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Takeaways
- The S&P 500 added 0.7% on Wednesday, April 2, 2025, ahead of President Trump's afternoon tariff announcement.
- Leidos shares and those of other defense contractors rose after a report stating that Elon Musk may soon step down from his role as government efficiency officer.
- Altria shares fell after Deutsche Bank analysts downgraded the tobacco maker's stock, citing valuation and regulatory concerns.
Investors awaited clarity about impending changes in U.S. Trade Policy as they awaited the end of Wednesday’s trading session. The latest round in tariffs was announced at a press conference that began just as Wednesday’s trading session closed.
The latest ADP National Employment Report revealed that the private sector created more jobs than expected in March. This is a sign of the strength of the labor market going into Friday’s employment report.
The S&P 500 ended the midweek trading session with a gain of 0.7%. The Dow advanced by 0.6% and the Nasdaq by 0.9%.
Shares of defense contractor Leidos Holdings (LDOS) jumped 5.9%, gaining the most of any S&P 500 stock. A Politico article indicated that President Trump had informed members of the administration about Elon’s departure from his government advisory position. This boosted investor confidence in defense firms and government contractors. Other defense stocks have also gained. (Musk referred to the report as “fake” news.)
Caesars Entertainment (CZR) shares moved 5.8% higher. Analysts predict a recovery in March on the Las Vegas Strip, tying February’s year over year declines in gaming winnings to unique events in 2020, including an additional day in the month because of Leap Year, and a traffic boost due to the Super Bowl being held in the city which distorted comparisons last year. Even with Wednesday’s gains, Caesars is still down more than 20 percent year-to date and nearly 40 percent over the last six months.
Tesla (TSLA), the electric vehicle maker, reported fewer deliveries than expected in the first quarter. However, the stock changed direction after the report that Musk, its CEO was reportedly distancing him from the Department of Government Efficiency. Tesla shares closed the day with a gain of 5.3%.
The heaviest decline in the S&P 500 hit shares of chocolate maker Hershey (HSY), which slipped 3.3%. The stock price has been declining for the last two weeks, as the confectioner deals with the rising cost cocoa and seeks to source more beans directly. Analysts at Piper Sandler reiterated their “underperform rating” on Hershey’s stock last week, noting that the pricing pressure for this key input could continue into next year. The company also lowered its 2025 profit forecast, citing weak retail sales momentum.
The shares of the tobacco giant Altria Group fell 2.8% after Deutsche Bank lowered its rating to “hold” (from “buy”) Analysts expressed concerns over the stock’s value, indicating that there may be limited room for further gains after its strong performance in 2018. Altria faces other regulatory issues relating to its evapor business. According to the International Trade Commission, certain products infringe upon patents owned and held by Juul Labs. Altria has reportedly halted the sale of its NJOY Ace ecigarettes in response to this decision.
Jefferies analysts raised concerns over the potential impact trade tensions could have on U.S. agriculture exports. Analysts cautioned, however, that while past aid programs to farmers have helped to boost agricultural markets during disputes, they have done little to support machine sales. Deere & Co. (DE) shares sank 1.6%.
