Mid-Morning Look

Friday, June 06, 2025

What a change in sentiment in just 2 months! Wall Street has turned from massive fear in April following the tariff “Liberation Day” that saw major averages fall as much as 20% off highs by mid-April, to absolutely no fear and investors buying any and all market dips over the last 6-weeks, recouping all of the April losses and are now up on the year. The S&P 500 is less than 2.5% away from all-time highs (6,147.43) as investors remain focused on AI growth with technology rebounding in May (which has carried over to June) with chip stocks surging (SOX +6.5% this month already) after better NVDA results last week. All eleven S&P sectors are higher this morning, led by gains in Energy, Financials, Consumer Discretionary and Technology. The rally follows a stronger than expected Nonfarm payrolls report for May (with investors ignoring the March/April downward revisions), which was the first positive economic data point the last three days. The feud between President Trump and Tesla (TSLA) CEO Elon Musk over the last few days (which boiled over Thursday) appears to be far from over with more negative comments yet again this morning. Crypto ending the week strongly with Bitcoin prices rising 3%. U.S. Treasury yields rise along with a bounce in the U.S. dollar after stronger-than-expected U.S. jobs data. The data may encourage the U.S. Federal Reserve to keep interest rates on hold as it assesses the impact of the U.S. trade policy on the economy. Interest-rate futures showed the chances of three or more 25bps cuts this year falling to 25% from 36% Thursday, according to CME Group data and the chances of one or zero cuts rose to 34% from 25%. No fear as the CBOE Volatility index (VIX) extends declines, -6.5% below yesterday’s low at 17.08, the lowest since 3/26.

• In Forest, Wood Products: Citigroup opened positive catalyst watches on PCH, WY ahead of the raising of import duties on Canadian Lumber, which it expects by August. WY & PCH sharply outperformed in Q1 in expectation of tariffs on Canadian Lumber that ultimately didn’t materialize on Liberation Day. Since the beginning of April, the stocks have meaningfully underperformed as Lumber has drifted lower. A 20% increase in the duty translates to a ~$90/kbft move in Lumber, assuming current prices.
• In Restaurants: MCD was downgraded to Hold from Buy at Loop Capital and cut tgt to $315 from $346 saying they have growing concerns that domestic comp growth profile will not rebound as much as expected over the remainder of 2025 as its recent chicken strips launch has received predominantly negative customer feedback to date, which does not bode well; SG was initiated with an Equal Weight rating and $16 price target at Barclays saying the company offers industry-leading comp and unit growth, though its comps have eased of late and its ultimate U.S. penetration is up for debate.

• CRCL +16%; adds to gains after IPO priced yesterday; the 34M share IPO at $31 per shares yesterday, above expected range, raising $1.05B for the stablecoin company.
• MANU +17%; following quarterly results this morning and raises adj Ebitda outlook.
• PLTR +4%; rebounding after sharp pullback on Thursday.
• RBRK +3%; delivered strong Q1 results that were ahead of the high end of guidance for all metrics (revenue, ARR contribution margin and EPS) and also raised FY26 guidance for growth and profitability for all metrics. Reported Q1 ARR that beat by $33M, similar to the $32M TTM average beat.
• SRPT +6%; upgraded to Outperform from Sector Perform at Scotia with an unchanged price target of $80 saying now that negative news, including an Elevidys patient death and downward revision of 2025 sales guidance, is more than reflected in the share price.
• TSLA +4%; rebounds after falling -15% on Thursday after Musk social media feud with Trump.

• BRZE -6%; after reporting better-than-expected Q1 results, with non-GAAP EPS and revs beating ($0.07/$162.1M vs. est. $0.05/$158.7M), as revs 20% y/y, down from 22% growth last quarter, while guidance was better than expected on revenue, but disappointing on profitability.
• DOCU -18%; shares fell after lowering their FY26 billings forecast to $3.29B-$3.34B from prior $3.30B-$3.35B view and after its Q1 billings of $739.6M also misses estimates of $746M and guidance of $741M-$751M; guidance was mixed and now reflects more conservatism around the timing of early renewals.
• LULU -19%; after reported Q1 results were slightly better than expectations; FY25 revenue outlook reiterated, EPS lowered to range $14.58-$14.78 vs prior $14.95-$15.15 reflects tariff impacts weighted to Q225 and also saw a deceleration in international comps.
• MOS -3%; after cutting its Q2 phosphate sales volumes to be between 1.5M-1.6M tonnes vs prior forecast of 1.7M-1.9M tonnes; now sees 2025 phosphate production volume to be between 7.0M-7.3M tonnes, down from prior 7.2M-7.6M tonnes while reaffirms its Q2 and 2025 potash sales volumes.
• VERA -28%; after rival Otsuka’s experimental drug for a type of kidney disease showed over 50% reduction in protein in patient’s urine in a late-stage trial, which compared to Vera’s drug atacicept which reduced protein levels in patients’ urine by 46%, compared with a 7% reduction with a placebo.
• WOOF -21%; after reporting a wider EPS loss for Q1, as revs fell -2.3% to $1.5B, in-line with consensus $1.5B on weaker comp sales (-1.3%) y/y vs. est. (-0.6%); said sees Q2 and FY 25 revenue down low single digits y/y, which assumes tariffs stay at current levels for full year.