environment as too uncertain. No significant manufacturing changes have been made yet, but flexibility will be key if the environment worsens. The tone from CFO Paul Jacobson was cautious but not panicked.

PayPal posted stronger-than-expected profits but missed slightly on revenue, driven by a deliberate focus on profitable transactions over volume. Adjusted EPS came in at $1.33 versus $1.16 expected. Management reaffirmed full-year guidance but flagged ongoing macroeconomic uncertainty. Transaction margin growth remains a key bright spot.

Spotify missed its forecast for monthly active users and operating margins, sending the stock down over 8% pre-market. While overall engagement remains strong, management acknowledged a more cautious ad environment. Investors will be watching subscriber and monetization trends carefully into the second half.

SoFi confirmed it will re-enter the crypto investing space later this year after updated OCC guidance allowed greater flexibility for banks engaging with digital assets. CEO Anthony Noto said the company plans a "bigger, more comprehensive push" into crypto across all of SoFi’s lending, saving, spending, and investing platforms.

While volatility remains elevated and sentiment remains fragile, I continue to believe that a considerable amount of bad news — tariffs, regulatory noise, and macro slowdown fears — is already baked into equity prices. The bar for companies to positively surprise is lower than usual, and as we've seen with Tesla last week, even modestly better-than-feared earnings can trigger meaningful relief rallies.

With around one-third of the S&P 500 now reported, the tone across results has been more resilient than the broader narrative suggests. Yes, forward guidance remains cautious in places. But broadly speaking, revenue and profitability have held up against a difficult backdrop.

In my view, the risk/reward into the core of earnings season is starting to tilt more favourably. Companies that can deliver solid results or stable outlooks are being rewarded with sharp rebounds, reflecting just how defensive investor positioning has become. This dynamic — bad news priced, decent news rewarded — creates fertile ground for continued recovery if Big Tech earnings this week (particularly Meta, Microsoft, Amazon and Apple) come in even slightly ahead of the lowered bar.

Caution still makes sense at a macro level, but I maintain that earnings-driven relief rallies are increasingly likely as we move through the heart of reporting season.

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

[email protected]

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.