Closing Recap

Tuesday, May 06, 2025

U.S. stock markets finished lower for a second consecutive trading day after snapping the longest winning streak in over 20-years yesterday for the S&P 500 (9-days) ahead of the FOMC meeting results tomorrow, cautious market commentary, mixed economic data and more trade/tariff headlines. Stocks pared afternoon losses after U.S. Treasury Secretary Scott Bessent said the Trump administration could announce trade agreements with some of the United States’ largest trade partners as early as this week but gave no details on which countries were involved. Overall markets opened lower and just held there into tomorrow’s Fed meeting. Nasdaq pared its loss to 0.6% but also held above its 50-day line. All three major indexes remain below their longer-term 200-day moving average. Oil prices rose above $59 per barrel, Bitcoin climbed above the $95,000 level and gold above 43,400 an ounce.

In stock news, market breadth was soft with eight S&P sectors down on the day vs. only three higher, but the biggest drag was Healthcare (XLV) and Biotech (XBI) which tumbled on the day over 2.7% and 6% respectively after Vinay Prasad was announced as the next director of the Center for Biologics Evaluation and Research at the FDA, overseeing the regulation of vaccines, gene therapies, and the blood supply. Prasad, previously an epidemiology professor at the University of California at San Francisco, has sharply criticized the medical mainstream, including the FDA, in the past. Thew appointee sunk shares of large cap pharma, oncology, vaccine, obesity drug makers. Outside of the weakness in healthcare, attention remained on earnings with 19% of the S&P 500 reporting this week. Shares of MRK and AMGN were among the biggest decliners in the Dow Jones Industrial Average.

In trade/tariff news: During his Oval Office meeting with Canadian Prime Minister Mark Carney, President Trump was asked by a reporter if there was anything his counterpart could say to avoid tariffs. “No,” Trump responded, adding: “that’s the way it is.” Carney emphasized the trade relationship between the U.S. and Canada, while Trump maintained that he could eventually make Canada the nation’s 51st state and that tariffs would remain in place to encourage manufacturing in the U.S. Carney, who has repeatedly shot down the idea of Canada becoming the 51st state, responded: “There are some places that are never for sale.” The Financial Times reported that the UK closes in on US trade pact with lower tariff quotas for cars and steel. Earlier this morning however, Bloomberg had reported that the European Union could target roughly 100 billion euros ($113.17 billion) worth of U.S. goods with additional tariffs if officials fail to reach a deal with their U.S. counterparts that de-escalates the regions’ trade dispute. That measure would come on top of a levy on 21 billion euros of U.S. goods the commission has already drafted.

In a bit of a downbeat interview, legendary hedge-fund manager Paul Tudor Jones said this morning in a CNBC interview that stocks are bound to hit new lows even if President Donald Trump tones down his aggressive tariffs on China. “For me, it’s pretty clear. You have Trump who’s locked in on tariffs. You have the Fed who’s locked in on not cutting rates. That’s not good for the stock market,” Jones said. “We’ll probably go down to new lows, even when Trump dials back China to 50%.” Tudor Jones also raised alarms on AI, saying, “AI clearly poses an imminent threat to humanity in our lifetime”…says “there is a 10% chance AI will lead to a weapon that takes out half of humanity.” In another downbeat statistic, JP Morgan Asset Management (as per morning tweet) noted S&P 500 companies have issued the most downward revisions to earnings guidance since Q1’14. In addition, over 60% of CEOs are expecting a recession in the next 6 months.

• Global debt rose by around $7.5 trillion in the first three months of the year to hit a record high of over $324 trillion, data from a banking trade group showed on Tuesday. The Institute of International Finance said China, France, and Germany were the largest contributors to the global debt increase, while debt levels declined in Canada, the UAE, and Turkey. Total debt in emerging markets rose by over $3.5 trillion in the first quarter to a record high of more than $106 trillion. China alone accounted for over $2 trillion of the rise, says the IIF.

• Regarding the US dollar, Reuters reports over 55% of respondents, 46 of 83, surveyed April 30–May 6 voiced concern about the dollar’s safe haven status — a sharp rise from about a third in the April survey — though most conceded no clear alternative exists yet. Reuters poll-46 of 83 FX strategists noted they were concerned about U.S. dollar’s safe haven status (vs 19 of 51 in April poll) Reuters poll-euro to trade at $1.13 in three months, climb to $1.14 in six and $1.16 in a year (vs $1.07, $1.08 and $1.10 in April.
• In Treasuries, the U.S. sells $42B of 10-year notes at high yield 4.342%, vs. 4.354% when issued before auction; the 10-year notes bid-to-cover ratio 2.60, as primary dealers take 8.93% of U.S. 10-year notes sale, direct 19.88% and indirect 71.19%. Treasury yields pulled back to session lows following the solid auction as the 10-yr was down at 4.30% (lows of day) vs. 4.35% prior to auction. Bitcoin price edged higher, rising +0.5% back around $95,000 but off last week’s highs around $98,000 ahead of the Federal Reserve’s interest rate decision.
• U.S. WTI crude oil futures settle at $59.09/bbl, up $1.96, or 3.43% while Brent crude futures settle at $62.15/bbl, up $1.92, or 3.19% while natural gas price ell -2.45% to settle at $3.463 mln Btus. The EIA lowered its 2025 dry natural gas production forecast to 104.9 billion cubic feet a day from 105.3 Bcf/d while maintaining expectations of higher LNG and pipeline exports. The agency cut its 2025 oil production forecast to 13.4 million barrels a day from 13.5 million b/d.

• In Consumer Products/Staples: CLX reported Q3 adj EPS that missed analysts’ estimates ($1.45 vs. est. $1.56) as revenue fell 8% to $1.67B missing the $1.72B estimate and lowered its FY25 sales outlook to down -1% to flat, compared with a prior outlook of down 1% to up 2% to reflect recent changes in the macroeconomic and geopolitical environment and the impact of tariffs on earnings. Tobacco stocks PM, MO, BTI all hit 52-week highs today, while consumer staples names GIS, KLG, FLO, THS, CHD hit 52-week lows.
• In Retail: KTB Q1 EPS $1.20 tops ests $1.16, on revs $623M vs. est. $626M; and raises FY EPS to $5.40-$5.50 vs prior guidance $5.20-$5.30 and boosts revs to $3.06-$3.09B from prior $2.63-$2.69B; TDUP posted better Q1 results and guided Q2 above ests and raises FY25 revenue view to $281M-$291M from $270M-$280M (est. $274.23M); MAT reported an overall better than expected quarter with both top line and margins coming in ahead of expectations, but paused its annual guidance on tariff uncertainty; in mattress retail (SGI, LEG, SNBR), Piper said analysis suggests mattress industry units are between -10% to -20% off 2019, setting up for a strong multi-year recovery once mattress demand returns; in furnishing, ETD reported FQ3 (ended March) revenue and EPS below expectations due to softer than anticipated written order trends.
• In Restaurants: SG was downgraded to Neutral from OW at JP Morgan saying it sees underlying demand trends continue to soften with further impact moving into higher income demographics and restaurant supply growth has been exceeding demand, driving consumer choice in a digital world where convenience is commoditized & price transparency is high; DENN Q1 EPS from continuing operations was ($0.04) vs a consensus of ($0.07) as revs $71.3M exceeded guidance of $67.5M-$69.5M and adj EBITDA from continuing operations was $3.8M vs a consensus of $2.2M; PTLO reported in-line Q1 EPS and sales miss while cuts low end of FY25 revenue growth view to 10%-12% from 11%-12%; SBUX files for three-part senior notes offering; size not disclosed. FWRG shares tumbled as quarterly comp sales missed, along with light margins and cutting FY EBITDA guide.

• In Autos: Ford (F) Q1 adj EPS $0.14, vs. est. $0.02; Q1 revs $40.66B vs est. $36.20B; suspended its financial guidance and called out $1.5B in potential tariff impacts. It also expects vehicle prices to stay flat this year (In February, Ford management said they expected a 2025 operating profit of between $7B-$8.5B). TSLA sales volume in Germany nearly halved in April, German road traffic agency KBA said as Tesla sold 885 cars in Germany in April, down 45.9% y/y; meanwhile, British new car registrations fell more than 10% y/y in April, including a 62% plunge for Tesla. The Society of Motor Manufacturers and Traders said 120,331 vehicles were registered in the traditionally quieter month of April. RACE reported a Q1 revenue beat.

• In Solar & Utilities: SEDG shares jumped in solar space after posting a smaller-than-expected Q1 EPS loss and better revs and guided Q2 revs $265M-$285M, above consensus $243.65M and sees Q2 Non-GAAP gross margin 8%-12%; SHLS posted mixed Q1 results (EPS mis/revs beat) while guides FY25 revenue $410M-$450M, vs. consensus $426.33M and lastly ARRY shares jumped after Q1 adj EPS beat consensus ($0.13 vs. $0.09) on better revs of $302.4M; in nuclear power names, CEG reported Q1 EPS of $2.14 that missed the $2.18 estimate and said Calpine acquisition on track to be completed by year-end; backs FY25 adjusted EPS view $8.90-$9.60 (est. $9.45). AEP, WEC also moves in utilities on earnings results. Utilities (XLU) were one of the few bright spots in the S&P 500 today led by nuclear names (NRG, OKLO, TLN, NNE) after Axios reports this afternoon that the White House seeks to hasten nuclear deployment.

• In Insurance: LMND raised its 2025 gross earned premium and revenue estimates while reiterating its forecast for positive adjusted free cash flow in 2025 despite a hit from California wildfires; it said it plans to incorporate any inflationary impacts in its pricing to maintain alignment between rate and risk. PRAA lower-than-forecast U.S. collections (by 4%) drove a material earnings shortfall ($0.09 versus our Street-high $0.54 estimate).
• In Brokers & Exchanges: MKTX trading volume and preliminary variable transaction fees per million for April showed total average daily volume of $57.4B; total credit ADV of $18.4B; total rates ADV of $39.1B; U.S. credit block trading ADV of $3.8B; emerging markets ADV of $4.3B.
• In Employment Services: UPWK shares rallied after quarterly beat & raised; reported beat and raise 1Q results with revenue and EBITDA coming in $1.7M (1%) and $6.0M (12%), respectively, above the high end of guidance as the company raised 2026 EBITDA guidance by $10M.

• President Trump yesterday signed an executive order aimed at making it easier and faster for drug companies to manufacture their products in the U.S. The order includes a mandate for the FDA to reduce the amount of time it takes to approve domestic pharmaceutical manufacturing plants, though specific goals were not mentioned in the order. The FDA was also instructed to increase fees for foreign manufacturing plants.
• ACTU said its experimental drug, elraglusib, in combination with chemotherapy met the main goal of statically significant improvement in overall survival in a mid-stage trial, compared to chemotherapy alone.
• CORT shares fell on results; reported Q1 diluted EPS of $0.17 on revenue of $157.2M, compared to Street estimates of $0.14 and $177.9M, respectively; management reiterated its 2025 Korlym sales guidance range of $900M-$950M, implying growth of ~37% at the midpoint.
• IDYA said the FDA has approved the initiation of an early-stage trial for its antibody drug conjugate program, IDE849, in solid tumors; said that IDE849 is in an ongoing early-stage trial for advanced solid tumors by Jiangsu Hengrui Pharmaceuticals.
• NBIX shares rose on results; reported Q1 diluted Q1 EPS of $0.70 on revenue of $572.6M, compared to Street estimates of $0.54 and $559.6M, respectively; reiterated 2025 Ingrezza guidance of $2.5B-$2.6B, implying growth of ~10% at the midpoint; Q1 Ingrezza sales grew by ~8% y/y.
• VRTX shares fell on results; posted Q1 adj EPS of $4.06, below estimates of $4.32 and revs of $2.77B also missed analysts’ estimates of $2.85B (downgraded to market perform from outperform at Leerink post results).

• CSTL reported 1Q25 revenues of $88.0M, well ahead of consensus ($80.3M) and us ($83.1M); raised 2025 revenue guidance to $287-$297M from $280M-$295M and announced the acquisition of Previse.
• HIMS reiterated their full-year sales outlook despite delivering a nice Q1 beat and the new Wegovy partnership. HIMS did deliver a solid Q1 beat, with revenue growing 111% y/y to $586.0M vs. the Street’s $538.6M and adj. EBITDA at $91.1M vs. the Street’s $61.3M.
• INSP reported Q1 results with revenue of $201.3M coming in ahead of the Street’s $195.2M forecast, while EPS of $0.10 was well-above consensus (-$0.25). Management left its FY2025 revenue guidance unchanged and modestly increased its EPS outlook.
• IQV reported Q1 revenues $3.83B, beating consensus by +1.5% while R&D bookings was $2.1B, with 1.02x 1Q book-to-bill (and 1.14x TTM); raised its rev guidance to $16B to $16.4B (vs. $15.725B to $16.125B prior) to reflect favorable FX, while reaffirmed adj EBITDA and EPS guides.
• WAT posted Q1 revenue of $662M topping the consensus of $654M on healthy EPS beat; raised 2025 reported revenue growth guidance to +4.0% to +6.0% (+5.0% to +7.0% constant currency) and EPS guidance to $12.75-$13.05, from previous guidance of +2.5% to +5.0% (+4.5% to +7.0% constant currency) and $12.70-$13.00.
• ZTS posted Q1 revs $2.22B vs. est. $2.19B on better Companion Animal $1.55B (vs. est. $1.53B), with Gross Margins and EPS ahead; maintains Guidance for Organic Operational Revenue Growth of 6% to 8%, organic operational growth in net income tweaked lower to 5% to 7% (was 6% to 8%), Rev guidance raised for FX.

• In the E&C Sector: PRIM reported a very strong quarter on revenue and margins as revenue grew +16.7% y/y and adj. EBITDA came in at $99M vs. Keybanc $80M estimate, while reiterated guidance of adjusted EPS of $4.20-$4.40 and adjusted EBITDA of $440M-$460M. Jacobs (J) reported mixed Q2 results as EPS beat but revs fell short of consensus while backing both its FY adj EPS and revenue outlooks.
• In Aerospace & Defense: PLTR reported a solid quarter and raised 2025 guidance ahead of consensus, as Government results were better than expectations, but concerns about the runway for growth and product differentiation weighed on the shares; commercial came in slightly below consensus (raised full-year guidance for total revenue growth to 36% and guidance for U.S. commercial revenue growth to 68%).
• In Chemicals: CE shares strong after reported 1Q beat and healthy 2Q guidance (1Q EPS of $0.57, compared to consensus of $0.38) as Keybanc said guide supports their confidence that the hard reset to expectations in 2H24 is behind, similar to thesis outlined in their late March upgrade to Overweight.

• In Software: CCCS lowers its FY25 revenue view to $1.05B-$1.06B from $1.06B-$1.07B (est. $1.06B) while raises its FY25 adjusted EBITDA view to $420M-$428M from $417M-$427M; DDOG Q1 beat expectations while Q2 is better, and they tweaked FY’25 higher; operating income once again a touch light; FQ1 Revenue of 25% y/y vs. Street at 21.2% and FQ2 Revenue guided to 22%-22.4% vs. Street at 19.3%; NOW said its gen AI product, Now Assist, will hit $1B in annual contracted business by 2026; DOCN 1Q beat on revs/ARR/EBITDA with AI ARR growing >160% y/y (and total ARR of $843mn or +14% y/y) and guides 2Q below on Revs to $216.5M.
• In Semiconductors: LSCC reported in-line 1Q results and 2Q guidance while mgmt indicated it will take a few more quarters to get channel inventory (industrial-related) to normalize vs. prior expects of mid-2025 as Industrial demand is improving albeit at a slower-than-expected rate than previously expected; next up in earnings for semis, AMD results after the close; ICHR shares fell after reported in-line Q2 revs of $244M, but EPS of $0.12 missed the $0.26 estimate along with lower guidance and sees Q2 revs $225M-$245M vs. the consensus $245.5M as gross margin expansion fell short of expectations.