Closing Recap

Tuesday, March 25, 2025

U.S. stocks took bounced late day to close mostly higher, adding to strong gains on Monday as the S&P 500 index (SPX) rose for a 3^rd straight day, holding above its 200dma support of 5,750 while the Nasdaq gained behind strength in AAPL, AMZN, GOOGL and TSLA. Stocks have posted a nice bounce over the last week after the S&P 500 dropped more than -10% from February highs and the Nasdaq about -15% from its late 2024 highs, as fear has eased recently on hopes of more lenient reciprocal tariffs coming April 2^nd. In addition to the White House commentary yesterday on the tariffs, the Fed also showed last week that slowing US growth was their top concern which is also providing a little boost to sentiment. The CBOE Volatility Index (VIX) is down -20% this week, from 3/10 peak of 29.56, now at 17.41. NYSE mkt breadth has decliners outpacing advancers by roughly 1.2:1 margin with Utilities (XLU) -1.6% and Healthcare (XLV) -1.28% the biggest drags followed by Consumer Staples (XLP) and REITs (XLRE) – all defensive sectors. The Conference Board’s Consumer Confidence Index fell to 92.9 in March on the back of a sharp decline in household expectations and an ongoing fall in households’ perception of their present situation. At 65.2, household expectations plunged below their previous cycle low seen in the summer of 2022 when inflation hit a four-decade high and stock prices collapsed over 20%.

We are approaching the end of Q1, with major averages down YTD thus far, but even more impressive has been the outperformance by European markets over US markets. Bespoke invest tweeted: “Q1 is tracking for record outperformance of Europe vs. the US. Best quarters ever (since 1991) for the Euro Stoxx 50 vs. the S&P 500: Q1 2025: +18.5 ppts, Q4 2022: +17.7 ppts, Q4 2003: +13.3 ppts, Q3 1993: +11.8 ppts, Q4 1999: +11.7 ppts.” In a positive outlook heading into Q2, Almanac Trader tweets: “April is the second-best month for DJIA (+1.8%) and S&P 500 (+1.5%) since 1950 and fourth best for Nasdaq (+1.3%) since 1971. Post-election year April performance is just as good. NASDAQ’s 3 April post-election year declines were in 1973, 1993 and 2005.”

• March Richmond Fed factory index -4; vs. est. +1 and Richmond Fed regional business conditions -14.0; prices paid up to +3.75% vs. +2.23% prior; shipments down to -7 vs. +12 prior; employment down to -1 vs. +9.
• U.S. Jan wholesale inventories unrevised at +0.8%; U.S. Jan wholesale sales revised to -1.5% (prev -1.3%) and U.S. Jan wholesale stock-to-sales ratio unrevised at 1.33.
• January 20-metro area home prices +4.7% (consensus +4.8%) from year ago vs +4.5% in December (previous +4.5%) — S&P CoreLogic case-Shiller; January home prices in 20 metro areas +0.5% seasonally adj (consensus +0.4%) vs +0.5% in December (previous +0.5%). US January 20-metro area home prices non-adjusted +0.1% vs -0.1% in December (previous -0.1%).
• U.S. single-family home sales reached an annualized rate of 676K units, slightly below the consensus estimate 679K and compared to January’s rate of 664K units; Feb home sales Northeast -21.4%, Midwest +20.6%, South +6.6%, West -13.6%; Feb new home supply 8.9 months’ worth at current pace vs Jan 9.0 months; median sale price for U.S. homes was $414,500, representing a 1.5% y/y when the median price was $420,900.

• The Dollar Index (DXY) takes a breather after a four-day rally, slipping from an almost three-week high after rising earlier in the session as currencies continued to waver on the back of uncertainty about tariffs. U.S. President Donald Trump said not all of his threatened levies would be imposed on April 2 and some countries might get breaks, which helped the mood on Wall Street slightly.
• Treasury yields dipped on Tuesday after surging over 8bps on Monday and higher initially on Tuesday before reversing after weaker than expected data. This afternoon, the US Treasury sold $69B in 2-year notes at a yield of 3.984% vs. 3.987% when issued prior, with the bid-to-cover (demand) at 2.66 (vs. 2.56 prior auction) as primary dealers take 10.65% of U.S. 2-year notes sale, direct 13.58% and indirect 75.77%. The 10-yr yield rose as high as 4.37% this morning after yesterday’s spike but ended lower on day around 4.3%.

• In Retail: Piper said FRPT revenue growth has slowed in recent weeks, driven by notably slower growth with lower- and middle-income consumers, which Piper expects to persist in the near-term. It also has some top-line headwinds in Q125 from pet specialty distributor disruptions and one less shipping day.
• In Homebuilders: the sector was pressured after KBH reported a top and bottom line Q1 miss ($1.49/$1.39B revs vs. est. $1.57/$1.5B) and guided 2025 revenue in the range of $6.6B-$7B, down from its prior forecast of $7B-$7.5B but was close to in-line with Street ests $6.88B due to fewer new orders in the quarter.

• In the Uniform industry: CTAS terminated discussions to acquire UNF in a deal that valued the uniform supplier at $5.3 billion, sending UniFirst shares down. UniFirst had in early January rebuffed a takeover proposal from Cintas for $275 per share in cash and said it was confident of its strategy as a standalone company.

• In Consumer Finance: ALLY was downgraded to Sell at BTIG, projecting that the company won’t meet its net interest margin (NIM) and return on equity (ROE) targets in the near term due to macroeconomic headwinds and increased competition. COF was upgraded from Neutral to Buy at BTIG with $208 tgt saying if the merger fails with DFS, it thinks COF shares are worth $208. If the merger does go through, BTIG thinks COF shares are worth $427. BTIG’s positive view of Capital One regardless of the merger outcome.

• ILMN shares edge higher after activist investor Keith Meister will join the board of the gene-sequencing maker, and current board member Scott Gottlieb will become chairman, the Wall Street Journal reported.
• MRK signed a deal with Jiangsu Hengrui Pharmaceuticals worth up to $2 billion, giving the U.S. drugmaker access to an experimental heart disease drug.
• MRK shares declined as much as 5% after MURA said it won’t continue developing its ovarian cancer drug candidate Nemvaleukin to be used in conjunction with Merck’s Keytruda.
• MURA said it is stopping late-stage trials testing its experimental drug, nemvaleukin, with Merck’s Keytruda, to treat ovarian cancer; says trial unlikely to meet main goal as interim analysis shows no significant improvement in overall survival in patients given the combination (10.1 months) vs just chemotherapy (9.8 months).
• SAVA said it will discontinue the development of its drug for Alzheimer’s disease.
• SRRK said regulators in the U.S. and Europe accepted its marketing application for apitegromab as a treatment for spinal muscular atrophy. The FDA decision is expected on or before Sept. 22.
• In Hospital operators: Deutsche Bank recommended buying the sector (HCA, THC, UHS) noting Healthcare facility stocks have been under enormous pressure both in the lead-up and post the election on concerns around substantial Medicaid cuts to fund the $4.6 trillion Trump tax cuts. HCA is down 20% from its peak, with UHS & THC down 25% from theirs

• In Chemicals: Citigroup trimmed calendar Q125 and FY25 estimates by <1% and ~1% across the North American Industrial gases group (APD, LIN) on weaker volumes from industrial uncertainty partially offset by less negative FX and better pricing. An industrial recession over the last 18-24 months has not reached a material inflection, and CITI believes the risk to industrial production still lingers. MOS, NTR and CF shares slipped after headlines U.S. to help restore Russia’s access to the world market for agricultural and fertilizer exports.
• In Metals & Mining: Copper producers (FCX, SCCO) remain strong as copper prices hit new all-time highs on tariffs; gold miners (AEM, NEM, GOLD) remain strong as gold prices hold above $3,000 an ounce, holding near record highs as haven play.
• In Paper & Packaging: IP shares jumped after the packaging company outlined its targeted earnings and sales growth for the coming years during a presentation to investors; said it is aiming for roughly 3% to 4% long-term market growth in North America, as well as in Europe, the Middle East and Africa.
• In Transports: shares of UPS fell to lowest levels since June 2020, adding to recent weakness; Stock has been in freefall on slowing consumer spending fears last few weeks on weak airline outlooks (AAL, DAL) and then last week FDX missing and cutting guidance.

• In Telecom & Media: CCI disclosed that Steven Moskowitz, President and CEO, has been terminated; Dan Schlanger, EVP and CFO, will serve as interim CEO, effective immediately. Schlanger will continue to serve as the Company’s CFO until April 1, at which time Sunit Patel will assume the role of EVP and CFO.
• In Internet: GOOGL said its Waymo to launch robotaxi service in Washington D.C. in 2026. For META, EU set to hit Meta with fine that could stretch to $1B or more for alleged violation of antitrust rules – NY Post reported. Separately, META to introduce $14 monthly fee for ad-free Instagram and Facebook in the UK.
• In Security Software: CRWD was upgraded to Buy from Neutral at BTIG saying the company has demonstrated its dominance in the core endpoint security target market. The firm notes its fieldwork leads them to believe that CRWD is best positioned of any vendor to win the Security Information and Event Management market.
• In IT Services & Consulting: NET was double upgraded to Buy (from Underperform) at Bank America and raise PT to $160 from $60 citing differentiated AI offering, security momentum.