Closing Recap

Wednesday, March 12, 2025

U.S. stocks finished higher as the S&P 500 and Nasdaq recovered from prior day losses, while the Dow Jones Industrial Average lagged as “cooler” CPI data for February was not enough to spike beaten up markets as recession fears and market uncertainty from the impact of tariffs remain front and center for investors. S&P futures (Spuz) declined as much as -125 points from the premarket CPI spike high to 5,675, falling to lows of 5,550 (but above yesterday lows 5,534) snapping a streak of 6 straight days making lower lows on Spuz, while markets recovered late morning. Despite the better CPI reading coming in below views, it also raised concerns that the economy may be slowing, while it also didn’t consider any impact of tariffs. President Trump’s 25% tariffs on steel and aluminum imports came into force starting today, while the EU responded swiftly, saying it would impose counter tariffs on up to 26B euros ($28B) worth of U.S. goods. Canada also to announce C$29.8B in retaliatory tariffs on US in response to Trump’s steel and aluminum tariffs. Concerns about slowing spending by the consumer (as evident by recent WMT, TGT, recent airline commentary from DAL, AAL) have pushed discretionary names lower with big pullbacks from lodging names (HLT, MAR), casinos (WYNN, CZR, MGM), recently. Today the biggest drag was Consumer Staples (XLP) and Healthcare (XLV), while Technology (XLK) and Energy (XLE) were the biggest sector winners. The House passed its version of the stop-gap spending bill last night that would fund the government through September. Though, a tricky vote in the Senate now looms, where it will take some Democrats crossing the aisle for the bill to pass and avoid a government shutdown.

The Dow Jones Industrial Average underperforms, falling to lows down to 41,010 (though pared losses of lows) from high of 43,135 exactly a week ago on 3/5 behind big drops in AAPL, DIS, AXP, GS, and JPM. Dow Transports falling for a 3rd straight day, and down over 1,000 points during that stretch with airlines the biggest drag the last 5-days behind weaker outlooks/travel demand commentary. Goldman Sachs has cut its 2025 year-end S&P 500 $SPX target to 6,200 from 6,500, citing weaker earnings expectations, higher tariffs, and tighter financial conditions. The bank now expects S&P 500 EPS at $262 (from $268), factoring in slower growth. Goldman lowered its valuation multiple to 20.6x earnings (from 21.5x), signaling sustained headwinds to equity valuations.

Interesting statistical data: 1) Fundstrat’s Tom Lee said “a 10% SPX correction in 20 days is the 5th fastest in the past 75 years. 6 prior similar speed/magnitude declines saw SPX gains 3m, 6m, 12m later”. 2) Seth CL tweets: “Small Cap Russell 200 came into this trading week on a 6-week losing streak. Since 2002, all occurrences found $RUT higher in week 7. Additionally, higher EVERY. SINGLE. TIME 1-month and 12 months later 100%.” 3) heading into today, the SPX has now fallen over 10% from its peak on February 19, the biggest drawdown since 2022. This is the 30th correction >5% off of a high since the March 2009 low. 4) The volatility in the Nasdaq 100 has been remarkable, now going 15 straight sessions with an intraday 1% decline at one point during the day after today’s sharp pullback on the open.

• U.S. February budget deficit at $307B vs deficit $296.3B last year as receipts rose 9.3% y/y to $296.4B in Feb and outlays rose 6.4% y/y to $603.4B in February, at record highs for that month.

• The U.S. dollar index (DXY) edged higher to finish around 103.50 as the euro dipped from 5-month highs.
• U.S. crude oil futures settle at $67.68/bbl, up $1.43, or 2.16%.
• Brent Crude futures settle at $70.95/bbl, up $1.39, or 2.00%.
• Treasury yields edged higher with the 10-yr up 3bps to 4.31%; U.S. sells $39B 9-year 11-month notes at high yield 4.310%, awards 95.26% of bids at high as bid-to-cover ratio 2.59, as Primary dealers take 13.08% of U.S. 9-year 11-month notes sale, direct 19.51% and indirect 67.41%
• CBOE Volatility index (VIX) fell over -10% today

• In Staples, Food & Beverages: PEP was downgraded to Hold from Buy at Jefferies saying the stock offers limited upside after rallying 7% from the January lows, and says Frito Lay continues to struggle, which will weigh on PepsiCo’s multiple. Food stocks in general were weaker with KLG, HSY, GIS, CAG, THS, CPB all sharply lower. CL shares rolled late day following comments at UBS conference as executive said as noticed hesitancy in the consumer given all the news flow and there will be an impact both from initial tariffs with Mexico and Canada as well as any sort of retaliatory tariffs.

• In Casino & Gaming: BYD was upgraded from Neutral to Positive at Susquehanna after its lowered estimates suggest BYD’s trading at an attractive discount to weather both lowered regional estimates in Q1 and modestly lower in Q2 it is using a now lower multiple on its LV Locals assumptions for BYD. MGM falling to lowest levels since fall of 2022, CZR at lowest levels since 2020 as select casino/regional names underperform, In Lodging, HLT shares fell for the 8^th straight day.

• In Industrials: ETN upgraded to Overweight with a $340 price target at Keybanc following its 2025 investor day saying while acknowledging recent Data Center CAPEX concerns, it believes the recent pull-back in shares provides an entry point into one of its highest-quality names, evidenced by beatable/attractive LT targets.
• In Aerospace & Defense: RKLB announced an agreement to acquire a controlling ownership position in Mynaric, a manufacturer of laser (optical) communication equipment for satellites in orbit, in tandem with announcing a $500M at-the-market (ATM) equity offering program.
• In Industrials Metals (NUE, STLD, X, AA, CENX): President Trump’s 25% tariffs on steel and aluminum imports came into force starting today, restoring effective global tariffs of 25% on all imports of the metals, while the EU responded swiftly, saying it would impose counter tariffs on up to 26B euros ($28B) worth of U.S. goods. Canada also to announce C$29.8B in retaliatory tariffs on US in response to Trump’s steel and aluminum tariffs.

• In Asset Managers: AB announced that preliminary assets under management decreased -0.5% to $805B during February 2025 from $809B at the end of January; APAM preliminary assets under management as of February 28, 2025, totaled $167.7B; IVZ preliminary month-end assets under management (AUM) of $1,888.6B, a decrease of 0.7% versus previous month-end.
• In Consumer Finance: COF was upgraded to Outperform from In Line at Evercore/ISI as it believes the stock’s valuation does not fully discount L/T upside to earnings and returns driven by the combined Capital One/Discover franchise.
• In Financial Services: SPGI was initiated Outperform and $59 PT and MCO Neutral and $504 PT at Mizuho as the firm said it believes SPGI’s, and MCO’s credit rating agencies are among the highest-quality businesses with stable L-T growth rates, strong moats, and enduring pricing power.

• IONS and Ono Pharma announced an exclusive license agreement to develop and commercialize sapablursen worldwide. Ionis will remain responsible for completion of the ongoing Phase 2 IMPRSSION study, while ONO will assume responsibility for subsequent development, making an upfront payment of $280M and up to $660M in additional payments for the agreement.
• MYGN upgraded from Neutral to Overweight at Piper and raised tgt to $12.50 noting shares are now down more than 50% in the last six months and still has a leading position and high margins in markets that are consolidating around a profitability paradigm.
• ZLDPF said it would jointly develop and commercialize its Petrelintide obesity drug candidate with RHHBY as a standalone therapy and in combination with Roche’s CT-388 drug candidate. Under the deal, Zealand will get $1.65B in upfront cash payments and milestone payments that could reach totals of $5.3B.
• ZVRA reported Q4 results and provided a business update, highlighting continued growth in the MIPLYFFA launch; revenues were meaningfully ahead of consensus, driven by MIPLYFFA U.S. sales.
• ZYXI Q4 EPS ($0.02) vs est. $0.09 on revs $46Mm vs est. $53.65Mm; guides Q1 revs at least $30Mm vs est. $53.46Mm and EPS ($0.30) or better vs est. $0.06.

• In Semis: Philadelphia semiconductor index (SOX) jumps after falling to over seven-month low in previous session; INTC rises following Reuters report that TSM has approached U.S. chipmakers NVDA, AMD and AVGO about investing in a joint venture to operate Intel’s factories. Under the proposal, TSM would manage Intel’s foundry division, but would hold a stake of no more than 50%. Big moves for likes of MU, SMCI as well as equipment names AMAT, KLAC, LRCX
• In Quantum Computers: QBTS shares jumped after saying a research paper published in the journal Science showed that its quantum computer outperformed one of the world’s most powerful classical supercomputers in solving real-world problems (headlines boosted other quantum names IONQ, QMCO, RGTI).

• CWAN agreed to buy Beacon Platform, a provider of cross-asset class modeling and risk analytics, and Bistro, Blackstone’s proprietary portfolio visualization software platform built for its credit and insurance business, for a combined $685 million in cash and stock.
• HUBS upgraded to Overweight from Equal Weight with an unchanged price target of $815 at Barclay’s citing the company’s near-term benefit from a price increase, new core customer ramp, and easier comps.
• RBRK upgraded from Neutral to Buy at Rosenblatt with $77 tgt ahead of Q4/FY25 results (ending January 31) on March 13th, as expected in-line to marginally better results in Q4 from Rubrik.
• UPLD reported a top and bottom line beat for Q4, while lowered Q1 revenue view to $59M-$65M vs. est. $67M and sees FY25 revenue $231.5M-$255.5M below consensus $265.39M.