Mid-Morning Look

Thursday, April 17, 2025

U.S. stock markets are mixed early, failing to rebound after sharp losses on Wednesday following weakness in chip stocks (AMD, NVDA) amid an export ban on chips to China, and Fed Chairman Powell failing to ease market concerns at all, talking about uncertainty of tariffs and that the Fed was basically in no rush to make any policy changes. Futures were higher overnight following some fairly positive comments on trade as President Trump tweeted, “had a very productive call with the President of Mexico yesterday. Likewise, I met with the highest-level Japanese Trade Representatives. It was a very productive meeting. Every Nation, including China, wants to meet! Today, Italy!” Markets got a bounce overnight on the Japan headlines, but a weaker earnings report and sharply lowered guidance from Dow component/managed care giant UNH crushed the sector (and the Dow).

The S&P 500 and Nasdaq are on track for weekly declines with a focus still on tariffs, but earnings are starting to come into play, with the deluge starting next week. Still, this morning we saw several bank earnings, AXP in cards, DHI in homebuilders, UNH in healthcare, and NFLX in media tonight after the close. Also in healthcare, LLY surges on new data on obesity drug. Treasury yields steady with 10-yr at 4.3%, gold taking a slight breather, dollar index (DXY) remains weak), oil prices rise and stocks choppy in the early going. The European Central Bank (ECB) cuts deposit facility rate by 25bps to 2.25% as expected, their 7th consecutive cut to help the economy (as decision to cut rates was unanimous).

President Donald Trump stated in a Truth Social post this morning attacked Powell: “The ECB is expected to cut interest rates for the 7th time, and yet, “Too Late” Jerome Powell of the Fed, who is always TOO LATE AND WRONG, yesterday issued a report which was another, and typical, complete “mess!” Oil prices are down, groceries (even eggs!) are down, and the USA is getting RICH ON TARIFFS. Too Late should have lowered Interest Rates, like the ECB, long ago, but he should certainly lower them now. Powell’s termination cannot come fast enough!

No tariffs deal yet between Japan and Trump, but they will do another round of talks later this month, Japan’s chief negotiator said. A Japanese govt source said Trump mentioned a potential increase in Japan’s defense budget. Bessent said earlier that exchange rates could be on the agenda, but neither side took up the topic.

Lots of volatility to start the year as Charlie Bilello tweets: “The S&P 500 fell 2.2% today, the 18th daily decline in 2025 w/ a loss of more than 1%. The average year since 1928 has 29 large declines and we’re on pace to exceed that by a wide margin. Downside volatility is the price of admission. No risk, no reward”

• Housing Starts for March weakened, falling -11.4% to 1.324M unit rate (below est. 1.42M) vs Feb +9.8% as single-family starts -14.2% to 940,000-unit rate; multifamily -3.5% to 384,000-unit rate. March housing permits rose +1.6% vs Feb -1.0% to 1.482M unit rate (consensus 1.446M) vs Feb 1.459M unit rate.
• Philadelphia Fed Business Outlook for April with negative -26.4 reading vs. est. +2.2 and prior +12.5; Fed prices paid index April 51.0 vs March 48.3; new orders index April -34.2 vs March 8.7; employment index April 0.2 vs March 19.7; six-month capital expenditures outlook April 2.0 vs March 13.4.

• In Solar: Citigroup out with a sector note as they downgraded ENPH to Sell and RUN to Neutral to reflect the firms negative view on residential solar given IRA uncertainty, slower growth due to persistently high rates, lower pace of utility price increases, and tariff impact on storage. CSIQ was upgraded to Neutral saying IRA risks and a large portion of tariff impact appear to be already in utility scale stocks. Any policy clarity should drive utility scale solar higher given attractive economics and more demand visibility from datacenter/AI. Citi also upgraded GNRC to Buy as it thinks the company is well positioned to defend margins with upside from above average hurricane season and downgraded BLDP to Sell given challenges to the H2 economy but prefer the name over PLUG; top pick in renewables is FSLR and least preferred names are PLUG, SEDG, and ENPH.
• Bank earnings: FHN Q1 operating EPS of $0.42 was 2c better than the Street as weaker revenue was more than offset by better expense trends. NII and fees were impacted by both volume and rate, but lower outside services and comp costs made up for the revenue shortfall. HBAN Q1 EPS $0.34 vs. est. $0.31; board approves $1B share repurchase authorization; provision for credit losses was $115M, higher than $107M from a year earlier; Q1 NII jumped to $1.43B, compared with $1.29B y/y; now expects a record full-year NII to rise between 5% and 7% (above prior view 4%-6%). FNB Q1 EPS $0.32 vs est. $0.30 on NII $323.845Mm vs est. $322.41Mm, credit loss provision $17.489Mm. KEY Q1 EPS $0.33 vs. est. $0.32; Q1 revs $1.77B vs. est. $1.75B; Q1 net interest income grew 4% and the net interest margin increased by 17 basis points to 2.58%. RF mixed Q1 as EPS beat consensus, but revs missed estimates; net interest income (NII) grew marginally from a year earlier to $1.19 billion; wealth management income jumped 8.4% from a year earlier to $129M. SCHW Q1 adj EPS $1.04 tops est. $1.01 as revs climb 18% y/y to $5.6B vs. est. $5.53B; Net inflows to its managed-investing division grew 15%; logged higher revs from trading and net interest, along with higher fees on bank-deposit accounts.

• FIS +6%; after GPN announced definitive agreements to divest its Issuer Solutions business to FIS for $13.5B and acquire Worldpay from GTCR and FIS for a net purchase price of $22.7B,
• HTZ +28%; adds to yesterday’s gains after CNBC’s Scott Wapner reported on air that Bill Ackman’s Pershing Square holds about a 19.8% stake in the rental-car company
• LLY +12%; after saying its experimental pill Orforglipron (oral GLP-1) met primary and secondary endpoints compared with a placebo in a phase 3 study evaluating its safety and efficacy in adults with type 2 diabetes and inadequate glycemic control with diet and exercise alone.
• QURE +41%; after saying its treatment for Huntington’s disease, received breakthrough therapy designation from the FDA; said the FDA’s designation for AMT-130 is in addition to the regenerative medicine advanced therapy designation, orphan drug designation and fast track designation previously granted.
• THC +2%; Hospital operators (HCA, CYH, UHS, THC) advanced after health insurer UnitedHealth Group flags a bigger-than-expected jump in medical care demand among older adults.
• TSM +1%; Q1 earnings and sales topped prior views and guided higher on Q2 revenue to $28.4B-$29.2B above prior year $20.8B y/y while for the full year it expects revenue growth roughly midway between 20% and 30%; reported Q1 profit climbed 60% in the year to T$361.6 billion ($11.1 billion).

• GPN -16%; announced definitive agreements to divest its Issuer Solutions business to FIS for $13.5B and acquire Worldpay from GTCR and FIS for a net purchase price of $22.7B, or total value of $24.25B including $1.55B of anticipated tax assets.
• LMT -3%; after announced the departure of its CFO, Jesus Malave, and named insider Evan Scott as his successor, effective immediately. Evan, who previously held the role of treasurer and CFO of the U.S. defense company’s two different business areas, has been with Lockheed for 26 years.
• MAN -12%; Q1 adj. EPS of $0.44 missed the analysts’ estimate of $0.50 while guided Q2 EPS to be between $0.65-$0.75, below analysts’ estimate of $0.95 as the CEO said the demand outlook is less clear based on increased caution following trade policy developments (RHI, KFY, KFRC other staffing names).
• NVO -8%; after LLY obesity drug news; also, was downgraded to Market Perform from Outperform at BMO Capital and cut tgt to $64 from $105 saying Novo’s “first mover advantage” with semaglutide, the active ingredient in its weight loss and diabetes drugs, has waned with Lilly’s tirzepatide taking share rapidly.
• UNH -19%; after reporting Q1 adj EPS $7.20, below consensus of $7.29 and revs of $109.58B missed consensus $111.6B; cuts its annual adj EPS forecast to a range of $26-$26.50 per share, well below its prior view of $29.50-$30.00 (est. $29.73) – guidance weighed on ELV, CI, HUM, CNC, among others.