Mid-Morning Look

Friday, June 20, 2025

U.S. stocks, much like Wednesday, holding around the 6,000 level for the S&P 500 (SPX) to start before fading slightly, on track for modest weekly gains. Stock futures were down sharply yesterday on macro global uncertainty, but Fed comments on interest rates and comments from the President and Iran officials turned futures higher this morning. Federal Reserve Board Governor Christohper Waller was out with favorable market comments this morning saying, the Federal Reserve should consider cutting interest rates at its next meeting given recent tame inflation data and the fact that any price shock from import tariffs will be short lived. Wall said, “tariffs will not be completely passed through, a 10% tariff on all imports would not have much impact on overall inflation.” He also noted so far that data has been fine, with no reason to wait much longer to cut while noting the job market is solid but is starting to see things like high unemployment for recent graduates. The comments piggybacked Iran senior official headlines earlier that Iran is ready to discuss limitations on its uranium enrichment. Overnight, President Trump signaled he would give diplomacy a chance before deciding whether to strike Iran, dialing back on recent comments that suggested military action could be imminent. All the news comes ahead of a very busy option expiration today as $6.5 trillion of notional US options are expiring, one of the largest expiries on record, the simultaneous expiration of index futures, index options, stock futures, and stock options along with 2Q25 rebalance Friday for several major market indexes. Little pullback here led by Technology and Healthcare while Energy and Staples lead higher.

• Leading economic indicators (LEI) for May fell (-0.1%), in-line with consensus.

• In Food & Beverages: In grocers, KR posted a mixed top and bottom line as Q1 EPS beat but sales $45.11B just missed the $45.18B estimate while raising its annual identical sales forecast growth of 2.25% to 3.25%, compared with its prior target of 2% to 3% growth. MDLZ was upgraded from Equal Weight to Overweight at Wells Fargo and raised tgt to $78 from $68 citing price execution, evolving inflation and says is relatively superior – into 2026, it sees prospects for 2x EPS growth vs peers despite 2-10x P/E discount, w/ a bull case; CPB was downgraded to Hold from Buy at Argus.
• In Autos: STLA is considering a possible sale of its struggling luxury Maserati unit, among other options, Reuters reported citing two sources with knowledge of the matter said, as the automaker seeks to overhaul its sprawling portfolio of 14 brands. TSLA is expected to launch its robotaxi service in two days. Democratic lawmakers in Texas have called for Tesla to delay the launch. Two state senators and five state representatives signed a letter addressed to Tesla’s director of field quality.

• BASE +28%; after it announced that it has entered into a definitive agreement to be acquired by Haveli Investments, a technology-focused investment firm, in an all-cash transaction valued at approximately $1.5 billion, as stockholders will receive $24.50 per share in cash.
• CRCL +14%; adding to the 33% jump on Wednesday after the U.S. Senate approved a milestone stablecoin bill dubbed the GENIUS ACT, fueling hopes for broader adoption.
• DRI +1%; reported Q4 sales $3.3B, topping consensus vs. est. $3.261B on slightly better earnings and Q4 same-restaurant sales growth 4.6%; saying sales grew thanks to a mix of growing same-restaurant sales, sales from its acquisition of 103 Chuy’s Tex Mex restaurants and 25 net new restaurants.
• GMS +27%; HD made an offer for the building-products distributor, kicking off a potential bidding war after QXO on Wednesday said it submitted an unsolicited proposal to buy GMS for about $5B, offering $95.20 per share in cash – WSJ reports https://tinyurl.com/3pxvzb4j
• KMX +4%; after results beat; Q1 EPS $1.38 vs. est. $1.17 and revs $7.55B vs. est. $7.53B while Q1 retail used unit sales increased 9.0% and comp store used unit sales increased 8.1%; wholesale units increased 1.2%.
• KR +5%; posted a mixed top and bottom line as Q1 EPS beat but sales $45.11B just missed the $45.18B estimate while raising its annual identical sales forecast growth of 2.25% to 3.25%, compared with its prior target of 2% to 3% growth.
• LEU +14%; announced that the U.S. Department of Energy has exercised an option to extend Centrus’ competitively awarded contract to produce High-Assay, Low-Enriched Uranium through June 30, 2026.
• MSGS +5%; benefiting from news that the Lakers sold a majority stake to investor Mark Walter, possessor of the baseball Dodgers in a deal that values the team at $10B (almost $4B more than what a group agreed to pay for the Boston Celtics, just a couple of months ago).
• OSCR +16%; adding to recent gains after jumping 16.5% Wednesday and over 7% gains on Monday and Tuesday on no particular news.

• JCI -1%; downgraded to Perform (from Outperform) at Oppenheimer following its recent re-rating and tweaking estimates as it awaits further details on the company’s strategic review.
• LLY -3%; among top decliners in the S&P along with VRTX, REGN as Healthcare sector weak.
• SWBI -18%; after Q4 revenue missed expectations, falling -12% y/y to $140.8M (below consensus above $152M) as firearm demand remains soft as CEO said Q4 proved more difficult than we anticipated largely due to macroeconomic and industry trends.