Closing Recap

Tuesday, March 11, 2025

U.S. stocks were lower most of the day, pressured initially after Donald Trump’s said he was increasing the steel and aluminum tariff on Canadian goods to 50% (from 25%) starting tomorrow in retaliation for Canada placing a 25% tariff on “Electricity” coming into the United States, as the global trade tensions intensify. The move pushed the S&P down further (near a -10% drawdown from recent all-time highs in February, or correction territory) while Nasdaq also underperformed. Tariff impact concerns weren’t the only fears investors had today as the Dow Transport index fell for than 3% below 15,000 to its lowest levels since last summer (off all-time highs 16,901 in January of this year) led by weakness in airlines, as DAL, AAL, LUV offered lower outlooks citing slowing travel demand. The impact from the airlines carried to other sectors including lodging (MAR, HLT), travel (ABNB, BKNG), theme parks (DIS FUN), and cruise lines (CCL, RCL) which all saw sharp declines following airlines flagging slower travel demand. However, in a much-needed bounce, stocks caught a late day bounce to pare losses as: 1) the U.S. State Dept said that Ukraine expressed readiness to accept the U.S. proposal to enact an immediate, interim 30-day ceasefire…which helped spur a bounce off the lows. That was followed by headlines out of Canada as Premier Ford said they are suspending 25% surcharge on exports of electricity and said Commerce Secretary Lutnick agreed to meet with Ford on Thursday to discuss a renewed USMCA ahead of April 2 deadline.  Next up, tomorrow’s Consumer Price Index (CPI) inflation data!

Odds of the US pulling back into a recession have increased in recent weeks on the back of DOGE spending cut initiatives, as well as tariff uncertainty, and signs of a slowing economy (recent WMT comments, as well as airlines today). Global investors and strategists also getting more cautious on the U.S. as Citigroup downgraded U.S equities to neutral from overweight, which it had been since October 2023, while upgrading China to overweight from neutral. Lastly, concerns about the stopgap funding bill in Washington DC remain another headache for markets. Coming into the day, the S&P 500 index is now down -8.6% from its February record closing high, while the Dow is off -7.5% from its December 4 record close and the Nasdaq is trading down -12.9% from its December 16 record closing high. The S&P 500 and Nasdaq Composite are also on pace to record a 4-week losing streak.

Markets rolled lower at 10:00 after President Trump tweeted about tariffs saying, “Based on Ontario, Canada, placing a 25% Tariff on “Electricity” coming into the United States, I have instructed my Secretary of Commerce to add an ADDITIONAL 25% Tariff, to 50%, on all STEEL and ALUMINUM COMING INTO THE United States FROM Canada, ONE OF THE HIGHEST TARIFFING NATIONS ANYWHERE IN THE WORLD. This will go into effect TOMORROW MORNING, March 12th. Also, Canada must immediately drop their Anti-American Farmer Tariff of 250% to 390% on various U.S. dairy products, which has long been considered outrageous. I will shortly be declaring a National Emergency on Electricity within the threatened area. This will allow the U.S to quickly do what has to be done to alleviate this abusive threat from Canada. If other egregious, long time Tariffs are not likewise dropped by Canada, I will substantially increase, on April 2nd, the Tariffs on Cars coming into the U.S. which will, essentially, permanently shut down the automobile manufacturing business in Canada. Those cars can easily be made in the USA!

• January JOLTS job openings data showed a reading of 7.74M, above the expectation of 7.63M and vs last month’s read of 7.60M last month.

• The U.S. dollar rose to a one-week high against the Canadian dollar after President Donald Trump hit Canada with more tariffs, while the euro hit a new four-month peak against the U.S. dollar. The euro rose to as high as $1.0947, its highest since November and has gained more than 5% this month as Germany acts to ramp up defense spending. The U.S. dollar rose to as high as C$1.4521 against the Canadian dollar, its highest level since March 4 before retreating on tariff headlines, back down to C$1.438. Against the Japanese yen, the dollar strengthened 0.18% to 147.53 (but down -2% this month).
• Treasury yields fell overnight, jumped this morning on JOLTs data and extended gains this afternoon in wake of potential Ukraine ceasefire news as bonds fell; the 10-yr yield hit highs above 4.28%

• In Sporting Goods Retail: DKS Q4 adj EPS $3.62 vs. est. $3.54 on better sales $3.89B vs. est. $3.78B and margins 35% (est. 34.6%); said its business looks strong for 2025 but its profit outlook of $13.80-$14.40 was below consensus est. $14.82; said it will increase its gross margins in 2025 and grow its comparable store sales.
• In Food & Beverages: AVO shares slumped following results and commentary; UNFI reported Q2 adj EPS of $0.22 on sales $8.15B, topping the $0.19/$7.95B estimates on better Ebitda of $145M; boosted its FY25 EPS view to $0.70-$0.90 from $0.40-$0.80 prior and revs to $31.3B-$31.7B from $30.6B-$31B prior. Bloomberg reported Health and Human Services Secretary Robert F. Kennedy Jr. has called on top executives from KHC, GIS and other food companies to remove artificial dyes before the end of his term

• In Leisure: ski resort company MTN reported Q2 EPS $6.57 vs est. $6.31, op Inc $384.417Mm vs est. $373.1Mm on revs $1.137B, vs est. $1.13B; guides FY resort EBITDA $841-877Mm vs est. $871Mm. Truist noted following a string of in-season earnings misses, this was the second consecutive quarter where the company beat consensus expectations (though notes FY guide comes down due to FX headwinds). Lodging stocks MAR, H, HLT another sector tumbling after major U.S. airlines flag slowing travel demand.
• In Pet Services: FRPT was downgraded to Perform from Outperform at Oppenheimer and removing $140 tgt saying following disappointing guidance at CAGNY, more subdued commentary from management lately, and a slowdown to start the year, we believe investors should now await signs of top-line stabilization.

• In Metals & Mining: industrial metals such as aluminum and steel producers (X, NUE, AA, CENX, STLD) advanced early after President Donald Trump imposed an additional 25% tariff on all steel and aluminum coming into the U.S. from Canada. A total of 50% tariff to go into effect on Wednesday morning.
• In Industrials: ETN said it will buy Fibrebond Corporation in a $1.4 billion deal as it looks to expand its reach into the data center market.
• In Aerospace: RDW shares fell after the space infrastructure company reported revenue for Q4 that trailed Wall Street’s expectations; RKLB schedules two launches three days apart, upcoming mission to deploy final satellites in Kinéis constellation; BA delivered jets at a steady clip in February but shipped out fewer of its profitable 737 MAXs than in January; Boeing delivered 44 planes last month, including 32 737s. That was down from 40 737 deliveries the month before.

• In Financial Services: RDDT reiterated Buy and $210 tgt at Loop Capital saying understands that it is in a risk-off market environment, and that RDDT has been one of the top performing stocks over the past year, but it believes the 50% drop in the past month is excessive and says Reddit has the biggest upside potential relative to Street estimates under the firms coverage universe.
• In Crypto: CoinDesk reported HOOD crypto trading volume dropped 29% in February, outpacing declines in equities and options trading. Despite the monthly drop, the crypto volumes were 122% higher than in February 2023. The month-over-month drop to $14.4 billion outpaced declines in equities and options trading, which each fell 1%; Bitcoin popping to highs up over 4% this afternoon at $82,900; lifting crypto names MSTR, COIN, CORZ.
• Investment banking: HLI was double upgraded to Overweight from Underweight at Wells Fargo as defensibility, with upside to the M&A recovery, is attractive during periods of uncertainty in the highly cyclical M&A industry.

• BIIB announced the initiation of dosing in the global clinical study, TRANSCEND. The Phase 3 study will evaluate the efficacy and safety of the investigational drug felzartamab compared to placebo in adult kidney transplant recipients diagnosed with late antibody-mediated rejection (AMR). TRANSCEND is designed to enroll approximately 120 kidney transplant recipients with late AMR.
• GH shares outperformed after announced the Centers for Medicare & Medicaid Services CMS has approved Advanced Diagnostic Laboratory Test ADLT status for the Shield blood test for colorectal cancer CRC screening.
• ILMN lowered its annual 2025 EPS forecast to about $4.50 from prior $4.50-$4.65 and said it plans to cut $100 million in spending after China announced a ban on imports of its genetic sequencing instruments.
• PTCT upgraded from Underperform to Neutral at Bank America and raised to $55 from $41 given that the FDA has fast tracked potential approval for vatiquinone, the company’s drug to treat Friedrich ataxia; said is particularly positive given that a phase 3 study failed to demonstrate a stat sig benefit on a primary FA rating.
• TSVT announced a definitive merger agreement under which BMY will acquire all of the outstanding shares at a price of $5.00 per share in an all-cash transaction for a total equity value of approximately $286M.
• VKTX announced that it has signed a broad, multi-year manufacturing agreement with CordenPharma, an industry-leading contract development and manufacturing organization.

• AAL shares fell as cuts their outlook as forecasts Q1 adj loss/shr (-$0.60-$0.80) worse than prior view for loss of (-$0.20-$0.40) while forecasts Q1 available seat miles flat to -2%; notes revenue environment weaker than expected amid softness in domestic leisure.
• DAL shares fell after hours as cuts Q1 EPS view to $0.30-$0.50 from prior $0.70-$1.00 guidance and below consensus $0.085; guides Q1 total revenue up 3%-4%; said premium, international and loyalty revenue growth trends are consistent with expectations.
• JBLU forecasts Q1 capacity down (-4% to 5%), vs. prior forecast of down (-2% to -5%); guides Q1 ASMS growth down 5% – 4% y/y; said is experiencing demand choppiness due to mixed macroeconomic indicators, resulting in trough period rev performing below expectations in Q1.
• LUV cuts 1Q RASM to up 2%-4% from prior view up 5%-7%, primarily due to increased capacity and lower than expected salary, wages, and benefits, maintenance, and other expenses; sees 1Q fuel cost per gallon of $2.35-$2.45; sees 1Q ASMs down 2% and sees 1Q CASM-X up 6%; says accelerating $2.5B share buyback program; will charge to check bags for the first time, launch basic economy tickets.
• UAL CEO says near-term economic pressures will likely accelerate removal of unprofitable capacity; says the company has seen weakness in the demand market and now expects to be in the low range of their prior forecast range; CEO notes look like a tougher economic time ahead.

• In Telecom: VZ shares fell as the CEO said the company has seen an elevated level of competition in Q1 and growth will be "probably soft" in an industry conference call; expects middle-single-digit growth y/y with slow start in Q1; AMT files for offering of senior notes due 2030, senior notes due 2035.

• ASAN shares tumbled as Asana’s Co-founder and CEO, Dustin Moskovitz, will be stepping back to the board and will hand over the CEO role to a successor; retirement creates new risk, particularly given his 53% ownership of the business; reported better-than-expected FQ425 results but a weak FY26 outlook; guided FY26 non-GAAP EPS of $0.19-$0.20 (consensus ($0.01)) on revenue of $782M-$790M (consensus $804M).
• MYPS reported Q4 revenue that met expectations, but AEBITDA fell short in Q4, reflecting weaker-than-expected cost efficiencies; FY 2025 guidance was below consensus, particularly on profitability, raising concerns about near-term margin expansion and cash generation said Benchmark.
• Unity Software (U) was upgraded to Outperform from Market Perform with $30 PT at Citizens saying believes the upcoming launch of Vector represents a significant catalyst that can drive share gains of the $100B+ mobile gaming advertising market. With Unity now expecting to be fully live with Vector by the end of Q225, Citizens believe the company is nearing an inflection point in its high-margin advertising business.
• In the Optical sector: CIEN reported aQ1 EPS $0.64 above ests $0.41 and revs rose to $1.07B from $1.04B y/y and above ests $1.05B; guides Q2 revs $1.05B-$1.13B vs. est. $1.07B and says sees FY25 revenue growth toward high end of 8%-11% view.