Breakfast News: Chips and Drugs Probe
April 15, 2025
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Tuesday's Markets |
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| S&P 500 5,406 (+0.79%) |
| Nasdaq 16,831 (+0.64%) |
| Dow 40,525 (+0.78%) |
| Bitcoin $84,798 (+0.67%) |
Source: Image created by Jester AI.
1. Investigation targets semis and pharma
According to a Federal Register notice on Monday, the Commerce Department announced trade probes in semiconductor and pharmaceutical imports, signaling new tariffs in the future.
- A $600 billion global sales industry: The announcement comes just days after semis were exempted from the 145% Chinese duties late last week. President Donald Trump has reportedly said new tariff rates for semiconductors will come within the next week.
- "Medicines have historically been excluded from tariffs because they can lead to higher costs and shortages of life-saving medicines." Alex Schriver of trade group PhRMA explained why tariffs on pharma companies are somewhat controversial. Eli Lilly (LLY 4.99%) and Johnson & Johnson (JNJ 0.85%) have rushed to announce U.S. investment packages to try and win favor.
2. AMD pushes for U.S. production
Advanced Micro Devices (AMD 0.16%) announced it would produce key processor units in the U.S. for the first time, pre-empting potential supply chain disruption from likely tariffs looming for the sector.
- "The United States is also going to be important and we're expanding our work there." CEO Lisa Su emphasized the balance between continued production in Taiwan and ramping up chip manufacturing at Taiwan Semiconductor's (TSM +1.32%) Arizona plant.
- The recent purchase of ZT Systems is telling: The completion of the acquisition of the U.S.-based data center business at the end of March shows the push to expand U.S. operations and diversify the supply chain further away from Asia.
3. What you might've missed on Monday
On 'Hold' in Stock Advisor, Luckin Coffee (LKNC.Y +0.75%) rocketed almost 10% higher, partly driven by the surge in Robusta coffee futures. This builds on the momentum from the strong full-year results released last month, in which Q4 revenue jumped 32.7% versus the same period last year.
- A high-risk, high-reward potential investment: Rule Breakers rec Viking Therapeutics (VKTX 1.47%) rose over 10% following news that Pfizer (PFE +1.92%) is cutting research and development spend in oral obesity medication. Viking is underway with its own oral weight loss drug, so lower competition in this space helped to provide investor optimism.
- Beating the market by 14% since its September Hidden Gems recommendation: Unity Software (U +3.90%) fell by over 5% as the UBS (UBS +1.92%) analyst downgrade last week continued to weigh on the stock. The bank noted minimal (albeit positive) feedback for Unity's new artificial intelligence (AI)-powered platform.
4. Next Up: Key Tuesday Earnings
Johnson & Johnson released first-quarter earnings ahead of the market opening. Following a revenue beat, management lifted the sales forecast for the fiscal year to $91 billion-$91.8 billion from $89.2 billion-$90 billion.
- Clarity and guidance on the menu: Bank of America (BAC +0.88%) also reported before the opening bell, beating analyst revenue estimates for the sixth straight quarter. Profit lifted 11%, while revenue climbed 5.9%. In response, the stock rose around 2% in pre-market trading.
- Beating the S&P 500 by 816% and 326%: Recommended twice in Stock Advisor, Interactive Brokers (IBKR +0.32%) puts out Q1 results after the market closes. The focus will be on new account openings, the ongoing mix of retail versus institutional clients, and commentary on how the market volatility could boost earnings for the coming quarter.
5. Foolish Fun
On Friday's Motley Fool Money podcast, Matt Argersinger put Robinhood (HOOD +1.21%) forward as a stock on his radar, saying, "I'm a shareholder in Schwab (SCHW +0.52%). ... If I'm going to make a long-term bet on a brokerage company, I might also want to have exposure to a brokerage company that has the most young people coming to it."
Along with Interactive Brokers, which company has the best chance of beating the market over the next five years? Discuss with friends and family, or become a member to hear what your fellow Fools are saying.
