Weekly Digest - May 12th
Markets have continued their upward streak, with the S&P 500 rising by approximately 4.14% this week. After the dips seen in March and April, stocks appear to be rebounding, supported by lower-than-expected tariffs and reduced recession risks. In a twist of events, Goldman Sachs has now raised its 12-month S&P 500 target from 6200 to 6500, just weeks after cutting it twice. Investor sentiment is clearly shifting.
A big reason behind this optimism is the progress on US-China trade talks. Both countries agreed to roll back tariffs for the next 90 days. The US will reduce tariffs on Chinese goods from 145% to 30%, while China will cut tariffs on American products from 125% to 10%. Global investors welcomed the news, with stock markets across the U.S., Europe, and Asia moving higher following the announcement. While analysts welcomed the move, many remain cautiously optimistic, awaiting further clarity after the 90-day window.
In other news, President Donald Trump announced an executive order to reduce prescription drug prices by around 30% to 80%. Shares of major pharmaceutical companies including Moderna, Pfizer, Eli Lilly, and Merck dropped following the announcement.
On the economic front, the U.S. economy contracted by 0.3% in the first quarter as the tariff policy uncertainty weighed on business sentiment. However, not all seems lost, as the Atlanta Fed’s GDPNow model forecasts a 2.3% real GDP growth in the second quarter of 2025, signalling potential recovery ahead.
Weekly Earnings Roundup: Surprises & Misses
Several major companies released their earnings this week, including Palantir Technologies (NASDAQ: PLTR), AMD (NASDAQ: AMD), Novo Nordisk A/S (NYSE: NVO), Uber (NYSE: Uber), MercadoLibre (NASDAQ: MELI), Walt Disney (NYSE: DIS), and Shopify (NASDAQ: SHOP).
Palantir beat revenue expectations and raised its guidance for the year. However, some analysts believe the stock is overvalued since it trades at nearly 189 times expected earnings. Concerns around falling international sales and slowing growth pushed the stock down by 4%.
AppLovin had a standout quarter, reporting 1.48 billion dollars in revenue versus the expected 1.38 billion and 1.67 earnings per share compared to 1.45 expected. The stock surged 15% this week and is already up more than 700% in 2024, driven by strong demand in artificial intelligence and digital advertising.
AMD also posted better-than-expected results, with revenue up 4.4% and earnings per share rising 1.7%. The stock climbed 7% during the week.
Top Gainers
Walt Disney (NYSE: DIS) saw its stock jump 20% this week after reporting strong earnings. Second-quarter results showed 1.45 earnings per share compared to 1.20 expected and 23.62 billion dollars in revenue versus 23.17 billion expected. Streaming finally turned profitable, profits from theme parks grew, and a new theme park in Abu Dhabi was announced. Analysts increased their price targets from 120 dollars to 140 dollars.
Tradedesk Inc (NASDAQ: TTD) was another big gainer, with shares rising 43% after strong earnings. The company reported 616 million dollars in revenue and 0.33 earnings per share, both ahead of expectations. It also raised full-year guidance due to strong demand in connected television advertising. Analysts responded with multiple upgrades, citing strong fundamentals and growth potential.
Top Losers
Doordash (NASDAQ: DASH) dropped 6% after missing revenue expectations. Two major acquisitions, SevenRooms for 1.2 billion dollars and Deliveroo for 3.9 billion dollars, raised concerns about spending and future profitability, especially with signs of weaker consumer demand.
Upcoming Earnings: Key Stocks to Monitor
The current week includes earnings announcements from major companies such as Nu Holdings (NYSE: NU), JD.com (NASDAQ: JD), Cisco (NASDAQ: CSCO), Walmart (NYSE: WMT), and Alibaba Group (NYSE: BABA).
With markets trending higher, smart investors are positioning early. The momentum is strong, making it an excellent opportunity to buy quality stocks that could benefit from both short- and long-term gains.