📈 CVS's Prescription for Profit

Good morning.

⚡ The Fast Five → Kimberly-Clark to invest $2B in US Manufacturing, Amazon falls short on cloud revenue, TSMC committed to Arizona chip plant, Apple to Source 19B Chips from US, CVS Stock Surges On Huge Q1 Beat

🔎 Market Trends → Stocks close sharply higher, lifted by Microsoft, Meta; US Futures Jump on Upbeat Tech Earnings

And now…

⏱️ Your 5-minute briefing for Friday, May 2, 2025:

MARKET BRIEF
Before the Open

Pre-Market

Fear & Greed

Markets in Review

Tech Muscle Lifts Markets, Even as Macro Clouds Linger

The Nasdaq jumped 1.5% to 17,710.7, while the S&P 500 rose 0.6% to 5,604.1 and the Dow added 0.2% to 40,753. That’s eight straight wins for the Dow and S&P—momentum is proving sticky.

The Big Picture:

Markets are tuning out the noise—for now. Despite soft economic readings and elevated job cuts, robust earnings from Microsoft (MSFT) and Meta (META) gave investors a welcome distraction and a reason to rally.

Tech led the charge as cloud strength and digital ad resilience trumped contraction in manufacturing and rising jobless claims. Add in hopes of US-China tariff de-escalation, and the bulls got room to breathe.

WTI crude rose 1.5% to $59.06, hinting at confidence in global demand. Gold slid 2.3% to $3,243.10, while silver dipped 0.7% to $32.62—classic signs of investors rotating toward risk.

Market Movers:

• 📈 Microsoft (MSFT) soared 7.6%, the top Dow gainer, after a beat-and-raise quarter fueled by cloud momentum.

• 📈 Meta (META) climbed 4.2%, riding strong Q1 numbers and forward revenue guidance.

• 📈 Kohl’s (KSS) gained 7.6% after naming a new interim CEO following a board shake-up.

• 📉 Eli Lilly (LLY) plunged 11.7%, as its full-year earnings outlook was slashed despite strong drug pipelines.

What They’re Saying:

“Demand and output weakened while input strengthened… not considered positive for economic growth,” said ISM’s Timothy Fiore. But markets? Still focused on forward earnings, not backward data.

WHAT WE’RE WATCHING
Events

• Today: Bureau of Labor Statistics - Average Hourly Earnings m/m - 8:30am

  Why You Should Care: It's a leading indicator of consumer inflation - when businesses pay more for labor the higher costs are usually passed on to the consumer.

• Today: Bureau of Labor Statistics - Non-Farm Employment Change - 8:30am

  Why You Should Care: Job creation is an important leading indicator of consumer spending, which accounts for a majority of overall economic activity.

• Today: Bureau of Labor Statistics - Unemployment Rate - 8:30am

  Why You Should Care: Although it's generally viewed as a lagging indicator, the number of unemployed people is an important signal of overall economic health because consumer spending is highly correlated with labor-market conditions. Unemployment is also a major consideration for those steering the country's monetary policy.

Earnings Reports

• Today: Berkshire Hathaway, ExxonMobil, Chevron, Shell, Cigna

• Monday: Ford Motor Company, Clorox, Tyson Foods, Palantir, Vertex Pharmaceuticals, Realty Income, Williams Companies

MARKET BRIEF
Leading News

CVS's Prescription for Profit: Wegovy Deal Signals Healthy Upside

Why it matters:

CVS Health's partnership with Novo Nordisk creates a first-mover advantage in the booming GLP-1 market, potentially transforming both its pharmacy business and long-term growth trajectory.

Zoom Out:

The pharmacy giant delivered a stunning 72% earnings surge in Q1, demonstrating remarkable resilience in a challenging healthcare landscape. While Wall Street expected decent results, few anticipated the magnitude of this beat.

This performance isn't just about cutting costs—it reflects fundamental improvements in CVS's health benefits segment, where medical costs fell to 87.3% of premiums from 90.4% a year ago. The company's strategic pivot away from underperforming segments (exiting Aetna's individual market) shows disciplined capital allocation.

Key Insights:

• The Wegovy partnership positions CVS as the first retail pharmacy in NovoCare's network, driving foot traffic to its 9,000 community health locations while addressing affordability concerns for patients seeking weight-loss treatments

• Medicare improvements delivered outsized returns, with better star ratings for 2025 creating a virtuous cycle of higher reimbursements and improved patient outcomes

• The company's raised guidance ($6.00-$6.20 EPS vs. previous $5.75-$6.00) suggests management believes Q1's success is sustainable, despite cautious commentary about potential headwinds

Market Pulse:

"This quarter represents an inflection point for CVS, particularly as they leverage their retail footprint for high-margin GLP-1 medications," says healthcare analyst Sarah Benning. "The Novo deal changes the competitive landscape."

Bull’s Take:

Patient investors should consider CVS's technical breakout above its 50-day moving average as an entry opportunity. With the stock trading at modest multiples despite robust cash flow generation ($4.6B in Q1 alone), the risk-reward balance tilts decidedly positive.

Headlines

• Amazon falls short on cloud revenue for third straight quarter (link)

• Nvidia takes aim at Anthropic’s support of chip export controls (link)

• Apple to Source 19 Billion Chips from US Factories, Cook Says (link)

• TSMC committed to Arizona chip plant ahead of potential tariff impact (link)

• Kimberly-Clark to invest $2 billion to bulk up US manufacturing (link)

• Conagra to sell Chef Boyardee to private equity firm for $600M (link)

CRYPTO
Fear & Greed

Headlines

• Bitcoin Tops $97K, Strategy Hits 2025 High Ahead of Earnings Amid Capital Raise Speculation (link)

• Metaplanet plans to establish US subsidiary, raise $250 million to accelerate bitcoin treasury strategy (link)

• SEC Ditches PayPal's PYUSD Probe, Removing Key Regulatory Hurdle for Its Stablecoin (link)

DAILY SHARE
On the Socials