Sector Snapshot
Sector Synopsis:
Stocks continue to navigate a tug-of-war between tariff-driven cost pressures and AI-driven growth optimism. Consumer-facing sectors remain resilient, with retailers like Academy Sports and Warby Parker outperforming on product innovation and strategic partnerships, while Walmart and Home Depot revealed diverging pricing strategies in response to rising tariffs. In tech, investor attention centered on Google’s AI updates at I/O and Microsoft’s expanding cloud roadmap, fueling optimism for long-term growth. Meanwhile, energy names gained on geopolitical positioning and M&A chatter, while health care remained under pressure from regulatory and political crosswinds. Industrials and transportation face trade route disruption and capacity reductions, underscoring continued macro sensitivity across supply chains.
Consumer Staples & Retail:
Sporting goods rallied on strong results from Academy Sports, while Levi’s offloaded Dockers to Authentic Brands. Online retailers like Shein and Temu face fresh headwinds as the EU readies a flat tax on small imports. Ulta was upgraded ahead of earnings, and Warby Parker surged on news of a smart eyewear partnership with Google.
Homebuilders & Building Products:
Home Depot missed EPS but beat revenue, with comps broadly flat and full-year guidance maintained. Homebuilder results were mixed as Hovnanian reported ahead of Toll Brothers tonight. Building materials struggled, with Eagle Materials missing on both top and bottom lines.
Autos, Leisure & Travel:
Tesla extended gains despite steep sales drops in China as CEO Musk reiterated robotaxi rollout plans. Waymo received expanded operating approval in California. In cruise lines, Viking narrowed losses and confirmed capacity growth. Travel stocks found footing as Trip.com reaffirmed guidance.
Energy & Utilities:
Chevron looks to Indonesia for new development, while EQNR faces rising leverage concerns and was downgraded. Utilities rallied on news the Trump administration lifted a stop-work order on a $5B offshore wind project. AES was downgraded following a recent rally.
Financials:
Alternative asset managers saw rotation as Owl Rock was upgraded and Chubb was downgraded on valuation concerns. Government-sponsored enterprises Fannie and Freddie gained after FHFA commentary on operational efficiency and borrower cost reductions. Credit score and mortgage insurance names dipped on regulatory reform headlines.
Biotech & Pharma:
Vertex announced a $4B buyback, while Pfizer deepened its China exposure with a new licensing deal. Akero jumped on M&A rumors. Tourmaline’s heart drug underwhelmed, and Vivos saw its price target slashed. CRISPR signed a multi-target RNAi partnership, and strong Anktiva sales boosted IBRX’s outlook.
Healthcare Services & MedTech:
Mettler-Toledo was upgraded on pricing power and service expansion potential. Equipment and diagnostics names found support, but sector sentiment remained cautious following a week of political volatility. No major managed care headlines after last week’s selloff.
Industrials & Materials:
Air Lease was upgraded as it pivots to a capital allocation model, while ATI was downgraded on exhausted catalysts. Maersk flagged 30–40% volume declines between the U.S. and China, while airlines slid on news of Newark flight reductions. In chemicals, Celanese was upgraded on easing risk, but Westlake was cut on weaker industry pricing.
Internet, Media & Telecom:
Google I/O headlined with Gemini 2.5 and new AI-integrated hardware, underscoring its competitive push. Vodafone missed estimates but launched a new €2B buyback. SBA Communications was downgraded as AFFO growth remains limited in the near term.
Hardware, Software & Semiconductors:
Microsoft’s Build event lifted sentiment, with Goldman hiking its target to $550. MongoDB was downgraded on adoption concerns, while HPE was upgraded on AI upside. Asana and Nutanix were both downgraded following recent rallies. In quantum computing, QBTS launched its Advantage2 system. Semiconductor sentiment was mixed, with KLAC downgraded and MKSI upgraded in semi-equipment, while Intel considered strategic divestitures.
Featured Articles
Musk Says He’s Committed to Being Tesla CEO for Next Five Years — Bloomberg
Elon Musk told Bloomberg he's "fully committed" to remaining Tesla's CEO for at least the next five years, signaling stability at the top amid ongoing AI and robotics bets. He reiterated confidence in the robotaxi rollout and autonomous vehicle scaling.Apple Desperately Needs the AI Help It’s Seeking from Third-Party Developers — Bloomberg Opinion
Bloomberg argues Apple’s dependence on outside developers for AI innovation at WWDC reveals deeper strategic vulnerabilities. With rivals accelerating, Apple’s late-stage ecosystem reliance underscores the urgency of evolving its in-house capabilities.Walmart Price Increases After Trump Tariffs — CNBC
Walmart acknowledged raising prices in response to Trump’s tariffs, especially for general merchandise. The company is exploring supply chain adjustments to cushion the inflationary impact on consumers.Why Home Depot’s Approach to Prices and Tariffs Will Likely Play Better to Trump Administration — MarketWatch
Home Depot's decision to absorb tariff costs instead of raising prices could garner favor with the Trump administration. MarketWatch notes this may enhance consumer trust and political goodwill as election-year trade tensions escalate.Kraft Heinz Evaluating Strategic Transactions; Berkshire Steps Away from Board — WSJ
Kraft Heinz is considering asset sales or restructuring following Berkshire Hathaway’s board exit. The move reflects pressure to revamp its portfolio amid changing consumer trends and governance shifts.Sam Altman Is a Visionary With a Trustworthiness Problem — The Economist
The Economist examines Sam Altman’s dominance in AI and questions the transparency of his leadership style. While praised for vision, concerns linger over power concentration and accountability at OpenAI and beyond.
Inside the Earnings Call - Home Depot (HD)
Q1 FY2025 Earnings Call Summary
Theme | Q1 2025 | Q4 2024 | Q3 2024 | Q2 2024 |
|---|---|---|---|---|
Sales Trends | Slight revenue beat, comp sales -0.3%, U.S. comps +0.2% | Broad-based slowdown, comps -3.5% | Weak DIY demand, comps -3.1% | Comps -2%, weakness in big-ticket discretionary |
Margins | Gross margin 33.7%, +22 bps y/y | Promotional intensity continued to weigh | SG&A growth outpaced sales | Pressured by inventory and shrink |
Tariffs & Pricing | Absorbing tariffs, not passing to consumers | Defensive pricing strategy | Focused on maintaining everyday value | Promotions used to manage traffic |
Customer Trends | Pro spend remains resilient; DIY still soft | DIY stabilization noted, pro remains strong | Pro strength offset by weak DIY | Pro demand solid, project delays in DIY |
Guidance & Tone | FY guide reiterated; 2% rev growth, -2% EPS | FY25 guide introduced, cautious tone | Macro caution, no change to FY outlook | Maintained guide despite soft trends |
Takeaway for Investors:
Home Depot’s Q1 offered modest upside on revenue with comps roughly flat and Pro customer demand staying resilient. Management’s decision to absorb tariffs rather than hike prices sets it apart strategically and politically, particularly as consumer sensitivity and White House scrutiny increase. While the DIY segment remains pressured, the company reaffirmed guidance, suggesting stable execution amid uncertainty.