Daily Meeting 07/23/2025

0 7 / 23 /2025 Market summary:      

• Today's market overview:

* 30 -year mortgage rates as of 07/23/2025

          Source: Bloomberg

• U.S. stocks closed higher on Wednesday. The Dow Jones Industrial Average rose more than 500 points. The S&P 500 and the Nasdaq hit new highs - the latter closed above the 21,000 mark for the first time in history . U.S. President Trump announced that the U.S. and Japan had reached a trade agreement, which raised market expectations that the U.S. would reach more trade agreements before the August 1 tariff deadline. It is rumored that the U.S. and Europe are close to reaching a 15% tariff agreement. The Dow Jones Industrial Average rose 507.85 points, or 1.14% , to 45,010.29 points; the Nasdaq rose 127.33 points, or 0.61% , to 21,020.02 points; and the S&P 500 rose 49.29 points, or 0.78% , to 6,358.91 points.
• U.S. President Donald Trump posted on Truth Social on Tuesday evening that the United States has completed a "massive deal" with Japan, which includes a "reciprocal" tariff of 15% on Japanese exports to the United States. The White House on Wednesday announced the specific terms of what Trump said was a new U.S.-Japan trade agreement: a reciprocal tariff of 15% will be imposed on Japanese exports to the United States, while tariffs on U.S. auto imports will be reduced in stages. Japan has pledged $550 billion in investments in the United States, and Washington is expected to reap most of the benefits. White House Press Secretary Carolyn Levitt said on Wednesday that U.S. President Trump will decide on his own how to use Japan's $550 billion investment in the United States. Levitt made the above statement at a press conference. She said that Japan's investment is part of the U.S.-Japan trade agreement, and Trump will use this investment in key industries such as energy, semiconductors, critical minerals, pharmaceuticals and shipbuilding, and the United States will retain 90% of the profits of the $550 billion fund's investment.
• On Wednesday, it was reported that the United States and Europe were close to reaching a 15% tariff agreement. According to diplomats familiar with the negotiations, the European Union and the United States are moving towards a deal that will set a 15% tariff rate on most products. Diplomats said that member states may be ready to accept a 15% tariff, and EU officials are pushing for this rate to cover industries such as automobiles. One of the diplomats added that steel and aluminum imports above a certain quota will face a 50% tariff. Diplomats said that while the European Union is optimistic about reaching a deal, they are also cautious that any final agreement will need to be approved by US President Trump, and his final decision is difficult to predict.
• The European Stoxx 600 index rose 1.08%, the UK's FTSE 100 index rose 0.42%, the French CAC 40 index rose 1.37%, the German DAX index rose 0.83% and the Spanish IBEX index rose 0.19%.
• WTI crude oil rose 0.28% to close at $65.25 per barrel.
• Gold futures on the New York Mercantile Exchange rose 0.04% to close at $3,456.4 per ounce.
• As of the close, Bitcoin fell 1.28% to $118,463.00
• Nine of the 11 major sectors of the S&P 500 rose, led by the healthcare sector, which rose 2.03%, and the utilities sector, which fell 0.79%.
• AT&T's second quarter non-GAAP earnings per share were $0.54, exceeding expectations by $0.01. Revenue was $30.85 billion (up 3.6% year-over-year), exceeding expectations by $370 million. Postpaid phone net additions were 401,000 units, with a churn rate of 0.87%. Mobile service revenue was $16.9 billion, up 3.5% year-over-year. AT&T fiber net additions were 243,000 units, and AT&T Internet Wireless net additions were 203,000 units. Consumer fiber broadband revenue was $2.1 billion, up 18.9% year-over-year. T rose 1.20% to $27.75
  • AT&T expects full-year 2025 adjusted EPS* growth of $1.97 to $2.07, compared with consensus of $2.07. Comprehensive service revenue growth in the low single digits. Mobile service revenue growth of 3% or higher. Consumer fiber broadband revenue growth in the mid-to-high teens.
• Thermo Fisher Scientific reported second quarter revenue of nearly $10.9 billion, up about 3% year-over-year, exceeding market expectations by $180 million. Although Thermo Fisher Scientific's adjusted earnings per share were $0.12 higher than expected, they remained stable at $5.36, and its adjusted operating margin fell to 21.9% from 22.3% in the same period last year. TMO rose 9.14% to $466.71
  • Thermo Fisher Scientific expects revenue to increase by $43.6 billion to $44.2 billion this year, compared with the company's April forecast of $43.3 billion to $44.2 billion, and in line with analysts' forecast of $43.7 billion. Thermo Fisher Scientific's 2025 earnings guidance is set at $22.22 to $22.84 per share (adjusted), compared with the previous consensus of $21.76 to $22.84 per share and the consensus of $22.32 per share.
• Alphabet's second-quarter revenue was $ 96.43 billion, up 14% year-on-year , higher than analysts' expectations of $ 93.97 billion. Excluding partner revenue, second-quarter sales were $ 81.7 billion, higher than analysts' average expectation of $ 79.6 billion. Alphabet's second-quarter earnings per share were $ 2.31 , up 22% year-on-year , higher than analysts' expectations of $ 2.18 . GOOG fell 0.31% to $191.51 ; GOOG rose 1.80% after the market closed
  • Google Cloud revenue was $ 13.6 billion in the second quarter, up 32% year-on-year , higher than the market expectation of 27% . Alphabet's total advertising revenue was $ 71.3 billion, up 10.4% year-on-year . Search business revenue was $ 54.1 billion in the second quarter, up 11.7% year-on-year , higher than analysts' expectations of $ 54 billion. Full-year capital expenditures are currently expected to be $ 85 billion, compared with the previous forecast of $ 75 billion. Bloomberg's forecast for full-year capital expenditures is $ 73.3 billion.
  • The company announced that it would increase its full-year capital expenditure for 2025 to US$85 billion, US$10 billion higher than previously expected, raising some market concerns about profitability.
  • Media analysis shows that although Alphabet's revenue reported was better than expected and set a historical record, since capital expenditures in 2025 will be higher than previously forecast, the company's investment in the AI competition will face greater pressure to justify its investment.
• Tesla's second-quarter non-GAAP earnings per share were $0.40, in line with expectations. Revenue was $22.49 billion (down 11.8% year-on-year), exceeding expectations by $360 million. Automotive gross margin narrowed 80 basis points to 17.2%, but was also better than the 16.5% expected. Adjusted net profit in the second quarter was $1.393 billion, down 23% year-on-year and down 39% year-on-year in the first quarter. Capital expenditures in the second quarter were $2.394 billion, up 5% year-on-year, while analysts expected $2.43 billion and down 46% year-on-year in the first quarter. TSLA rose 0.14% to close at $332.56; TSLA fell 4.00% after hours.
  • Automotive revenue in the second quarter was $ 16.661 billion, down 16% year-on-year , and down 20% year-on-year in the first quarter . Excluding regulatory credit points, the gross margin of the automotive business was 15% , compared with 12.5% in the first quarter . Energy production and storage revenue in the second quarter was $ 2.789 billion, down 7% year-on-year , and up 67% year-on-year in the first quarter .
  • Although the product outlook in the financial report did not completely copy the rhetoric of the first quarter financial report, Tesla reiterated that it is still on track to launch new cars this year, including more affordable models. Like the fourth quarter report and the first quarter report, this report also predicts that Tesla's specially built Robotaxi product, Cybercab, " is scheduled to start mass production in 2026. "
• IBM's adjusted earnings per share were $2.80, compared with an expected $2.64; revenue was $16.98 billion, compared with an expected $16.59 billion. According to the statement, IBM's revenue grew nearly 8% year-on-year in the quarter, compared with less than 1% in the first quarter. Net income, including acquisition-related costs, increased to $2.19 billion ($2.31 per share) from $1.83 billion ($1.96 per share) in the same period last year. Software business revenue grew by about 10% to $7.39 billion. Hybrid cloud business revenue, including Red Hat, grew by 16%. The software division's gross margin of 83.9% was roughly in line with Street Account's consensus forecast of 84.0%. Consulting business revenue grew by nearly 3% to $5.31 billion, higher than Street Account's consensus forecast of $5.16 billion. Infrastructure business revenue grew by 14% to $4.14 billion, exceeding Street Account's average forecast of $3.75 billion. This quarter, IBM released the next-generation z17 mainframe computer and announced the acquisition of data and artificial intelligence consulting company Hakkoda. IBM rose 0.02% to close at $282.01; IBM fell 5.11% after the market closed
  • IBM expects free cash flow to exceed $13.5 billion in 2025, unchanged from its April forecast. The company still expects full-year revenue to grow at least 5% in constant currency.
• ServiceNow's second-quarter non-GAAP earnings per share were $4.09, exceeding expectations by $0.52. Revenue was $3.22 billion (up 22.4% year-over-year), exceeding expectations by $100 million. NOW fell 0.62% to $956.43; NOW rose 6.96% after the market closed.
  • Subscription revenue in the second quarter of 2025 was $3.113 billion, up 22.5% year-over-year, and 21.5% at constant exchange rates. ServiceNow expects subscription revenue for the quarter to be between $3.26 billion and $3.27 billion, also higher than the market consensus of $3.21 billion. The remaining performance obligations are currently $10.92 billion, up 24.5% year-over-year, and 21.5% at constant exchange rates.
  • In the second quarter, 18 of ServiceNow's top 20 deals involved Now Assist. ServiceNow's major customers using its AI platform include Nvidia (NVDA) and Starbucks (SBUX). As a result, ServiceNow's full-year 2025 subscription revenue median grew by $125 million to $12.77 billion to $12.79 billion, higher than the $12.68 billion forecast.
• Southwest Airlines' adjusted earnings per share were $0.43, down 25% from the same period last year and 8 cents below expectations. Total revenue fell 1.5% to $7.24 billion, $50 million below expectations. LUV rose 0.73% to $37.44; LUV fell 0.64% after hours
  • Since the launch of the Basic Economy product on May 28, the conversion rate of Basic Economy on the website has dropped, resulting in a drop in revenue per available seat mile (RASM) of nearly half a percentage point, and RASM is expected to drop by one percentage point in the third quarter. Therefore, assuming a slight improvement in demand from the previous quarter, the company expects unit revenue in the third quarter to fall by 2% to grow by 2% with basically flat capacity. Passenger revenue per available seat mile (PRASM) fell 1.8% to $0.1410, CASM fell 0.7% to $0.1494, and increased 4.6% to $0.1211 after deducting fuel costs.
  • Looking ahead to FY25, Southwest Airlines (LUV) expects adjusted EBITDA to be between $600 million and $800 million, with EBITDA contribution from initiatives of approximately $1.8 billion in FY25 and approximately $4.3 billion in FY26.
• Chipotle Mexican Grill's second-quarter non-GAAP earnings per share were $0.33, in line with expectations. Revenue was $3.06 billion (up 3.0% year-over-year), $60 million below expectations. CMG rose 0.76% to $52.78; CMG fell 9.62% after hours
  • Total revenue growth was driven by new restaurant openings. Chipotle opened 61 company-operated restaurants this quarter, 47 of which have Chipotlanes. Chipotle expects to add 315 to 345 restaurants for the full year, with more than 80% of its restaurants having Chipotlanes. Same-store sales fell 4.0% due to a 4.9% drop in transactions, partially offset by a 0.9% increase in average bills. Digital sales accounted for 35.5% of total restaurant revenue.
• The VIX index fell 6.85% today to 15.37.