Markets Climb on Strong EPS; Concerns Over Tariffs Loom

Markets showed resilience as the S&P 500 closed up by 1.59%. Investors were buoyed by strong EPS reports, but lingering tariff concerns may impact future trends.

Date: 01-03-2025

AI Rating: 7

Market Performance and Conditions
The S&P 500 Index closed up +1.59%, influenced by the reporting of stronger-than-expected EPS and an overall positive movement in major indices. However, concerns regarding new tariffs, particularly a proposed 25% tariff on Canada and Mexico and an additional 10% tariff on China, introduce a layer of uncertainty.
Earnings Per Share (EPS)
AES Corp reported Q4 adjusted EPS at 54 cents, exceeding the consensus estimate of 35 cents. Furthermore, it forecasts 2025 adjusted EPS of $2.10 to $2.26, surpassing the consensus of $2.04, indicating solid growth expectations.
Edison International aims for core EPS of $5.94-$6.34 for 2025, also better than the consensus of $5.70. This suggests a strong outlook, bolstering investor confidence.
Additionally, Monster Beverage's Q1 net sales of $1.81 billion exceeded the $1.80 billion consensus, showing strong market performance.
Revenue Growth
Elastic NV reported Q3 revenue of $382.1 million, which surpassed expectations of $368.9 million, and raised its full-year revenue forecast, reflecting a positive growth trajectory.
Rocket Companies also reported Q4 adjusted revenue of $1.19 billion, beating the $1.15 billion consensus estimate, indicating strong revenue growth in that period.
Negative Factors
On the flip side, several companies faced challenges. Acadia Healthcare’s forecast for annual adjusted EBITDA of $675 million-$725 million was below the consensus of $741.6 million, signaling weaker performance. Similarly, NetApp revised its full-year adjusted EPS forecast to $7.17-$7.27, falling short of the $7.31 expected. This revision may negatively impact investor sentiment. HP Inc also lowered its Q2 adjusted EPS forecast to a range of 75 to 85 cents, below the consensus of 85 cents.
Conclusion
While the overall market has experienced a rebound aided by strong earnings from select companies, external factors like potential tariffs could counteract this growth, leading to mixed sentiments among investors.

Stocks: AES EIX MNST RKT ESTC ACHC NTAP HPQ