Closing Recap

Monday, March 03, 2025

Another day of broad market weakness as stocks stumble to start the new month! US stock markets failed to rally after February weakness/late Friday’s bounce, sliding on the open and never recovered following another round of disappointing economic data (ISM/revised GDP), technical and momentum selling pressure. The market declines accelerated midday in another “sell the rip” moment following a rough February. Inflation/tariff impact/slowing growth fears have spooked investors in recent weeks, sending the S&P 500 index down as much as -5% from its recent all-time highs on Friday. Today’s early rally was stopped in its tracks after another economic data point pointed to slowing growth in the U.S., putting downward pressure on markets. The February ISM Manufacturing report showed weakening orders and rising prices paid (inflationary), denting early market optimism. The pullback accelerated following another revision to the Atlanta GDP Now model forecast, as the Atlanta Fed GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in Q1 fell to (-2.8%) on March 3, a further decline from the down (-1.5%) this past Friday (after having been revised lower on Friday from +2.3% prior). The latest update comes after today’s ISM Manufacturing data as the nowcast of Q1 real personal consumption expenditures growth and real private fixed investment growth fell from 1.3% and 3.5%, respectively, to 0.0% and 0.1%.

No fears in Europe, where several index touching all-time highs despite uncertainty with Ukraine/Russia/US as Europe’s Stoxx 600 up 1.12%, closes at record high, Britain’s FTSE 100 up 0.73%, closes at record high, Germany’s DAX up 2.61%, closes at record high in biggest daily jump since Nov 2022, and France’s CAC 40 up 1.23%, and Spain’s IBEX up 0.31%. Related to Ukraine/US, President Trump today replied on Truth Social, slamming Zelenskyy for his recent statement for saying end to Ukraine war ‘very, very far away’. “This is the worst statement that could have been made by Zelenskyy, and America will not put up with it for much longer,” Trump said. Related to tariffs, Commerce Secretary Lutnick said Mexico/Canada have done a reasonable job on the border but notes there will be tariffs on Mexico/Canada on Tuesday as President trump later confirmed the tariffs and reciprocal tariffs starting April 2^nd. Trump last week threatened China with an extra 10% duty, set to take effect on Tuesday, resulting in a cumulative 20% tariff. Stocks fell all afternoon, taking out the Friday lows heading into a handful of key earnings and key jobs data this week, as the VIX hit 12/20 highs 23.40.

• January Construction Spending fell -0.2% M/M vs. consensus unchanged and vs Dec +0.5% (prev +0.5%); January private construction spending -0.2%, public spending +0.1%
• S&P Global February final manufacturing PMI at 52.7 (vs flash 51.6).
• China February manufacturing hits 3-month high, but US tariff war clouds outlook. China Feb Caixin Manufacturing PMI (final) reported at 50.8 vs 50.3 consensus, the official manufacturing PMI at 50.2 vs 49.9 consensus and China Feb Official Non-Manufacturing PMI 50.4 vs 50.2 previous.

• April gold rose $55.60, or +1.95%, to settle $2901.10 an ounce after prices snapped an 8-week winning session last Friday and following a more than three-week low in the previous session. Precious metals prices drew support from a weaker dollar and safe haven buying triggered by concern over U.S. President Donald Trump’s tariff policies. The dollar index (DXY) fell around 1% from a more than two-week high in the previous session as weaker economic data revisions (GDP) offset another rise in inflation data. Traders await the U.S. payrolls report due later this week for more clues on the Fed’s monetary policy.
• Bitcoin prices jumped more than 11% overnight to highs of $94,800 on Sunday after U.S. President Donald Trump said that his recent executive order on digital assets directed his team to create "a Crypto Strategic Reserve" that will hold Bitcoin, Ethereum, and other Cryptocurrencies such as XRP, Dogecoin, Solana and Cardano. The mover prompted some flow into the crypto industry, with Bitcoin, Ethereum, XRP and others along with Bitcoin miners to surge on the open, before reversing and paring gains to around $86K along with broader equity markets.
• Yields extended slight declines, with the benchmark 10-year U.S. Treasury note hitting 4.157%, its lowest since December 9, after the Institute for Supply Management (ISM) said its manufacturing PMI slipped to 50.3 last month from 50.9 in January, which marked the first expansion since October 2022. The euro jumped vs. the US dollar as investors weighed potential increases in fiscal spending across the euro area. The euro climbed 0.85% to $1.0474, pulling away from Friday’s low of $1.0359.

• In Food & Beverages: KR announced the departure of Chief Executive (CEO) Rodney McMullen after a board investigation of his personal conduct. The company did not disclose what the conduct was but said it was "inconsistent with Kroger’s Policy on Business Ethics”.  NOMD reported stronger-than-expected Q4 volume growth while EPS in the period were helped by FX tailwinds, and mgmt slightly boosted its FY25 EPS view. Deutsche Bank upgraded DEO to Hold from Sell as believes Diageo is fundamentally one of the best positioned companies in European staples and upgraded BUD to Buy from Hold as believes the company is steadily building a track record of strong delivery, despite prior exogenous challenges. CMG was upgraded to Overweight at Morgan Stanley and the price target was boosted to $70 saying unit growth is a clearly strong suit for CMG, which should continue and support valuation, while says CMG will likely be a leader in deploying automation at substantial scale, in a way that restrains costs, drives margins and throughput.

• In Autos: TSLA named top pick in U.S. autos at Morgan Stanley noting shares are down nearly 30% YTD on a clear buyers’ strike and sees >50% upside to its $430 price target with a Bull case $800; Chinese Electric vehicle stocks were weaker (LI, NIO, XPEV) despite the three Chinese electric-vehicle makers delivered almost 70,000 vehicles in February, up 112% y/y; NIO’s deliveries jumped 62% y/y, Xpeng’s deliveries soared 570% to 30,453, boosted by sales of its relatively new P7+ and MONA MO3 models, and Li Auto’s deliveries rose 30%. February Ford (F) total vehicle sales fell -8.9%.
• In Leisure Products/RV space: THO was upgraded from Neutral to Buy at Bank America and raised tgt to $125 from $110 saying they see evidence of THO recapturing market share, especially at CWH which hit recent lows in 2024. According to SSI data, BAML estimate as a % of CWH retail, THO share declined 740bps in 2024, compared to a 760bps increase for Forest River.
• In Cruise sector: Stifel added NCLH to the Stifel Select List (removing OSW) as it believes the recent sell-off (-16% in one week) has created an incredible buying opportunity as demand/tax fears are massively overblown, and it still sees a beat/raise narrative throughout 2025. Stifel said it remains clear demand/spending patterns remain strong across the industry all the way into 2026 (RCL, CCL, VIK).

• In MLPs/Pipelines: KMI was upgraded to Overweight from Equal Weight at Barclay’s with an unchanged price target of $31 saying the company stands at the nexus of multiple structural tailwinds, benefiting its core infrastructure assets across natural gas and liquids products.
• In Aerospace & Defense: FTAI was downgraded from Buy to Hold at Stifel saying shares have had a wild ride as the stock rebounds from the "short attack" a few weeks ag that caused investors to focus on the sustainability of the aerospace margins; VOD and ASTS signed an agreement to create a jointly owned European satellite service business to serve mobile network operators in all European markets.
• In Fertilizers/Chemicals: MOS was upgraded to Overweight at JP Morgan while NTR remains Neutral saying shares are fairly valued. JP Morgan said it thinks that there is an opportunity in Mosaic shares as there is room for the company to increase sales volumes, which were held back by hurricanes in the second half of 2024.

• In Insurance: ALL was upgraded to Buy from Hold at Argus noting the insurer recently reported Q4 adjusted net income of $2.06B or $7.67 per share, compared to $1.54M or $5.82 per share a year earlier. BOW was upgraded to Outperform from MP at KBW on strong growth prospects as raises its 2025E/2026E EPS to $1.70/ 2.10 from $1.65/$2.00, assuming faster GWP growth and lower core loss and expense ratios.

• AXSM announces FDA Pre-NDA meeting minutes for AXS-05 in Alzheimer’s disease agitation supporting NDA submission; supplemental New Drug Application (sNDA) submission anticipated in Q3 2025.
• BGNE was upgraded to Buy from Neutral at Bank America and raised its tgt to $320 from $207 and said given its sharp sales growth in the US, raises the revenue forecast for Brukinsa, and overall lift BeiGene’s revenue forecast.
• CRL was upgraded from Sell to Neutral at Redburn saying demand in Charles River Laboratories Discovery and Safety (DSA) segment appears to have stabilized after a sustained period of weakness.
• LXRX shares plunge after topline results from the PROGRESS Phase 2B study evaluating pilavapadin (LX9211), an oral, non-opioid investigational adaptor-associated kinase 1 (AAK1) inhibitor in adult patients with moderate to severe diabetic peripheral neuropathic pain (DPNP).
• MRNA: The Trump administration is reconsidering a $600 million BARDA contract with Moderna to develop an mRNA-based H5N1 bird flu vaccine, raising concerns that doing so could hinder pandemic preparedness
• PTGX announced Phase 3 VERIFY meets primary endpoint: Phase 3 VERIFY study of Rusfertide in patients with Polycythemia Vera met its primary endpoint and all four key secondary endpoints. No new safety findings were observed in the study.

• In Medical Research/CRO: FTRE shares fell after guiding 2025 revs $2.45B-$2.55B, below consensus of $2.73B after Q4 revs missed consensus ($697M vs. est. $703.2M).

• ALGM shares rose after Bloomberg reported the company is drawing takeover interest from ON, citing people familiar with the matter https://tinyurl.com/2u9t6zhh
• MCHP announces additional restructuring actions; to shut down Tempe fab 2 in May 2025 and is reducing headcount at multiple facilities; estimates restructuring costs of $30M to $40M; expects $90M to $100M in annualized cost savings and expects $45M charges from cancellation of supply agreements
• SMCI said Friday it will be building its third campus in California’s Silicon Valley. Plans call for the campus, with construction expected to start this year, to be nearly 3 million square feet. The expansion, Super Micro said, would accelerate production of liquid-cooled services for data center, and create new jobs.
• President Trump has announced TSM is investing $100 billion in new chip plant, with total investment at least $165 billion, and a plan to build give additional chip factories in the US.
• Keybanc noted inSpectrum released its memory contract pricing for the month of February. 8Gb DDR4 DRAM pricing was flat m/m and -13.04% q/q, and 8GB DDR5 DRAM pricing was flat m/m and -11.8% q/q, while 512Gb NAND pricing was -4.0% m/m and -29.4% q/q. The firm said it views the February pricing results as neutral for DRAM and moderately negative for NAND (MU).