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Trading Day: Earnings Optimism Powers Three-Day Rally Amid Tariff Relief

Clyde MorganThursday, Apr 24, 2025 5:56 pm ET

39min read

The stock market staged a remarkable three-day rally from April 23–25, 2025, as investors embraced a mix of strong corporate earnings and easing trade tensions between the U.S. and China. With the S&P 500 rising 1.7%, the Nasdaq surging 2.5%, and the Dow gaining 1.1%, the rebound underscored Wall Street’s hunger for positive catalysts amid lingering macroeconomic uncertainties. Let’s dissect the key drivers, sector winners and losers, and the risks still lurking beneath the surface.

Tariff Relief Fuels Tech’s Surge

President Trump’s comments that tariffs on Chinese imports would be “substantially lower” than the current 145% rate sent a wave of relief through markets, particularly in tech-heavy sectors. Treasury Secretary Scott Bessent amplified this sentiment by calling current tariff levels “unsustainable,” calming fears of an escalation in trade conflicts.

The semiconductor sector led the charge, with chip stocks like Nvidia (NVDA), Broadcom (AVGO), and Marvell Technology (MRVL) climbing 4–6%. The VanEck Semiconductor ETF (SMH) rose nearly 4%, reflecting investor confidence in reduced trade friction.

However, not all tech companies fared so well. Solar firm Enphase Energy (ENPH) plummeted 15.7% after warning that tariffs on Chinese battery cells would squeeze margins, highlighting the uneven impact of trade policies. Meanwhile, hardware-dependent firms like Dell and HP remained vulnerable, as 60% of their products still face potential tariff risks.

Earnings Deliver the Goods

While tariff news dominated headlines, strong corporate results from tech and industrial leaders provided the rally’s legs.

Tech Titans Shine:
- Tesla (TSLA) defied its recent struggles, rising 5% after CEO Elon Musk vowed to focus more on Tesla amid weaker-than-expected Q1 results.
- Texas Instruments (TXN) surged 5% after-hours on $4.07B in Q1 revenue (+11% YoY) and upbeat guidance.
- Palantir (PLTR) jumped 7.3% following a partnership with Northrop Grumman (NOC) on AI combat vehicles, while Super Micro (SMCI) rose 7.6% on Fujitsu server collaborations.

Industrial Gains:
- Boeing (BA) climbed 6% after narrowing its Q1 loss to $0.49 per share (vs. $1.24 estimates) and announcing a $10.55B sale of parts of its Digital Aviation Solutions division.
- GE Vernova (GEV) rose 3% after Q1 revenue hit $8.03B, surpassing estimates despite tariff-driven inflation.

Market Movements and Asset Class Shifts

The broader market’s rebound was broad-based, with equities recouping losses tied to earlier tariff fears and criticism of the Federal Reserve’s independence.

Indices: The S&P 500 and Nasdaq hit session highs, while the Dow’s 400-point gain marked its strongest day since early April.
Cryptocurrency: Bitcoin soared to $93,500 (+25% from its 2025 low), benefiting from improved risk appetite and a weakening dollar.
Gold and Oil: Gold fell 3.5% to $3,300 as safe-haven demand waned, while WTI crude dipped 2.2% to $62.30/barrel.

Caution Lingers Amid Sector Weakness

Despite the rally, pockets of concern remain.

Consumer Discretionary: Chipotle (CMG) fell 2% after Q1 revenue missed estimates, citing “weather and slowing consumer spending.” Shares are down 19% YTD.
Energy: Baker Hughes (BKR) dropped 6.4% despite beating profit forecasts, as oil prices languished and macro risks clouded the outlook.
Software vs. Hardware: Morningstar analysts noted that software giants like Microsoft (MSFT) face less tariff exposure than hardware peers, though the sector’s resilience depends on broader economic health.

Conclusion: A Delicate Balancing Act

The three-day rally reflects a market leaning into optimism about trade de-escalation and robust corporate performance—particularly in tech and industrials. Key gains like Boeing’s 6% surge and Texas Instruments’ 5% post-earnings jump highlight how earnings momentum can offset geopolitical risks. Meanwhile, the S&P 500’s 1.7% rise and Nasdaq’s 2.5% surge since April 23 signal investor willingness to take on risk again.

However, vulnerabilities persist. Sectors like solar energy (ENPH’s 15.7% drop) and consumer discretionary (CMG’s struggles) remind us that tariff impacts and economic slowdowns are far from resolved. Additionally, the Fed’s stance remains a wildcard: while Trump’s reassurances on its independence eased gold’s safe-haven demand, any shift in policy could quickly reverse gains.

Investors should focus on companies with strong earnings catalysts and minimal exposure to tariff risks. Tech leaders like Texas Instruments and Boeing, along with AI-driven firms like Palantir and Super Micro, appear positioned to capitalize on current trends. Meanwhile, caution is warranted for hardware-dependent firms and sectors facing margin pressures from inflation and trade barriers.

The market’s resilience this week proves that positive news can overpower uncertainty—provided it’s paired with solid fundamentals. For now, the rally is real, but the path forward remains as nuanced as the factors driving it.

Data as of April 25, 2025. Past performance does not guarantee future results.

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