Closing Recap

Wednesday, April 02, 2025

Wall Street Bulls made a statement today, erasing sharp overnight declines (Nasdaq and S&P futures were down more than 1% this morning) pushing higher by more than +1% by early afternoon before finishing strong into the bell as investors wait for President Trump to give details of new tariffs at 4:00 pm EST in the Rose Garden that could shake up U.S. trading relations worldwide. Global markets remain in the dark as to what the official new reciprocal duties will entail, with some hawkish options bantered about in recent days by the media including imposing 20% “blanket” levies on trading partners. Also today, Sky News reported that Trump’s reciprocal tariffs will be in three bands of 10%, 15% and 20% depending on the country and industry in question, citing sources close to the White House. Again, the speculation has been wide-ranging, and markets have been volatile in reaction while European markets have slumped this week. We will soon find out, but thus far auto tariffs are currently in place to the tune of 25%, along with new blanket tariffs of around 20% on China on top of existing 10% duties.

A couple of top stories today included: gov’t IT Service names (BAH, CACI, LDOS, SAIC) bounced after media reports (Politico) that Elon Musk will be stepping back in the coming weeks from his current role at DOGE. Article noted Trump remains pleased with Musk and his Department of Government Efficiency initiative, but both men agree its soon time to return back to his businesses. Note the White House Secretary Leavitt tweeted later “This “scoop” is garbage. Elon Musk and President Trump have both *publicly* stated that Elon will depart from public service as a special government employee when his incredible work at DOGE is complete: Biotech (XBI, IBB) rebounds after tumbling more than -3.6% each of the last 2 days following recent key departures at the FDA, CDC, and other health departments as the gov’t looks to slash excess spending/waste. Gold closed at new record highs; oil prices gained.

TikTok a big story today ahead of the April 5^th deadline for the company to find a non-Chinese buyer or face a ban in the country. News today showed a Trump administration official confirmed to Reuters that AMZN has put in a bid to buy TikTok, while CNBC’s David Faber also reported APP is a bidder for TikTok as well. Late day, a report in The Information said President Trump plans to announce later on Wednesday his plan for a new company called TikTok America, part of his efforts to broker a deal to keep TikTok alive in the U.S., according to a person close to the discussions. It’s unclear whether the Trump administration has approval for the proposed structure from the Chinese government. Under Trump’s proposal, TikTok America would be roughly 50% owned by new U.S. investors and license TikTok’s algorithm from ByteDance,

• February Factory orders ex-trans climb 0.4% m/m vs. est. +0.4% and vs Jan +0.3% (prev +0.2%); Feb factory orders ex-defense +0.5% vs Jan +1.9% and Feb Durables orders revised to +1.0% from +0.9%.

• U.S. Treasury yields were up slightly on Wednesday, with the short-end slightly higher while longer-dated yields edged lower following the better ADP private payrolls data and as investors awaited the Trump administration’s tariff announcement. The benchmark U.S. 10-year Treasury note yield rose 2.5 basis points to 4.181% after hitting a fresh one-month low of 4.11% earlier in the session.

• Sporting goods retailer SPWH shares jumped as Q4 results topped expectations as value-focused holiday strategies drove traffic and solid margins. Strength in core categories like fishing and camping offset broader consumer weakness. FY25 guidance was in-line, with management focused on cost control and inventory.

• In Airlines: ALGT was upgraded to Strong Buy at Raymond James and downgraded UAL to Market Perform from Outperform while the firm lowered target prices due to the earnings cuts and application of lower multiples reflecting elevated macro uncertainty. The firm said they favor stocks with idiosyncratic earnings drivers that should help offset any macro-driven headwinds, which notably include ALGT, AAL and LUV.
• In the Gov’t IT Defense sector: the group has been pressured for months on DOGE and defense budget cut concerns, with shares of BAH, CACI, LDOS, KBR, SAIC, PLTR among names that have fallen. However, the sector got a boost after media reports (Politico) the President Donald Trump has told his inner circle, including members of his Cabinet, that Elon Musk will be stepping back in the coming weeks from his current role. https://tinyurl.com/mwpaj5bm (Politico report).
• In Chemicals: SMG was upgraded to Buy with $70 PT at Truist saying in their opinion, the US lawn and garden category has finally normalized post-COVID. The category and the company are well positioned to navigate the macroturbulence expected to impact the consumer over the next year with an attractive valuation.

• In Payments: Goldman Sachs upgraded FI to Buy and JKHY to Neutral in Payment Technology saying choppy macro in Q1 to limit near term upside to spending. The firm leans into higher beta names with idiosyncratic stories (such as AFRM and XYZ) along with companies with defensive revenue streams. Upgrade FI to Buy (from Neutral) sees accelerating top-line growth driven by international expansion, rising customer base, and new products roll out in the near term and raise JHKY to Neutral as solid improvement in its top and bottom-line ahead set-against an expensive valuation relative to peers.
• In Insurance: JP Morgan shifted its view on life insurance stocks from Positive to Neutral, saying risk/rewards have become less compelling given an incrementally downbeat outlook for business fundamentals. It forecasts life insurers will report "weak" earnings and mixed business trends in Q1. JP Morgan upgraded RGA to Overweight from Neutral to reflect a positive outlook for business trends, more reasonable earnings expectations following the EQH deal, and the company’s defensive risk-profile. Separately, UBS downgraded RGA to Neutral from Buy, driven by its expectation for the recent overhang on shares to persist over the near term as management executes its newer, more aggressive growth strategy.
• In Banks: Raymond James downgraded a handful of regional banks, including SNV, TFC, TCBX, USCB to Market Perform from Outperform while upgraded HTH to Market Perform from Underperform and SSB to Outperform; and OBK, VBTX were both downgraded to Outperform from Strong Buy
• In Business Services: FCN was downgraded to Hold from Buy at Truist based on 1) ongoing risk to estimates from consultant attrition in Economic Consulting; 2) risk to less regulatory-driven demand under a Trump administration; and 3) dearth of M&A.

• BIIB said the FDA granted Fast Track designation to BIIB080, an investigational antisense oligonucleotide (ASO) therapy targeting tau, for the treatment of Alzheimer’s disease. Fast Track designation is intended to facilitate the development and expedite the review of investigational drugs that treat serious conditions.
• BMRN said that the Phase 3 PEGASUS trial evaluating Palynziq met its primary efficacy endpoint, demonstrating a statistically significant lowering in blood-Phe levels in adolescents aged 12-17 with phenylketonuria compared to diet alone.
• CYTK rebounds after weakness from competitor EWTX in heart disease study; CYTK is nearing FDA approval for its competing hypertrophic cardiomyopathy drug
• EWTX shares tumbled after drug data after two cases of serious side effects; also announced the pricing of underwritten offering of 9.9M shares of common stock at offering price of $20.13 per share.
• HIMS shares slip after rising on Tuesday; Bloomberg had reported the company is expanding its weight-loss offerings by adding access to generic liraglutide and branded tirzepatide, the compound used in Mounjaro and Zepbound, through its telehealth platform. However, Citigroup noted the company is offering the auto-injector pens for $1.9K/month, and not the lower priced Tirzepatide vials, which are priced as low as $349/$499 per month on LillyDirect and since HIMS does not take insurance, it doesn’t see much uptake given price.
• NVAX shares fell after the WSJ reported midday that Federal drug regulators have missed the deadline for making a key decision regarding a COVID-19 vaccine from Novavax, days after the Food and Drug Administration’s vaccine chief was pushed out.

• In Medtech: ANGO reported Q3 adj EPS loss (-$0.08) vs. est. loss (-$0.13); Q3 revs $72.0M vs. est. $70.3M; said is increasing fiscal full year guidance for all of our key metrics, including total worldwide revenue, MedTech revenue growth, gross margin, adjusted EBITDA, and adjusted EPS.

• In Hardware: BB guided Q1 revs $107M to $115M below consensus est. $128.4M and forecast drop in revenue for FY ending February 2026 to between $230M-$240M, below the $272.6M in prior year. At its Switch 2 Direct presentation earlier Wednesday, Nintendo (NTDOY) announced that "Mario Kart World," a new open-ended take on "Mario Kart," will be releasing on Switch 2 on the June 5 launch date and will be available as part of a $500 bundle. In addition, the Japanese gaming giant announced adventure title "Donkey Kong Bananza," out July 17 exclusively for Switch 2.
• In Software: NCNO shares tumbled after results and guidance as Q4 revs of $141.4M was in-line (up 14% y/y) on a 16% acceleration in subscription revs but guided Q1 revs of $138.75M-$140.75M, below consensus $145.2M, up 9% y/y at the midpoint; organic subscription revenue growth of 7%; subscription revenue of $121.75M $123.75M (est. $126.5M), up 11% y/y at the midpoint (prompting some Wall Street downgrades).
• In Data Center: CRWV shares rebounded after an uninspiring IPO debut last week when it priced at $40 before falling as low as $36 on March 31^st – shares got a further bounce late day after The Information reported Google is in advanced talks to rent state-of-the-art Nvidia Blackwell chips for running AI from CoreWeave, an upstart cloud provider, according to two people briefed about the situation https://tinyurl.com/43ntjs5v .
• In Semiconductors: for NVDA, Digitimes reported Chinese distributors of Nvidia’s H20 GPU are facing severe supply constraints as demand surges for AI computing power in the market; AVGO was upgraded to Outperform at Daiwa but cut tgt to $225 from $275. The sector still lagging broader markets.