Closing Recap

Tuesday, June 17, 2025

US equity futures faded overnight following more uncertainty around Trump’s position on US involvement in the Israel/Iran war and ongoing attacks by both sides. Futures pared gains into the morning economic data but faded slightly again on the softer Retail Sales report for May. Early trading saw breadth favoring decliners by 3:2 as small caps underperformed slightly with IWM versus SPY and QQQ. Energy, Technology and Real Estate were early outperformers among S&P sector ETFs, while Consumer Discretionary, Health Care and Communications led the underperformers with four sectors gaining versus seven declining. The Fear and Greed Index continued to register Greed at 61/100 versus last week’s 63 (Greed) and last month’s 70 (Greed). A year ago, the index was at 43/100 (Fear). Meanwhile, the sell-side upgrade/downgrade ratio continues to tilt negative at 39.3% week-to-date and 43.9% month-to-date as more uncertainty filters into the investment dialog. 

In data of interest today, @RBAdvisors noted the Fed’s job is getting more difficult (ahead of the FOMC meeting tomorrow afternoon) as the US trade deficit causes Core Import Price trends to lead Core CPI trends and Core Import Prices may be resuming a move higher. They also noted a potential margin squeeze on the horizon as a NY Fed survey shows prices paid rising, but prices received declining. Something to watch. On market movements, @bespokeinvest noted the market has recovered nearly all of its post-tariff decline while about ¾ of S&P500 stocks came into today trading above their 50dma.

Heading into the final hour of trading, US equities were off their lows but remained weak. Breadth favored decliners by almost 5:2 as small caps were mixed versus large caps, but all were soft with IWM (-1%) versus SPY (-0.8%) and QQQ (-0.9%). Sector performance had weakened with only Energy remaining to the upside. Energy (+0.9%), Financials (-0.55%) and Real Estate (-0.41%) were outperformers among S&P sector ETFs, while Materials (-0.96%), Health Care (-1.65%) and Consumer Discretionary (-1.72%) paced the underperformers.

• U.S. Import prices unchanged for May vs. consensus -0.2% vs April +0.1%; May export prices -0.9% vs. consensus -0.2% and vs April +0.1%; May non-petroleum import prices +0.2%, y/y +1.8%; May year-over-year import prices +0.2%, export prices +1.7%.
• Industrial production for May declined -0.2% vs. consensus +0.1% and compared to April +0.1% (previously unchanged) while May industrial output ex cars/parts -0.5% vs April +0.2%; the May capacity utilization rate declined to 77.4% (consensus 77.7%) vs April 77.7% (previous 77.7%).

• WTI July crude futures gained almost 2% overnight as attacks continued in both Israel and Iran. No progress has been evident in settling the conflict and speculation continues around whether the US will or will not directly enter the fighting or supply bunker-buster bombs to Israel. Crude futures continued to gain during the session, settling higher by $3.07/bbl, or +4.28%, at $74.84 while Brent rose $3.22/bbl, or +4.4%, to settle at $76.45 following headlines from President Trump on the Iran situation.
• Treasury yields fall ahead of a Fed meeting that is expected to keep rates unchanged. Much attention will be directed to the officials’ economic projections, the first since Trump’s big tariffs announcement in April. The 10-year yield falls 0.062 percentage point, its largest one-day decline in a couple of weeks, to 4.390%. The two-year drops 0.020 to 3.947%.

• In Retailers: WMT shares come into the trading day with a 9-day losing streak, longest streak in 14 years; AMZN annual Prime Day sales event is scheduled for July 8 through July 11, expanding to four days from two days compared to last year, the company announced. U.S. shoppers spent $14.2 billion, up 11% year-over-year, during Amazon’s July 2024 Prime Day event, according to Adobe Analytics. PTON shares weak after Bank America noted weakness was related to HSA (health savings account) provisions from the House Reconciliation Bill not being included in the current Senate Bill.

• In Autos: NIO was upgraded to Neutral from Sell at Goldman Sachs as believes management’s cost reduction efforts will help improve the company’s profit levels over the next three years by 4%-10% and XPEV was upgraded to Buy from Neutral saying a series of efforts, including organization and supply chain restructuring, technology cost-down, and platformization, have transformed the company’s product and cost structure competitiveness. RACE has delayed plans for its second fully electric model that was due out in 2026 to at least 2028, because of a lack of demand for high-performance luxury EVs, Reuters reported.

• Research on solar space: 1) Goldman Sachs said while they take no view on the final outcome of the bill, it views the Senate proposal as relatively positive for FSLR, NXT, and ARRY as these companies have exposure primarily to 45X manufacturing tax credits, which are relatively unchanged and thus more intact through the end of 2031; but the firm views RUN, ENPH, and SEDG as the most negatively impacted by the proposed bill as the revision specifically calls out leasing and rental models which will not be eligible for tax credits starting in 2026. 2) GLJ Research downgraded RUN to Sell with a $0.01 price target saying barring SunRun’s ability to inflate the value of its solar systems to collect tax credits, the "underlying equity is worthless.
• In the Utilities/nuclear sector: UBS raised estimates and price target for VST to $207 from $160 to reflect the strong fundamental backdrop it continues to see for power. Key among UBS’s changes is increasing the multiple it applies to the non-nuclear generation EBITDA to 9.75x from 8.0x. Shares of OKLO, SMR, LEU and other nuclear power companies rose after the Senate extended credits for nuclear energy to 2036.

• In Crypto: a weak session for the crypto space with Bitcoin falling over 4% this morning to pull under $105,000 and pressure the Bitcoin related players COIN, MSTR, HOOD and Bitcoin miners MARA, RIOT, CLSK, IREN, among others. RIOT price tgt was raised from $12 to $15 at Needham and maintains Buy saying they believe Riot’s Corsicana site is one of the most attractive HPC sites in its universe. JPM said they plan to test a deposit token on a blockchain connected with COIN. TDCowen out with comments, expects the Senate this evening to pass the GENIUS Act; "To US, the stable coin bill is positive for banks and negative for foreign stable coins.

• ALKS was upgraded to a Buy from Neutral at UBS and raise tgt to $42 from $33 saying recent physician survey drives their confidence that ALKS-2680 (Orexin) is well-positioned to potentially establish itself as an attractive treatment option in Narcolepsy/ Idiopathic Hypersomnia.
• DYN shares declined after receiving FDA clearance to seek accelerated approval for its drug to treat myotonic dystrophy type 1 as the company pushed back the timing of the submission to "late 2026" from its previous guidance of "first half 2026."
• LYEL announces positive new clinical data demonstrating high rates of durable complete responses from the phase 1/2 trial of LYL314 for the treatment of aggressive large B-cell Lymphoma.
• NVAX was initiated with a Sell rating and $6 price target at Citigroup saying the company’s overwhelming concentration in respiratory vaccines, an area that is seeing a decline in vaccination rates and has many entrenched players, along with healthcare policies that are in flux.
• SGRY shares fell after saying they were unable to agree to the terms of Bain Capital’s take-private offer. In January, Bain Capital Private Equity proposed to acquire the remaining shares of SGRY it does not already own for $25.75 apiece (Bain Capital has a 38.97% stake in co, according Reuters).

• In Medical Devices: COO was upgraded to Buy at Needham following management meetings saying they came away more positively on CVI’s growth outlook, CSI trends, and COO’s FY26 EPS potential and believes a dislocation between the company’s valuation and fundamentals has created an attractive entry point.

• In Aerospace & Defense: RDW priced an upsized stock offering of 15.525M shares at $16.75 per share; defense stocks (LMT, NOC, GD, RTX) saw renewed buying interest as the Iran/Israel/US headlines heated up this afternoon.
• In Chemicals: NTR was downgraded from Outperform to Market Perform at Raymond James based upon the company’s outsized share price gains in recent months (YTD: +40.4% vs TSX: +7.4%) and diminishing commensurate upside to RAJA’s target (unchanged). Broad based weakness in chemicals today given the broad mkt pullback late day on Middle East concerns (FMC, DOW, LYB, CE).

• In the EMS sector: JBL reported Q3 revenue of $7.8B vs estimates of $7.06B on better earnings of $2.55 vs estimates of $2.31; lifts 2025 revenue forecast to $29B from $27.9B and raises 2025 adj EPS to $9.33 from $8.95; said intelligent infrastructure segment remains a critical growth engine, benefiting from accelerating AI-driven demand (shares of CLS, FLEX, BHE, SANM moved in reaction early).
• In Software: APPS shares jumped on results following a strong quarter and guide on strength of its on-device group where it posted its first quarter of growth since Q2 of FY23; In Internet/Content: ANET appoints Todd Nightingale as President and COO; Nightingale joins from FSLY, where he served as CEO
• In Semiconductors: AMD outperformed for a second day in the semi sector, helped yesterday following reports of an AWS partnership announcement (as per CNBC David Faber); NVTS was downgraded to hold from buy at Deutsche Bank noting the share rally that followed news that the company will collaborate with Nvidia on data-center power infrastructure.