Mid-Morning Look: February 05, 2025

Mid-Morning Look
Wednesday, February 05, 2025
Index |
Up/Down |
% |
Last |
DJ Industrials |
38.70 |
0.08% |
44,592 |
S&P 500 |
-8.59 |
0.14% |
6,029 |
Nasdaq |
-87.80 |
0.44% |
19,568 |
Russell 2000 |
13.95 |
0.61% |
2,304 |
U.S. stocks are mixed to kick off the day following a multitude of key earnings results, a round of stronger than expected economic data, and overall cautiousness regarding trade/tariff concerns. US futures dipped overnight following weaker tech earnings from GOOGL, AMD as well as reports China’s antitrust regulator is preparing for a possible investigation into Apple’s (AAPL) policies and App Store fees, just a day after China announced measures targeting U.S. businesses. The U.S. Postal Service said it would temporarily suspend all inbound parcels from mainland China and Hong Kong. Lastly, the Financial Times reports that the EU is preparing to hit Big US Tech in retaliation for Donald Trump’s tariffs. Lots of market uncertainty has pushed gold prices to new all-time highs above $2,900 an ounce and rallied bond markets as yields hit lowest levels since mid-December (10-yr 4.42% and 2-yr 4.18%). Oil prices are lower, Bitcoin prices are higher and the dollar weaker. More earnings tonight as the earnings barrage continues. Utilities, Financials, REITs, and Healthcare early leaders while Communications and Consumer Discretionary slide the most.
Economic Data
- January ADP private payroll data was strong, adding +183K jobs vs. ests. +150K, while the prior month was upwardly revised to $176K from +122K.
- U.S. S&P Global January final services PMI at 52.9 (vs flash 52.8) and U.S. S&P Global January final composite PMI at 52.7 (vs flash 52.4).
- ISM report on U.S. non-manufacturing sector shows PMI 52.8 in January below consensus 54.3 and vs 54.0 in December; business activity index 54.5 in January vs 58.0 in December; prices paid index 60.4 in January vs 64.4 in December; new orders index 51.3 in January vs 54.4 in December; employment index 52.3 in January vs 51.3.
- The US trade deficit widened sharply at the end of 2024 as imports increased by 3.5% in the month of December while exports fell by -2.6%, taking the deficit to $98.4 billion, rising 25% from $78.2B in November, Commerce Department data showed. Economists had been expecting the trade deficit to be $96.8B in December.
Macro |
Up/Down |
Last |
WTI Crude |
-1.18 |
71.52 |
Brent |
-0.98 |
75.22 |
Gold |
22.60 |
2,898.40 |
EUR/USD |
0.0043 |
1.0419 |
JPY/USD |
-2.08 |
152.25 |
10-Year Note |
-0.085 |
4.428% |
Sector Movers Today
- In Autos: RACE was downgraded to Equal Weight from Overweight at Barclay’s on valuation saying after the 8% rally on the Q4 results, shares moved to well within 10% of the price target. GT said it plan includes 850 job reductions at Danville, Virginia facility; reached deal with united steelworkers, approved plan to reduce Co’s production capacity & production cost per tire in Americas. TM raised its full-year operating profit forecast by 9% to 4.7 trillion-yen ($30.7 billion) versus 4.3 trillion yen expected previously, while Operating profit for the three months through December totaled 1.22 trillion yen, down 28% y/y and compared to the 1.42 trillion est. NSANY board plans to reject Honda’s (HMC) terms for a combination of the two companies, WSJ reported.
- In Aerospace & Defense: ERJ said it signed a deal to supply Flexjet with up to 212 jets, a contract valued at up to $7 billion at current list prices. The agreement represents the largest firm order ever for Embraer’s executive aircraft, with firm orders for 182 aircraft and options for another 30, the group said in a statement. LUNR was initiated at Underperform and $16 tgt at Bank America saying frothy valuation based on uncertain revenue growth coupled with a small array of customers and missions leads them to see better opportunities to gain exposure to commercial space. MRCY reported a strong Q2 with $82M in free cash flow and bookings of $242M.
- In Apparel/Luxury Retail: CPRI Q3 adj EPS $0.45 missed the $0.66 estimate saying overall business remained challenged during the quarter, while guided FY26 revs $4.1B vs. est. 44.5B and FY25 revs $4.4B vs. est. $4.51B. AEO was downgraded to Equal Weight at Barclay’s based on ongoing price competitiveness in key categories such as denim and intimates, its belief that VSCO’s course correction could challenge the Aerie brand, and negative sales-to-inventory inflection that occurred in FYQ324. COLM posted Q4 EPS ($1.80 vs. $1.88) and margin miss and weaker than anticipated FY25 guidance (EPS $3.80-$4.15 vs. est. $3.92) sending shares lower.
- In Financial Services: FICO Q1 results missed expectations on lower-than-anticipated mortgage volumes in Scores and muted ARR growth in Software; unexpected headwinds to software revenue and platform ARR of +20% (vs. +30% expectations) were disappointing. HRB shares fell on results as Q2 adj EPS loss (-$1.73) vs. consensus loss (-$1.61); Q2 revs $179.07M which was flat y/y vs. est. $183.4M; reaffirms full year outlook consensus; Total operating expenses of $472.4M increased by $25.8M.
Stock GAINERS
- ACB +42%; shares surged in the cannabis space after Q3 revs rose 37% y/y to $88.2M lifting the rest of the sector (CURLF, TLRY, CGC, GRWG, etc.)
- AMGN +5%; reported better Q4 earnings ($5.31/$9.09B vs. $5.08/$8.87B est.) while noting the FDA ordered a hold on its early obesity candidate, dubbed AMG 513; guides Fy25 adj EPS $20.00-$21.20 vs. consensus $20.82.
- CRUS +3%; posted strong F3Q results and provided F4Q guidance, which exceeded expectations as mgmt noted that demand for (iPhone) in F3Q was sustained with content growth from its 22nm audio codec and latest generation boosted amplifiers; posted GM up 143bps Q/Q to 53.5% on favorable mix.
- FI +7%; shares rallied after Q4 results lifted shares on better margins while said expects organic revenue growth of 10% to 12% in 2025.
- GSK +7%; announced a share buyback this morning as it raised its long-term growth forecast, citing progress with its late-stage pipeline; lifting its 2031 sales target to nearly $50 billion.
- MAT +13%; shares jumped after Q4 results and Jefferies upgraded from Hold to Buy, saying after 10 quarters (ex. Barbie) of negative sales growth, MAT reported positive Q4 top-line results and guided 2025 sales up 2%-3%.
- MRCY +19%; reported a strong Q2 as revs $223.1M topped the $182.45M estimate with $82M in free cash flow and bookings of $242M.
- SMCI +5%; after ramps full production of NVDA Blackwell rack-scale solutions with Nvidia HGX b200; co offers next-generation air-cooled and liquid-cooled architecture for Nvidia Blackwell platform.
- TEM +9%; after TD Cowen reinstates with Buy rating and $74 tgt.
Stock LAGGARDS
- AMD -10%; Q4 results were roughly in line with expectations, but guidance and Data Center (DC) missed expectations due to weaker GPU demand weighing on shares.
- BG -5%; shares fell after top and bottom line Q4 results missed consensus estimates and guided FY25 $7.75 below consensus $8.81 (shares of ADM fell in reaction).
- CMG -4%; reported Q4 EPS of $0.25 vs. est. $0.24, comp sales +5.4% below Street at +5.7% while provided disappointing L-MSD comp guidance for 2025 (Street 5.2%). Results were driven by slightly better than expected store-level margins, partially offset by slightly lower than expected comp growth.
- GOOGL -8%; after results as both Search and YouTube accelerated in the quarter as political contributed to results, but cloud revenue came in -2% below consensus as it decelerated ~5 points from Q324; also revealed higher-than-expected 2025E Capex of $75B vs. Street of $59B.
- FMC -35%; after posting a weaker FY25 outlook than expected outlook (guides Q1 revs $750-800Mm vs est. $963.68Mm and adj EPS $0.05-0.15 vs est. $0.83). FMC said it is working to lower inventory and introduce higher growth products.
- MTCH -7%; shares fell after announcing Spencer Rascoff as new CEO, succeeding Bernard Kim, and offered a softer 2025 revenue outlook for the dating site as sees 2025 revs $3.38B-$3.5B below consensus of $3.5B after its Q1 revenue outlook also missed consensus.
- UBER -7%; reported weaker-than-expected Q4 EPS ($0.23 vs. est. $0.50) and operating income, overshadowing steady bookings growth ($44.2B vs. $43.45B est.) but guided Q1 gross bookings between $42B-$43.5B, with midpoint lower than analysts’ estimate of $43.42B; said sees a 5.5% hit from a strong dollar.
Market commentary provided by Hammerstone Markets, Inc, a firm separate from and not affiliated with Regal Securities. Regal Securities has not participated in the creation of the content, and does not explicitly or implicitly endorse the content.