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What Happened?
Shares of enterprise workflow software maker ServiceNow (NYSE:NOW) jumped 15.2% in the afternoon session after the company reported strong first-quarter 2025 results, with cRPO (current remaining performance obligations) and RPO (remaining performance obligations) both beating. Although reported revenue roughly met expectations, profitability outperformed, leading to beats for adjusted operating income and adjusted EPS. Revenue from the US public sector grew net-new ACV (annual contract value) over 30% in the quarter, which is better than many investors expected under the new Trump administration. Overall, the result was impressive, especially considering how the markets were worried about the health of ServiceNow's enterprise customers and their appetite to spend amid an uncertain macro backdrop.
The shares closed the day at $939.49, up 15.4% from previous close.
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What The Market Is Telling Us
ServiceNow’s shares are somewhat volatile and have had 13 moves greater than 5% over the last year. But moves this big are rare even for ServiceNow and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 1 day ago when the stock gained 7.6% on the news that President Trump clarified that he had no intention of removing Federal Reserve Chair Jerome Powell, a statement that helped calm markets. Earlier remarks had sparked fears of political interference in decision making at the central bank.
With Trump walking back his earlier comments, investors likely felt more assured that monetary policy decisions would continue to be guided by data, not drama. That kept the Fed's word credible, and more importantly, gave investors a steadier compass to figure out where rates and the markets were headed next.
Adding to the positive news, the president made constructive comments on US-China trade talks, noting that the tariffs imposed on China were "very high, and it won't be that high. ... No, it won't be anywhere near that high. It'll come down substantially. But it won't be zero."
Also, a key force at the center of the stock market's massive two-day rally was the frantic behavior of short sellers covering their losses. Hedge fund short sellers recently added more bearish wagers in both single stocks and securities tied to macro developments after the whipsaw early April triggered by President Donald Trump's tariff rollout and abrupt 90-day pause, according to Goldman Sachs' prime brokerage data. The increased short position in the market created an environment prone to dramatic upswings due to this artificial buying force. A short seller borrows an asset and quickly sells it; when the security decreases in price, they buy it back more cheaply to profit from the difference.