Mixed start expected amid UNH, trade, and economic news

The stock market had a tough outing Wednesday, as NVIDIA (NVDA) and the semiconductor stocks fell sharply on demand concerns triggered by NVIDIA’s large accounting charge related to export restrictions for China. Beyond that, the broader market struggled with Fed Chair Powell’s thoughts that tariffs are likely to drive inflation higher in the near term, that the Fed isn’t going to be hasty with policy changes, and that there is no Fed put.

President Trump is certainly struggling with the Fed chair’s views. He was adamant in a Truth Social Post that the Fed should be lowering rates now and exclaimed that Jerome Powell’s “termination cannot come fast enough!”

Separately, President Trump also took to Truth Social to proclaim that “big progress” was made yesterday in trade talks with Japan, that he had a productive call with the president of Mexico yesterday, and that he will be meeting with Italy’s prime minister today.

The market seems to like the idea of trade progress being made, but it is also cognizant that any positive views on trade matters can change in an instant. That understanding has curtailed investors’ conviction in buying efforts along with the festering concerns about earnings not living up to higher expectations.

The market has a lot to live up to right now, and it is struggling from a lack of confidence that is an offshoot of the policy uncertainty. It is trying to find some higher ground this morning, yet there are distractions in its midst, like the president calling out Fed Chair Powell, like China digging in with its retaliatory trade actions, and like this morning’s ugly FY25 earnings guidance from Dow component UnitedHealth Group (UNH).

Shares of UNH are down 20% in pre-market trading after the company said it expects FY25 adjusted EPS to be $26.00-26.50. The midpoint of that range is nearly 12% below the current consensus estimate. The warning was attributed to “heightened care activity indications in UnitedHealthcare’s Medicare Advantage businesses [and]…unanticipated changes in the profile of Optum Health members.”

The loss in UNH is why the Dow futures are in their own world right now. Currently, the S&P 500 futures are up 21 points and are trading 0.3% above fair value, the Nasdaq 100 futures are up 117 points and are trading 0.6% above fair value, and the Dow Jones Industrial Average futures are down 537 points and are trading 1.4% below fair value.

An 11% gain in Eli Lilly (LLY) after it announced positive trial results for its weight-loss drug pill and rebound action in the mega-cap space has helped offset UNH’s problems and a modest 0.8% decline in shares of American Express (AXP) after it reported better-than-expected Q1 results.

That has added to a very busy news cycle this morning, which has also included earnings reports from DR Horton (DHI), Taiwan Semiconductor Manufacturing Company (TSM), CSX Corp. (CSX), Snap-on Inc. (SNA), and a host of regional banks, as well as the ECB’s expected decision to cut its key interest rates by 25 basis points and a mixed batch of economic data.

• Total housing starts declined 11.4% month-over-month in March to a seasonally adjusted annual rate of 1.324 million (Briefing.com consensus 1.418 million) from a downwardly revised 1.494 million (from 1.501 million) in February. Building permits increased 1.6% month-over-month to a seasonally adjusted annual rate of 1.481 million (Briefing.com consensus 1.455 million) from an upwardly revised 1.459 million (from 1.456 million) in February.
  • The key takeaway from the report is that single-unit starts (-14.2%) and permits (-2.0%) were both down during the month, as affordability constraints driven by higher mortgage rates and building costs presumably curtailed homebuilder activity.
• Initial jobless claims for the week ending April 12 decreased by 9,000 to 215,000 (Briefing.com consensus 225,000). Continuing jobless claims for the week ending April 5 increased by 41,000 to 1.885 million.
  • The key takeaway from the report is that the low level of initial jobless claims will support the idea that the labor market is still in a solid position overall. Additionally, this should factor well in forecasts for April nonfarm payrolls since it covers the period in which the employment survey is conducted.
• The April Philadelphia Fed Index plunged to -26.5 (Briefing.com consensus 10.0) from 12.5 in March. The dividing line between expansion and contraction is 0.0.
  • The key takeaway from the report is that the index for new orders dropped sharply to -34.2 from 8.7, signaling a notable dropoff in demand; meanwhile, the prices paid index rose to 51.0 from 48.3.

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Originally Posted April 17, 2025 – Mixed start expected amid UNH, trade, and economic news