Mid-Morning Look

Tuesday, July 01, 2025

U.S. stocks mixed early, pulling back slightly overnight after another record run for Wall Street with the S&P 500 and Nasdaq each hitting fresh record highs on Monday, as investors monitored U.S. trade talks ahead of the July 9^th deadline for deals, and a Senate voting marathon over President Donald Trump’s tax and spending bill. U.S. senators were still voting on Tuesday on a potentially long list of amendments to Trump’s bill that is expected to bring a $3.3 trillion hit to the nation’s debt pile, fueling uncertainty among investors (which has pressured the US dollar to 4-year lows vs. the euro, in turn boosting gold prices). The S&P and Nasdaq both posted their best quarterly results since 2023 as hopes for more trade deals and possible rate cuts supported sentiment. This morning, Fed Chairman Powell reiterated at a central bank gathering in Portugal that the FOMC plans to “wait and learn more” about the impact of tariffs on inflation before lowering interest rates, again setting aside President Donald Trump’s demands for immediate and deep rate cuts. At the same time Powell noted that a majority of Fed officials in recent projections still expect to lower the benchmark interest rate later this year. In stock news, Tesla (TSLA) shares fell after a fresh spat between CEO Elon Musk and Trump over the tax bill and spending; casinos stocks (WYNN LVS, MLCO) surge on positive Macau data; auto stocks busy with monthly EV delivery headlines (LI, XPEV, NIO); Home health and hospice providers as well as diabetes stock under pressure on CMS proposed a payment scheduling change. Busy round of data this morning (see below) has pared dollar losses and lifted Treasury yields as Fed rate cuts pare a bit.

• S&P Manufacturing PMI Final Actual 52.9 (best all year and highest since May 2022 as per CNBC) above forecast and prior reading of 52.0)
• Construction spending for Mat declines -0.3% vs. consensus -0.2% while May private construction spending -0.5%, public spending +0.1%.
• ISM U.S. manufacturing activity index 49.0 in June above consensus 48.8 vs 48.5 in May; prices paid index 69.7 in June (consensus 69.0) vs 69.4 in May; new orders index 46.4 in June vs 47.6 in May and employment index 45.0 in June (consensus 47.0) vs 46.8 in May.

• In the Oil E&P and Equipment Sector: CTRA was downgraded to Neutral from Buy at Goldman Sachs saying while Coterra holds a dry gas position in the Marcellus, the company’s oil exposure has shifted to a more meaningful consideration relative to natural gas following the recent Permian acquisitions. OVV was upgraded to Buy from Neutral at Goldman Sachs (tgt to $51 from $47) citing expectations for outsized free cash flow generation following the company’s divestiture of the higher-cost Uinta assets and the acquisition of deeper, more capital efficient Montney inventory.
• Home health and hospice providers (AMED, EHAB) were weak after the Centers for Medicare & Medicaid Services proposes a 6.4% reduction cut in 2026 Medicare payments. Monday’s recommendation could cut $1.1B from the sector compared to 2025, CMS estimates. Insulin/diabetes stocks (DXCM, TNDM, PODD) shares fall after the U.S. government proposed a payment scheduling change as well as a competitive bidding program for the diabetes treatment devices. On June 30, the Centers for Medicare & Medicaid Services issued a proposed rule that proposes updates to Medicare payment policies and rates for home health agencies under the Home Health Prospective Payment System Proposed Rule for calendar year 2026.
• In Industrials: OSK was upgraded to Buy from Neutral at Goldman Sachs (tgt to $131 from $124) as 1) construction equipment capital stock – its favored lead indicator used equipment values and ultimately CAPEX – is declining, 2) consensus estimates now embed tariff risks, and 3) it expects improving Transportation (Defense) margins. RAL will replace WOLF in the S&P SmallCap 600 effective prior to the opening of trading on Tuesday, July 1. S&P 500 constituent FTV spun off Ralliant.

• HAS +3%; upgraded to Buy from Neutral at Goldman Sachs saying it sees upside to consensus for the toy company and raise tgt to $85 from $66 prior.
• HOOD +5%; surging again to $99 after rallying 12.77% on Monday – new all-time highs
• LVS +7%; along with gains in WYNN, MLCO after June monthly gaming revenue for the world’s biggest gambling hub in Macau exceeded analyst expectations in June.
• PKG +3%; announced that it has entered into a definitive agreement to purchase the containerboard business of GEF for $1.8B in cash.
• PL +7%; after announcing it has secured four major awards for its new AI-enabled solutions with customers in the Defense & Intelligence sector.
• WOLF +129%; after the chipmaker said it would file for bankruptcy to enact a creditor-backed plan to slash $4.6 billion in debt. The company filed for reorganization under Chapter 11 and expects to emerge out of bankruptcy by the end of the third quarter

• AVAV -5%; announced proposed underwritten public offerings of $750m worth of shares of its common stock and $600m aggregate principal amount of its convertible senior notes due 2030.
• DXCM -3%; as diabetes device makers weaker (PODD, TNDM) after the U.S. government proposed a payment scheduling change as well as a competitive bidding program for the diabetes treatment devices.
• DYN -5%; as 24.2M share Spot Secondary priced at $8.25.
• EHAB -19%; after the Centers for Medicare & Medicaid Services proposes a 6.4% reduction cut in 2026 Medicare payments. The recommendation could cut $1.1B from the sector compared to 2025, CMS estimates.
• SG -5%; was downgraded to Hold from Buy at TD Cowen and lowered its price tgt to $15 from $25 saying they are concerned on same-store sales misses began in Q2, though it extends to the optimistic 2H’25 acceleration embedded in consensus, while there is risk of not returning to normalized same store sales in 2026.
• TSLA -4%; after President Trump lashed out at Elon Musk, accusing the Tesla and SpaceX CEO of benefiting excessively from government subsidies for electric vehicles; also, Denmark Tesla sales down 61.6%, Model Y sales slump 31.2% y/y; Sweden registrations fall 64.4%.
• WBD -4%; as 100M share Block, priced at $10.97.