Closing Recap

Friday, March 14, 2025

A late surge had stocks close near the highs. Finally, Friday and US equity futures gained overnight and held on into the open with no significant economic news to sway investors and the prospect of a US government shutdown seemingly diminishing. Now we wait for another barrage of tariff headlines or maybe just celebrate a quiet day while the markets absorb some of the recent volatility and investors ponder recession odds vs Fed rate cut odds…. unless the University of Michigan 1-year and 5-year inflation outlook results were to come in hot, which they did, and futures immediately faded. The good news was, while the sentiment number was the lowest since 2022 and long-run inflation expectations hit a 32-year high, the sentiment spread actually widened as consumer expectations retrenched and reset. Fittingly, today’s Fear and Greed Index remained in the Extreme Fear category, at 20/100, versus 18 (Extreme Fear) last week and 44 (Fear) last month. A year ago, the index was at 70 (Greed). About an hour into the session, breadth held up well at about 7:2 favoring advancers and small caps were roughly in-line versus large caps with IWM (+1.19%) versus SPY (+1.02%) and QQQ (+1.27%). Energy (+1.82%), Technology (+1.70%) and Financials (+1.31%) were early outperformers among S&P sector ETFs, while Consumer Discretionary (+0.84%), Health Care (+0.34%) and Consumer Staples (-0.11%) led the underperformers with 10 sectors gaining versus just Staples declining.

In data today, @KevRGordon noted in the history of the UMich survey, consumers have never been this bearish when it comes to expectations for business conditions in the coming year. Perhaps that’s a good thing. The market likes low expectations. On a similar note, @allstarcharts points out NVDA is up about 7% on the week (intraday basis today) so while this week may have felt like the bull is over and everything is going to crash, not everything is necessarily pointing that way. @charliebilello also noted the weak start to the year with the S&P 500 down 6.1% through the first 48 days, ranking among the worst starts since 1928, but he also noted we regularly see big market comebacks and this does not necessarily indicate we will finish the year in the red. He also recently noted S&P 500 intra-year drawdowns of 10% happen on average every 1.6 years, while 15% drawdowns occur on average every 2.5 years: definitely adds perspective.

Heading into the final hour, breadth was holding in favor of advancers by just over 4:1 as both small caps and large caps remained strong with IWM (+2.31%) versus SPY (+2.00%) and QQQ (+2.37%). Sector-wise, all eleven were gaining with Energy (+2.95%), Technology (+2.79%) and Financials (+2.27%) outperforming among S&P sector ETFs, while Materials (+1.11%), Health Care (+0.58%) and Consumer Staples (+0.21%) lagged but still enjoyed gains. Both growth and value categories held in the green with growth the outperformer. The Russell 1000 Growth enjoyed a nice bounce of 2.45%, while its Value counterpart climbed 1.7% to finish a rocky week.

• On inflation expectations, big jumps as the University of Michigan surveys of consumers 1-year inflation outlook prelim March 4.9% vs final Feb 4.3% (highest since 5% in Nov ’22) and the University of Michigan surveys of consumers 5-year inflation outlook prelim March 3.9% (highest since Feb 1993 says CNBC) vs final Feb 3.5%.

• WTI April crude futures finished a volatile week with a gain, settling +$0.63/bbl, or +0.95%, to $67.18. Traders continue to carry significant uncertainty on the demand side as a result of the recent tariff headlines and potential impacts on growth. On the supply side, efforts to find an agreeable Ukraine ceasefire proposal have investors contemplating the probabilities of easing sanctions on Russia and rising exports there. Perhaps on the general lack of new tariff headlines, the demand side won the day. Brent similarly gained 1%, or +$0.70/bbl, to settle at $70.58

Sector News Breakdown

Consumer

Retail, Consumer Staples & Restaurants:

• In Food: PPC is returning about $1.5B to its shareholders through a special dividend; it said its board declared a special dividend of $6.30, payable April 17 to shareholders of record April 3. the bulk of the special dividend will go to Brazilian meatpacker JBS, which owns more than 80% of Pilgrim’s Pride. PEP is near a $1.5 billion-plus deal for soda brand Poppi, Bloomberg reported this morning.
• In Restaurants: CMG was upgraded to Buy from Neutral at Loop Capital and raised tgt to $65 from $58 saying there is the potential for at least 7.0%-8.0% upside to the current consensus EPS estimate of $1.30 for 2025 if comparable sales continue to beat expectations over the course of the current year.
• In Specialty Retail: mattress retailer PRPL announced mixed 4Q results, with sales slightly below estimates but EBITDA above as the Company continues to drive operational efficiency and EBITDA improvement; also announced a review of strategic alternatives following inbound interest.
• In Beauty: ULTA Q4 results expectations on robust sales during holiday season, as Q4 comp sales rose +1.5% y/y, driven by double-digit growth in Fragrance, was a solid acceleration, though posted roughly -11% y/y EPS decline, while Q1 expectations were for flattish comps.

Leisure, Gaming & Lodging:

• In Autos: BMWYY said it expects trade tariffs to cost the carmaker 1B euros ($1.09B) this year, its CEO said on Friday, factoring in EU duties on its China-made EV and newly imposed U.S. tariffs which are upending global trade; expects its earnings margin for cars to be 5-7% in 2025, below estimate of 7.3%; ORLY board approves a 15-for-1 stock split; TSLA plans to make a lower-cost version of its Model Y in Shanghai in an effort to regain ground lost in its second-largest market, Reuters reported. LI shares declined in China EV’s after earnings.
• In Fitness Retail: XPOF shares tumbled after the company widened its Q4 loss (-$0.19 vs. est. $0.39) and issued a 2025 outlook that missed Wall Street’s expectations as sees yearly revs $315M-$325M vs. est. $339.5M; PTON was upgraded to Buy from Hold at Canaccord with an unchanged price target of $10 saying Peloton is the clear leader in the connected fitness industry, which it invested in early on and built a 6M loyal member base that has a high margin recurring revenue stream.
• In Cruise lines (CCL, NCLH, RCL, VIK): Truist said following conversations over the past month with senior executives in the travel industry and from examining “big data” on future cruise bookings and pricing, beginning in mid-February Truist observed a noticeable deceleration in the industry wide y/y booking pace vs comparable paces in December and January – but noted did not observe any noticeable deceleration in the y/y pricing growth on new bookings.

Energy

• In Metals & Mining: gold and silver miners outperformed as gold prices hit $3,000 an ounce for the first time ever; RDUS announced it had entered into a definitive merger agreement with Toyota Tsusho America, Inc., a U.S. subsidiary of Toyota Tsusho Corporation, under which TAI will acquire all shares of RDUS in an all-cash transaction for $30.00/share, representing a ~120% premium to today’s closing price.
• In Solar sector (ARRY, FSLR, NXT): Mizuho said they estimate a 25% tariff on steel increases total solar tracker costs by up to 4%, however based on checks with solar OEM companies the impact in 2025 is rather muted due to delayed impact of new tariffs (doesn’t impact Q1/Q2 deliveries), potential price increases in backlog not contracted yet (most of 2H25 and beyond), and change of law clauses in any firm contract beyond the next two quarters. Beyond 2025 Mizuho expects solar OEM to pass the higher cost to end customers, which likely results in a manageable <2% increase in total solar system cost or PPA.

Financials

• In Banks: The hopes and dreams that rushed into bank stocks post-election have been quickly swept out and dashes of slowing growth and decelerating consumer spending fear are now starting to creep in as the BKX is (6%) vs. last Friday and (17%) from mid-February, led by big bank weakness (JPM, WFC, C, GS).  KEY announced it was buying back up to $1B in share buyback plan.

Healthcare

Biotech & Pharma:

• ALLO upgraded to Outperform from Market Perform at Citizens noting recent data published in JCO respectively demonstrating 100% and 82% CR rates in low disease burden patients, defined as <1000mm^2, and normal LDH levels increase conviction surrounding ALPHA3’s probability of clinical and statistical success.
• ALT said it plans to test its experimental obesity drug, pemvidutide, to potentially treat alcohol use disorder and alcohol-associated liver disease; expects to begin a mid-stage study for alcohol use disorder in Q2, and for alcohol-associated liver disease in Q3.
• BMY said it won the European Commission expanded approval of its CAR-T cell therapy Breyanzi in the blood cancer lymphoma.
• ETON said its experimental drug, ET-600, passed a bioequivalence study against an FDA-approved reference product with the same active ingredient for treatment of a rare condition called central diabetes insipidus
• STRO announced a near-50% reduction in headcount, discontinuation of the luvelta program across multiple indications, and the refocusing of development efforts on three currently preclinical candidates.

Technology

Internet, Media & Telecom

• US listed China tech/retail stocks (BABA, BIDU, JD, NTES, PDD) advanced after China’s benchmark stock index rallied the most in two months. The Nikkei Index jumped 263 points to 37,053, the Shanghai Index surged 60 points to 3,419, and the Hang Seng Index advanced 497 points to 23,959. The Shanghai Composite Index rises 1.39% this week to 3419.56 (up 7 of last 9 weeks); Nikkei 225 Index rises 0.45% on week snapping 3-week losing streak. Beijing said that it would hold a press conference on increasing consumption on Monday (hopes for more stimulus coming giving investors optimism).
• In Telecom & Cable: CHTR resume coverage with a Buy, $425 PT at Citigroup saying Charter should benefit from accelerating FCF growth from the current trough in 2025, improving financial flexibility to resume share repurchases, and retaining positive strategic optionality if the category further consolidates. TMUS downgraded to Neutral, PT $268 unchanged at Citigroup as T-Mobile continues to generate favorable growth relative to the category and its competitors but cites valuation for its downgrade.
• In Towers: CCI was upgraded to Overweight with $120 tgt at Keybanc after the company sold its small cells business to EQT Active Core infrastructure fund and fiber solutions business to Zayo Group Holdings for $8.5 bln in aggregate; also reported Q4 earnings, said to cut annual dividend to $4.25/shr in Q2, proposed $3.0B share repurchase program.

Hardware & Software movers:

• DOCU reported another strong +5pt billings beat along with re-accelerating subscription revenue and total revenue, and more positive indicators like ramping NRR, accelerating +$300k customers and improving contract utilization.
• EVCM posted a solid end to the year relative to expectations according to RBC Capital as revenue and adjusted EBITDA beat expectations and the high-end of guidance; CY/25 guidance excludes MarTech contributions, which the company plans to sell in 2025; with this, the normalized guide points to ~5% y/y revenue growth.
• RBRK reported a top and bottom-line Q4 beat and meaningful FY26 guide above as Q4 ARR beat by $33M, similar to the prior three quarters, and accelerated 1 pt to 37% growth and Q4 operating margin of -11% beat by 17 pts while FY26 ARR guided $42M above (guided Q1 revs $259M-$261M vs. est. $246.1M).
• In the Optical sector: AAOI shares jumped after the company inked a deal with AMZN, under which the retail giant can purchase nearly 8 million shares of Applied Optoelectronics’ common stock; said its deal with Amazon allows the company to acquire up to 7.9 million shares of its common stock for $23.70 apiece.