Mid-Morning Look

Monday, April 14, 2025

U.S. stocks off to a solid start to kick off the abbreviated trading week (markets closed Friday in observance of Good Friday), extending last weeks gains following some tariff related news late Friday. US stock sentiment got a boost, particularly in technology after late on Friday, a Customs and Border Protection rule exempted many consumer electronics categories from the incremental Chinese import reciprocal tariffs, at least temporarily. The list of about 20 categories included in this latest exemption includes smartphones, laptops, computers, monitors, memory chips and others. The news lifted several names in tech including AAPL, appliance and electronics retailer BBY, glass makers like GLW, hardware names like DELL and chip makers along with many others. The exclusions narrow the scope of the levies by excluding the products from Trump’s 125% China tariff and his baseline 10% global tariff on nearly all other countries. The exemptions cover almost $390 billion in US imports based on official US 2024 trade statistics, including more than $101 billion from China (as per Bloomberg data). The tariff reprieve does not extend to a separate Trump levy on China, a 20% duty applied to pressure Beijing to crack down on fentanyl, including the shipment of precursor materials. Note, Commerce Secretary Lutnick told ABC News on Sunday morning that the reprieve is temporary, with electronics exceptions only on the “reciprocal” tariffs. Trump will impose sector tariffs on electronics and semiconductors in about a month, Lutnick said.

Markets are also gearing up for quarterly earnings, which kicked off last Friday with bank results (JPM, WFC), while GS shares rally this morning after its results. We kind of ease into results this week given the shortened trading week, but then the flood gates open starting next Monday. Bonds rally as yields fall, with the 10-yr yield slipping nearly 10-bps to 4.397% (off highs 4.49% overnight) after the 10-yr surged last week more than 50bps. Gold prices drop from recent al-time highs while oil rebounds and the dollar weakens further. Citigroup downgraded its stance on U.S. equities and slashed its S&P 500 index target for this year as it expects tariff uncertainty to hurt corporate America’s earnings. Citi joined a string of brokerages, including Goldman Sachs and BofA, in slashing their benchmark index target below the 6,000 level. Citi’s current year-end target stands at 5,800, below its previous estimate of 6,500, while it also cut the index’s earnings-per-share (EPS) projection to $255 from $270.

• In Lodging/Online Travel: Goldman Sachs double upgraded CHH to Buy from Sell; downgrade Hyatt (H) to Sell and downgrade both MAR, HLT to Neutral from Buy in lodging amidst macro uncertainty. The brokerage reduced its outlook for the US Lodging C-Corps and Timeshares to reflect weaker consumer demand, geopolitical uncertainty, and negative read-across from US airlines. Goldman updated their 2025 RevPAR forecasts and lower US RevPAR estimates by ~125bps for 2025 and assume RevPAR trends deteriorate from 1Q through the remainder of 2025.
• In Metals & Mining: Gold miners (AEM, AU, GFI, GOLD, NEM) giving back some recent gains as gold prices pullback off record highs; GFI said it is preparing to cease operations at its Damang mine after an application to extend its lease was rejected by the Ghanian government. Gold Fields said it had engaged extensively with authorities since receiving the rejection notice to confirm that its lease extension application met all the statutory requirements for such an extension.
• In Autos: GM was downgraded from Buy to Hold at Deutsche Bank and cut tgt to $43 from $58 in auto previews saying Ford and GM, DBAB believes both will deliver solid Q1 results compared to expectations but will withdraw full-year guidance as they implement tariff mitigation strategies. As such, DBAB reluctantly downgrades GM to Hold from Buy given structural uncertainty around US industrial/tariff policy. STLA was downgraded to Neutral from Buy at UBS saying in a world of U.S. auto tariffs, Stellantis’ challenged North America business will face further pressure.

• BABA +6%; along with BIDU, PDD and other US listed China stocks off to strong start.
• CERT +6%; guides Q1 revenue $106M, above consensus $104.42M while board authorizes $100M share repurchase program; reaffirms FY25 revenue guidance $415M-$425M; said continues strategic evaluation of regulatory services business.
• ESI +5%; upgraded to Buy at Truist as believe recent market volatility has created an opportune entry point for what we view as a relatively high-quality name with strong and sustainable organic growth potential.
• GS +2%; board approved up to $40B share buyback program while EPS of $14.12 topped consensus of $12.30 and net revenue $15.06B, +6% y/y, above $14.76B; Q1 FICC sales & trading revs miss at $4.40B, below consensus est. $4.47B while equity trading revs $4.19B topped est. $3.8B.
• INTC +3%; amid strength in semiconductor chips and as entered into a definitive agreement to sell 51% of its Altera business to Silver Lake, a global leader in technology investing in transaction valuing Altera at $8.75B.
• MP +13%; along with gains in TMC after a report Donald Trump plans to stockpile deep-sea critical metals to counter China; US drafting order to collect ‘nodules’ from Pacific seabed for minerals used in battery supply chains. https://tinyurl.com/2dup7f7z
• VERV +17%; announces positive initial data from the Heart-2 Phase 1b Trial of VERVE-102, an in Vivo base editing medicine targeting PCSK9.
• VKTX +9%; after PFE said it is scrapping the development of its daily weight-loss pill, danuglipron, after a patient experienced a potential drug-induced liver injury (GPCR, NVO, ALT other obesity names rise).

• DVA -4%; said it has been hit with a ransomware attack that has affected some of the kidney-care company’s operations; notes the incident has encrypted some elements of its network.
• NEM -1%; gold miners slip after massive run, and as gold prices pull back off all-time highs.
• PFE ; said it is scrapping development of its daily weight-loss pill, danuglipron, after a patient experienced a potential drug-induced liver injury
• UNH -1%; weakness in defensive managed care stocks early (HUM, CNC) as tech rallies.