Happy Tuesday afternoon to everyone on The Street. Here's a snapshot of where markets ended the trading session, plus tomorrow's trade idea delivered to you today.

• 🟥 | US stocks ticked down today as investors took a breather from the recent rebound rally and digested more earnings.

• 📈 | One Notable Gainer: Netflix’s $NFLX ( ▼ 1.5% ) stock was a critical and commercial success today, following a report that the streamer is aiming to join the $1T market cap club by 2030.

• 📉 | One Notable Decliner: Grocery giant Albertsons $ACI ( ▲ 6.07% ) slumped despite its earnings beat, after issuing lackluster full-year guidance.

MARKET MOVERS

Bank of America, Citigroup, Boeing

$BAC ( ▼ 1.74% ) Bank of America tops analysts’ estimates on better-than-expected interest income, trading (CNBC)

$C ( ▼ 3.47% ) Citigroup Reports Jump in Profit, Revenue (WSJ)

$BA ( ▲ 0.61% ) China Orders Boeing Jet Delivery Halt as Trade War Expands (Bloomberg)

$RKLB ( ▼ 5.2% ) SpaceX Rival Rocket Lab Jumps On Two Hypersonic Testing Contracts (IBD)

$COTY ( ▼ 1.68% ) Coty falls after BofA flips to being a bear after being a bull (SeekingAlpha)

OVERHEARD ON THE STREET

AP: The White House advanced plans for new tariffs by launching investigations into imports of chips and pharmaceuticals.

WSJ: Most major banks reported a rise in consumer spending during Q1, signaling resilience ahead of economic concerns and tariff tensions.

The Verge: OpenAI is developing an early-stage social network to compete with X.

CNBC: Texas Roadhouse $TXRH ( ▼ 1.53% ) became the largest casual dining chain in 2024 as Americans seek value dining.

CNN: The EU has threatened retaliatory tariffs on specific goods like toilet paper, soybeans, and eye makeup if ongoing trade talks with the US fail.

TOMORROW’S TRADE IDEA, TODAY

Mag 7 or Mag 5?

Pendulum Swings

After underperforming in the first quarter, Magnificent 7 stocks are falling back into favor.

Amazon $AMZN ( ▼ 2.93% ) is now trading at a 32 P/E, down from 86 in 2022. NVIDIA’s $NVDA ( ▼ 6.87% ) P/E has fallen from 56 to 36. Apple $AAPL ( ▼ 3.89% ) , Alphabet $GOOGL ( ▼ 1.91% ) , and Microsoft $MSFT ( ▼ 3.66% ) have also seen their P/E ratios fall dramatically. 

Tesla $TSLA ( ▼ 4.94% ) and Meta $META ( ▼ 3.68% ) are the only members whose ratios remain well above what they were before the AI boom was ushered in by the release of ChatGPT.

Not All Created Equal

Analysts think this drop in price-to-earnings could represent a great buying opportunity as the AI hype begins to wear off.  

However, Siebert Financial’s Mark Malek cautions investors, saying that it should really be the “Magnificent Five”. The analyst believes Apple and Tesla’s outlooks are far cloudier than the others, amid tariffs and other Trump-era headwinds.

All the stocks have taken a beating recently, with Tesla faring the worst, down 37% YTD. But NVIDIA has surged 16.5% over the past five trading days, with Apple up more than 17% over the same period.

Apple & NVIDIA

Although they’ve lately looked anything but magnificent, many market observers believe that the long-term prospects for the Mag 7 remain strong, thanks to the companies’ robust cash reserves, profitability, and competitive advantages. 

But with Trump’s trade war raging, macroeconomic challenges will likely not be the same for all of them. Apple in particular could face severe consequences, thanks to China’s importance to the iPhone’s manufacturing and sales. Meanwhile, Morgan Stanley’s $MS ( ▼ 2.34% ) Joseph Moore says tariffs will have a “fairly minimal” impact on NVIDIA.

In other words, the current prices of these mega-cap tech stocks may be appealing to investors who believe the Mag 7 will reclaim their former glory. But it also may be seen as a warning sign by those who think they have further to fall.

ON OUR RADAR

AP: A new law in Peru sparked backlash from environmental and Indigenous groups, warning it could accelerate Amazon rainforest destruction.

WSJ: Following a major cyberattack on the Office of the Comptroller, big banks have limited electronic information-sharing with the regulator.

Bloomberg: GOP lawmakers are considering a millionaire tax hike, as President Trump signaled openness to the idea.

CNBC: The US faces a significant national security risk due to its reliance on Chinese rare earth elements, per the CSIS.

CNN: Starbucks $SBUX ( ▼ 3.52% ) baristas will be required to wear solid black tops under green aprons in a dress code update to reinforce brand identity.

MONDAY’S POLL RESULTS

Are you bullish or bearish on the biotech sector over the next 12 months?

🟩🟩🟩🟩🟩🟩 🐂 Bullish

🟨🟨🟨🟨🟨⬜ 🐻 Bearish

And, in response, you said: 

• 🐂 Bullish — “Always a need for medical advancements via meds or artificial body parts and disease mitigation.”

•  🐻 Bearish — “When the government is choosing winners and losers (fired Dr. Marks), you get stinkers (V.A.E.Rs reports on mRNA).”