Boersly Weekly: Is This a Bear Market Rally?

Friday, 2nd of May

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What Moved The Market This Week

We've seen a tailwind for the stock market in recent days. Overall, the market has shown a friendly trend. The S&P 500 has gained around 8% over the past seven trading days, marking the strongest 7-day rally since November 2020. Earnings season has begun. The rally has been led primarily by the solid results and outlooks from the tech sector. Meta and Microsoft have reported their numbers. Both are notably strong, including their forward guidance. Meta plans to further expand its investments in AI, which benefits stocks within the broader AI universe.

Also fueling the sharp rebound is the fact that Wall Street was technically oversold.

Last Friday, a rare Zweig Breadth Thrust (ZBT) was triggered: one of the strongest bullish technical signals. It occurs when the 10-day EMA (exponential moving average) of advancing stocks rises from under 40% to above 61.5%. This indicator, which gives more weight to recent days, reacts faster to market moves than a simple average. Since 1943, this signal has only occurred 20 times. In 100% of those cases, the S&P 500 was higher six months later.

But the big question remains: Is this a bear market rally?

My answer: Yes. We're likely to see new lows later this year. While the S&P 500 did break through the 50-day moving average — briefly hitting 5,650 on Thursday, just above the 50-day line at 5,636 — the reasons for the rally are temporary: solid earnings so far, a more supportive technical environment, renewed capital inflows, buybacks returning, and systematic trading models (used by institutions) being forced to enter the market due to the strong trend.

Analysts currently see the S&P 500 trading in a range between 5,200 and 5,800. The short-term news cycle is likely to support further upward momentum, though above 5,600 the rally could lose steam.

A short-term breather

On tariffs, Trump has hinted at progress on potential deals with Japan, Korea, and India, which may serve as templates for future trade agreements. The spotlight is on China: Trump seems willing to reach common ground and strike a deal soon, amid growing concerns about a looming wave of bankruptcies among small businesses. There are early signs of a shift in Trump’s economic policy — away from punitive tariffs and Fed bashing, and toward possible tax cuts and deregulation. That said, it remains unclear how much damage has already been done to the business cycle.

J.P. Morgan: The de-escalation in trade talks has significantly reduced the likelihood of a bear-case scenario. They expect the S&P 500 to trade within their base and bull cases (5,200 to 5,800). In the short term, the so-called "pain trade" in equities likely remains skewed to the upside, as markets position for a tariff policy shift. Medium-term, signs of weakening economic activity could emerge as summer approaches — driven by early pull-forward effects from tariffs, delayed impacts of other policy measures, and reduced corporate investment. As a result, the S&P 500 may retest 5,200 in the summer before finishing 2025 closer to the bull case (5,800), supported by stronger growth momentum and potential 2026 tailwinds from tax cuts and deregulation.

Not out of the woods yet?

Goldman Sachs: Despite more constructive capital flows and improved market behaviour, Goldman doesn't believe we're in the clear yet. They argue that the S&P 500 trading at the same level as it did before reciprocal tariffs were announced on April 2 feels wrong. Nonetheless, in case of another sell-off, many investors now see support not at 4,600, but at 5,000. In other words, the worst-case scenario has been revised higher.

Earnings season heats up

Wall Street’s focus will now shift to mega-cap techs. When Q4 numbers were released earlier this year, none of the big tech names backed down from their investment plans — not Meta, Microsoft, Alphabet, or Amazon. This week, the broader market will pay close attention to whether the hyperscalers are sticking to their aggressive AI investment strategies. Alphabet confirmed last week that it is — and it may be more the rule than the exception.

Q1 better than feared

Over the next three weeks, roughly 80% of S&P 500 companies will report earnings, providing insights into demand trends, pricing power, tariff pass-throughs, profit margins, capex, and R&D investments.

Recession by mid-year?

While the short-term environment should continue to support markets, the medium-term picture remains murky. Up through April, the economy benefited from frontloaded demand. Companies built up inventories ahead of tariffs, and consumers, for example in the auto sector, brought forward purchases. Whether the US can avoid a recession is unclear, especially given the recent tariff surge and its lagging effects. Apollo Investment believes a recession will hit by mid-year, citing the following:

• The largest downward revisions in earnings estimates in five years

• Declining new orders

• A sharp reversal in planned business investments

• Rising prices for intermediate and finished goods

• Consumer sentiment hovering near record lows

Supply Chain Shock Begins

Much like during the COVID lockdown period, the tariff shock is already working its way through the global supply chain and is expected to become increasingly visible over the summer. Apollo Investment emphasises the importance of timing: reciprocal tariffs were announced on 2 April, and they’ve already led to a notable slowdown in container freight activity. This is particularly evident on shipping routes from China to the US, where a marked cooling of demand is becoming apparent.

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Reported Quarterly Earnings

Apple (AAPL)

• Revenue: $124.3 billion (+4% year-over-year), a new record

• Earnings per share (EPS): $2.40 (+10% YoY), also an all-time high

• Net income: $36.3 billion

• Gross margin: 46.9%

• Active device base: Over 2.35 billion active devices worldwide — a new record

• Highlights: Record services revenue (+14% to $26.3 billion), strong growth in Mac and iPad sales (each over 15%). iPhone revenue remained stable, but declined in China due to the delayed launch of “Apple Intelligence”

Regional performance

• Americas: $49.3 billion (+6% YoY)

• Europe: $27.6 billion (+11% YoY)

• Japan: $9.0 billion (+16% YoY)

• Greater China: $18.5 billion (−11% YoY), impacted by local competition and the delayed rollout of Apple Intelligence

• Rest of Asia-Pacific: $10.3 billion (+13% YoY)

Strategic developments

• Apple Intelligence: New AI features launched, to be expanded to more languages in April

• Share buyback: Announcement of a record $110 billion buyback program

• Dividend: Raised by 4% to $0.26 per share

Stock performance

After the earnings release, Apple’s stock rose 3% in after-hours trading. Apple continues to show strong financial performance, especially in services, Mac, and iPad segments. However, challenges remain in certain regions, especially China, due to local competition and regulatory hurdles.

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Airbnb (ABNB)

• Revenue: $2.27 billion (+6% YoY)

• EPS: $0.24 (slightly above expectations)

• Profit decline: −42%, due to higher personnel costs and investment losses

• Outlook: Q2 revenue growth expected at 9–11%, but guidance for booked nights and experiences was cautious

Stock performance

After the release, Airbnb shares dropped over 6% in after-hours trading, weighed down by lower-than-expected Q2 revenue guidance.Airbnb continues to see solid growth, especially in international markets, but faces challenges in the US due to economic uncertainty. Planned investments and new services aim to strengthen the business long-term.

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Albemarle (ALB)

• Revenue: $1.08 billion (below expectations of $1.18 billion)

• Adjusted EPS: −$0.18 (better than the expected −$0.62)

• Net loss: $340,000 (vs. $9.1 million loss in the same quarter last year)

• Energy Storage revenue: $276.3 million, mainly impacted by a 34% drop in lithium prices

Market conditions & strategic actions

Albemarle continues to face global lithium oversupply, mainly due to overproduction in China. The company has responded by reducing workforce and scaling back expansion projects. Despite these headwinds, Albemarle maintains its full-year 2025 guidance, as lithium and other critical minerals are currently exempt from US tariffs, providing some protection.

A major project — a $1.3 billion lithium refinery in South Carolina — has been paused due to current market conditions. CEO Kent Masters stated the project currently lacks economic viability but stressed the need for government support to build a Western supply chain for critical minerals.

Outlook

Albemarle remains cautiously optimistic, focusing on existing projects, particularly in Chile, and investing in direct lithium extraction technology. The company aims to adjust its strategy to stay competitive even with low market prices.

Stock performance

Following Q1 2025 earnings release on April 30, the stock experienced a modest uptick. As of May 2, 2025, ALB is trading at $59.32, reflecting a 1.38% increase from the previous close.

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Amgen (AMGN)

• Revenue: $8.05 billion (+9% YoY), in line with expectations

• Adjusted EPS: $4.90, above analyst expectations of $4.30

• Net income (GAAP): $1.73 billion

• Adjusted net income: $2.65 billion

Stock performance

Amgen shares rose about 1% in after-hours trading to $286.Amgen showed solid growth in Q1 2025, driven by strong product sales and pipeline progress. Despite challenges with established products like Enbrel and Tepezza, the company is strategically investing in new therapies and manufacturing capacity.

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Amazon (AMZN)

• Revenue: $155.7 billion (+9% YoY)

• EPS: $1.59 (above expectations of $1.36)

• Net income: $17.1 billion

• AWS revenue: $29.27 billion (+17%, slightly below expectations)

• Advertising revenue: +19% to $13.92 billion

Segment performance

• Online stores: $57.4 billion (+6% YoY), above expectations

• Amazon Web Services (AWS): $29.3 billion (+17% YoY), slightly below forecasts

• Advertising: +19%, a strong contributor to total revenue

Challenges & one-time impacts

• Tariffs: New 145% US tariffs on Chinese imports affect over 50% of Amazon products

• One-time charge: $1 billion loss related to returns and inventory adjustments due to tariffs

• Consumer demand: While demand remains stable, third-party sellers may pass higher costs on to customers

Q2 2025 outlook

• Revenue: $159–164 billion, in line with expectations

• Operating income: $13–17.5 billion, below analyst estimates

• Investments: $25 billion planned for AI, cloud infrastructure, and satellite projects

Strategic developments

• AI initiatives: Launch of Alexa+, Trainium2 chips, and Bedrock models to enhance customer experience and recommendations

• Project Kuiper: Successful launch of first satellites to deliver broadband internet to rural areas

• Supply chain: Diversifying supply chains and proactively managing inventory to mitigate tariff risks

Stock performance

Despite strong Q1 results, Amazon shares fell about 3% after hours due to cautious guidance and ongoing tariff-related uncertainty.Amazon continues to show robust growth and is making strategic investments in future technologies. However, external factors such as trade tariffs and macroeconomic uncertainty remain challenges.

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CVS Health (CVS)

• Revenue: $94.59 billion (+7% year-over-year)

• EPS (adjusted): $2.25 (above expectations)

• Highlights: Improved Medicare insurance business; full-year guidance raised to $6.00–$6.20 per share (adjusted EPS)

Stock performance

Following the earnings release, CVS Health shares rose over 7% and reached a 52-week high, driven by the strong results and positive outlook.CVS Health delivered strong financial performance in Q1 2025, with solid results across all business segments. Strategic partnerships and a focus on high-margin segments position the company for sustainable growth.

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eBay (EBAY)

• Revenue: $2.59 billion (above expectations of $2.55 billion)

• Adjusted EPS: $1.38 (above expectations of $1.34)

• Net income: $503 million

• Gross Merchandise Volume (GMV): $18.8 billion (+1% YoY)

• Free cash flow: $644 million

• International revenue share: 48%

Highlights

• Stable growth in core categories like luxury goods, collectibles, and refurbished products

• Use of generative AI to enhance search, advertising, and listing tools

• CFO change announced: Steve Priest to step down; Peggy Alford (former PayPal) to take over in May 2025

Q2 2025 Outlook

• Revenue forecast: $2.59–2.66 billion (above consensus of $2.60 billion)

• EPS forecast: $1.24–1.31

Stock performance

Despite macroeconomic challenges such as high interest rates and inflation, eBay posted strong results, supported by tech innovation and strategic investments.After the earnings release, eBay shares rose up to 1.43% in after-hours trading, driven by better-than-expected results and a positive outlook.eBay continues to show solid financial performance in Q1 2025, with slight growth in GMV and above-expectation earnings. Strategic investments in AI and a focus on high-margin categories like luxury and collectibles are supporting positive development.

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Estée Lauder

• Revenue: $3.36 billion (−4% YoY)

• Organic sales decline: −5%

• Adjusted EPS: $0.14 (above expectations)

• Net loss: $156 million (vs. $31 million profit YoY)

• GAAP EPS: −$0.43

• Gross margin: 72.4% (up from 69.6% last year)

Reasons for weak performance

• China & Asia: Weak consumer sentiment in China and a decline in Asian travel retail sales

• U.S.: Weaker demand in the premium segment, especially among middle- and lower-income groups; growing competition from smaller brands

• Tariffs: U.S. tariffs impacted cost structures and negatively influenced consumer sentiment

• Travel retail: Lower reorders and inventory pressures in markets like Hong Kong and South Korea

Strategic Measures

• CEO change: Stéphane de La Faverie to take over as CEO from January 1, 2025

• Restructuring: Launch of the “Profit Recovery and Growth Plan” (PRGP) to cut costs and boost efficiency

• Product innovation: New luxury product launches, including the BALMAIN Beauty collection

• Supply chain diversification: Building alternative supply chains outside of China to mitigate tariff exposure

Outlook & Forecast

• Q2 2025 revenue: Expected decline of 6–8% YoY

• Q2 2025 adjusted EPS: $0.20–$0.35

• Full-year forecast: Withdrawn due to uncertainty in China, travel retail, and leadership transition

Stock performance

Following the report, Estée Lauder shares dropped 20%, hitting their lowest level in over nine years. This was driven by weak performance in China, a dividend cut from $0.66 to $0.35, and the withdrawal of the full-year outlook.Estée Lauder is facing a challenging phase but is taking steps to stabilise and return to growth through strategic actions and innovation.

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Eli Lilly (LLY)

• Revenue: $12.73 billion (+45% YoY)

• Adjusted EPS: $3.34

• Highlights: Strong sales of Mounjaro ($3.84 billion) and Zepbound ($2.31 billion); full-year profit forecast lowered due to investment losses and R&D expenses

Stock performance

Despite strong quarterly results, Eli Lilly shares fell more than 7% on May 1, 2025, influenced by the reduced earnings forecast and CVS Health’s decision to delist Zepbound from its preferred coverage.Eli Lilly continues to show robust growth, particularly through its blockbuster drugs Mounjaro and Zepbound. However, the company faces challenges such as regulatory decisions and shifting market dynamics.

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Mastercard (MA)

• Revenue: $7.25 billion (+17% YoY)

• Adjusted EPS: $3.73 (above expectations)

• Highlights: Strong growth in cross-border transactions (+15%) and value-added services (+18%); full-year revenue growth outlook raised to “low double-digit” percentage range

Stock performance

Following the earnings release, Mastercard shares rose 1.7% in premarket trading.Mastercard delivered strong financial performance in Q1 2025, with solid results across all business areas. Strategic investments in high-margin services and a focus on international transactions continue to support its positive trajectory.

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McDonald's (MCD)

• Revenue: $5.96 billion (below expectations)

• Adjusted EPS: $2.67 (above expectations)

• Highlights: Global sales declined by 1%; U.S. sales down 3.6%; concerns about valuation following four consecutive quarters of declining sales

Stock performance

After reporting results, McDonald’s shares fell 1.9%.McDonald’s faced challenges in Q1 2025, particularly in the U.S., where economic uncertainty and inflation impacted consumer behaviour. The company is responding with expanded value offerings and product innovations to retain customers and protect market share.

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Meta (META)

• Revenue: $42.31 billion (+16% YoY), above expectations of $41.45 billion

• EPS: $6.43, well above consensus of $5.33

• Net income: $16.64 billion (vs. $12.37 billion last year)

• Advertising revenue: $41.39 billion, remains the main revenue source

Highlights

• Strong ad growth; AI infrastructure investment raised to $64–72 billion

• Meta AI reaches nearly 1 billion monthly active users

Strategic Developments

• Meta AI: Reached nearly 1 billion monthly active users

• AI investment: Forecasted 2025 capex raised to $64–72 billion for AI infrastructure

• Product innovation: Launch of AI-powered products like Meta AI and smart glasses

Q2 2025 Outlook

• Revenue guidance: $42.5–45.5 billion (slightly above consensus of $43.8 billion)

Challenges

• Regulatory concerns: Ongoing EU investigations into Meta's ad-free subscription model may impact European business

• Metaverse segment: Reality Labs reported a $4.21 billion loss despite strategic restructuring

Stock performance

Meta shares rose 4.2% after the results, contributing to Nasdaq’s gains.Meta continues to show strong growth, particularly in advertising and AI, but investors remain watchful of regulatory risk and continued losses in its metaverse division.Revenue targets for the current quarter are expected to be met. Operating cost guidance was revised slightly downward. Management warned that EU regulations could significantly impact the business from Q3 onward.

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Microsoft (MSFT)

• Revenue: $65.6 billion (+16% YoY)

• EPS: $3.30 (+10% YoY)

• Net income: $24.7 billion

• Gross margin: $45.5 billion (+13% YoY)

• Operating income: $30.6 billion (+14% YoY)

Highlights: Strong cloud performance

• Microsoft Cloud revenue: $38.9 billion (+22% YoY)

• Azure and other cloud services: +33% YoY

• Intelligent Cloud segment: $24.1 billion (+20% YoY)

• AI business: On track for $10 billion in annual revenue — the fastest ramp-up in company history

Strategic Developments

• AI infrastructure: Planned investment raised to $80 billion for FY 2025

• Azure OpenAI usage: Doubled in the past six months

• New AI products: Launch of Cobalt 100 VMs and Maia 100 AI accelerators

• Partnerships: Collaborations with Databricks, Siemens, and GE Aerospace to implement AI solutions

Stock performance

Microsoft shares jumped nearly 9% to around $430 after the report, driven by strong analyst upgrades. Morgan Stanley raised its price target to $482, Jefferies to $550, and Wedbush to $515, citing Microsoft’s dominant position in the AI space.Microsoft’s Q1 FY2025 results highlight the success of its cloud and AI strategies. The company is well-positioned to benefit from growing demand for AI-powered solutions.Revenue guidance for the current quarter has been raised, with Azure expected to grow 34–35% (Wall Street had expected 31.1%).

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Moderna (MRNA)

• Revenue: $108 million (below expectations)

• Loss per share: −$2.52 (better than expected loss of −$2.92)

Highlights

• Lower revenue driven by declining demand for COVID-19 vaccines

• Full-year revenue expected between $1.5 and $2.5 billion

Stock performance

After releasing its results, Moderna shares fell 5%, driven by disappointing vaccine revenue and continued market headwinds.Moderna faces pressure from waning vaccine sales and tough competition. However, the company is leaning on a diversified pipeline and aggressive cost-cutting to secure long-term growth.

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Reddit (RDDT)

• Revenue: $392.4 million (+61% year-over-year)

• EPS: $0.13 (above expectations of $0.02)

• User growth: +31% to 108.1 million daily active users

• Outlook: Q2 revenue guidance of $420 million (above expectations)

• Stock reaction: +19% after-hours, later settling at around +7%

Stock performance

Reddit delivered strong growth in Q1 2025 in both revenue and user metrics, supported by strategic investments in AI and international expansion. Despite earlier challenges due to Google algorithm changes, the company is positioning itself for sustainable growth.

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Roblox (RBLX)

• Bookings: $1.21 billion (+31% YoY)

• Loss per share: $0.32 (better than expected loss of $0.40)

• Highlights: Daily active users rose 26% to 97.8 million; full-year bookings guidance raised to $5.285–$5.36 billion

Stock performance

After earnings, Roblox shares rose as much as 6.8% and closed up 2.9% at $69.Roblox showed strong financial performance in Q1 2025, with solid results across all business segments. Strategic platform investments and a focus on new user segments contributed to its positive momentum.

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Robinhood (HOOD)

• Revenue: $927 million (+50% YoY)

• EPS: $0.37 (below expectations of $0.41)

• Highlights: Record net deposits of $18 billion; 100% growth in crypto revenue; Robinhood Gold subscribers rose to 3.2 million

Stock performance

Despite strong headline results, Robinhood shares fell 5% after earnings, driven by concerns about user retention and competition in the crypto space.Robinhood delivered solid financial performance in Q1 2025, with significant revenue growth and product innovations. The company is expanding its offerings for active traders and pursuing strategic acquisitions to strengthen its market position.

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Twilio (TWLO)

• Revenue: $1.17 billion (+12% YoY)

• Adjusted EPS: $1.14 (above expectations of $0.92)

• Net income: $20 million

• Segment revenue: Communications services $1.10 billion (+13%), Segment (Data & Applications) $75.7 million (+1%)

• Stock reaction: Up to +10% after-hours

Stock performance

Twilio delivered strong financial results in Q1 2025, with solid revenue growth and improved profitability. The company’s investments in AI and customer engagement, along with a share buyback program, reflect confidence in its long-term outlook.

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Qualcomm (QCOM)

• Revenue: $11.7 billion (+17% YoY)

• Net income: $3.2 billion

• Highlights: Strong growth in QCT segment (+20%), driven by mobile, automotive, and IoT demand

Stock performance

Despite beating expectations, Qualcomm shares fell 4.8% post-earnings, due to concerns around its licensing business.Qualcomm posted strong Q1 2025 results across all segments. Strategic investments in AI and focus on high-margin areas like automotive and IoT support the company’s long-term positioning.

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What's Coming Up Next Week

Central Bank Decisions

• Federal Reserve (Fed): The next Federal Open Market Committee (FOMC) meeting will take place on May 6–7. While no immediate rate cut is expected, markets will be watching closely — especially after the surprise 0.3% decline in U.S. GDP in Q1.

  
  

Key Economic Data

• U.S. Jobs Report (Non-Farm Payrolls): Scheduled for Friday, May 2 (note: this may refer to May 3 in U.S. timing). Forecasts suggest only 133,000 new jobs, which would signal a weakening labor market.

• U.S. ISM Services Index: To be released on May 5, offering insights into the health of the U.S. service sector.

• U.S. Productivity & Labor Costs: Q1 data will be published on May 8, shedding light on efficiency trends and employment costs in the U.S. economy.

Other Important Events

• European Central Bank (ECB): ECB Governing Council members will meet for an informal retreat in Porto on May 6–7, discussing potential changes to monetary policy amid ongoing global uncertainty.

  
  

Key Earnings Reports (May 5–9)

Monday, May 5

• Palantir Technologies – The data analytics firm, which saw a 340% share price increase in 2024, will report Q1 results.

  
  

Tuesday, May 6

• Advanced Micro Devices (AMD) – Focused on developments in AI and data center performance.

• Arista Networks – Specialises in cloud networking and infrastructure.

  
  

Wednesday, May 7

• Uber Technologies – Will report on trends in ride-hailing and delivery services.

• Unity Software – Provides tools for building 3D interactive content.

• The Walt Disney Company – To report on theme parks, streaming (Disney+), and media networks.

  
  

Thursday, May 8

• ARM Holdings – A key semiconductor designer, particularly for mobile and embedded systems.

• Shopify – Leading e-commerce platform serving online retailers.

• Takeda Pharmaceutical – Japanese pharma firm with a global footprint.

  
  

Friday, May 9

• Alliant Energy – Utility company with a focus on renewable energy and stable dividends.

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Disclaimer: This content is for informational and educational purposes only and does not constitute financial advice. It does not consider your personal objectives, financial situation, or needs. You should consider whether the information is appropriate for your circumstances and seek professional advice before making any investment decisions. Investing in stocks carries inherent risks, and the application of any strategy may not eliminate the risk of loss. Market conditions, volatility, and unforeseen events can impact outcomes, and past performance is not indicative of future results.