Mid-Morning Look

Monday, March 17, 2025

U.S. stocks open higher after overnight weakness, despite a round of softer/disappointing economic data that renewed the slowing economic growth outlook that has plagued investor sentiment in recent weeks, and ahead of the FOMC rate decision mid-week (no change is expected). The Federal Reserve is set to leave interest rates on hold despite significant uncertainty in the U.S. economic outlook, as this morning, February retail sales rose less than expected, Empire State manufacturing hit its lowest levels since March of last year, and NAHB Housing market data came in well below consensus. Equity futures dropped overnight after Treasury Secretary Scott Bessent dismissed recent stock market declines, calling them healthy. In global news, Trump will speak with Russian President Vladimir Putin on Tuesday about ending the war in Ukraine. Trump also said reciprocal tariffs and additional sector-specific tariffs will hit on April 2. Crypto early underperformers as Bitcoin erases earlier gains, gold prices little changed holding around all-time highs at $3,000 an ounce and the dollar dips slightly. Tech space keeping a close eye on NVDA ahead of its weekly GTC event with many updates expected (watching AI, chips, quantum space). Early sector leaders include energy, industrials, REITs and consumer staples while consumer discretionary lags.

• The March Empire State factory index falls to -20.0 (lowest reading since Jan 2024), well below the expected -1.9 reading and below the prior month of +5.7; prices paid rose to 44.9 vs 40.2; new orders fell to -14.9 vs 11.4; and reported six-month general business conditions fell to 12.7 vs 22.2.
• March NAHB Housing market index falls to 39 from 42 in February, which matched the consensus 42 estimate; March index of current single-family home sales 43 versus 46 in February (previous 46); March index of home sales over next six months 47 versus 47 in February (previous 46); index of prospective buyers 24 versus 29.
• January Business Inventories rose +0.3%, in-line with consensus and vs December -0.2%; Jan business sales declined -0.8% vs Dec +1.0% (prev +0.8%); Jan retail inventories ex-autos revised to +0.5% (prev +0.4%); Jan inventory/sales ratio 1.37 months’ worth vs Dec 1.35 months.

• In Consumer Finance: COF reported February domestic credit card net charge-offs rate 6.35 %; 30+ day performing delinquencies rate for domestic credit cards 4.52% at February end; February auto net charge-offs rate 1.48%; 30+ day performing delinquencies rate for auto 5.02% at February end; JPM reported charge-offs for February of 1.68% and delinquencies 0.91%. SYF reported charge-offs for February of 6.8% (vs 6.2% prior) and 30-day delinquencies at 4.7% (same as prior); BAC credit card delinquency rate was 1.51% at February end and credit card charge-off rate were 2.46% in February.
• In Metals & Mining: US Steel (X) shares rose after the U.S. Department of Justice filed a motion last week to extend two deadlines in U.S. Steel and Nippon Steel’s lawsuit against the Committee on Foreign Investment (CFIUS), U.S. Steel (X) said in a filing on Monday. Copper producers (FCX, SCCO) got a boost early, supported by rising copper prices after the latest economic stimulus plan from top metals consumer China and a weaker dollar, with traders awaiting more clarity on U.S. tariff risks and their effect on global growth.
• In Chemicals: Mizuho said reflecting lower market and peer multiples, they reduce price targets for CBT, SEE, ASH, IFF, AXTA, APD, CE, EMN, DOW, LYB, OEC, OLN and adjust ests for select chemical/packaging names saying, U.S. industrial orders leading indicator back below 50 is also concerning for basic chemicals. Yesterday DOW pointed out to continued softness in macroeconomic conditions with no signs of recovery in MarQ25. We believe Winchester ammo continues to see weakness from consumer (especially lower income) & channel de-stocking. CBT operates plants in both Mexico & Canada serving auto supply chains so trim ests.

• INTC +6%; incoming CEO Lip-Bu Tan reportedly plans to restructure the co’s approach to AI, reduce middle mgmt. staff, and attract new customers for its foundry business, Reuters reported.
• QMCO +21%; Quantum computing stocks such as QUBT and RGTI advanced last week and continued this morning as NVDA holds a “quantum day” at GTC on Thursday during its weekly GTC tech event.
• NCLH +2%; after being upgraded to Overweight from Neutral at JPMorgan, as the company sees no change in demand trends and the stock fell 25% year-to-date.
• NFLX +4%; was upgraded from Neutral to Buy and raised to $1,100 from $850 at MoffettNathanson and raised its estimates with greater confidence in the margin expansion story.
• SAIC +9%; shares rose after forecasts FY26 adjusted profit per share between $9.10-$9.30, beating analysts’ estimate of $9.07 while Q4 results beat as total revenue increases 5.8% to $1.84B.
• ZIM +2%; along with TRMD and STNG after the U.S. vowed to keep attacking Yemen’s Houthis until the Iran-aligned group ends its assaults on shipping. U.S. President Donald Trump launched military strikes against the Houthis on Saturday over the group’s attacks against Red Sea shipping.

• INCY -9%; reported topline results from its two Phase 3 studies of Povorcitinibi in patients with Hidradenitis Suppurative, with the company noting STOP-HS1 and STOP-HS2 studies met their primary endpoint at both tested doses and that the data supports planned regulatory submission; shares slip as the placebo adjusted efficacy underwhelmed expectations
• LI -3%; downgraded to Neutral from Outperform at Macquarie and lower FY25 volume ests; Q1 volume guidance of 88-93k in line with recent seasonal sales trends, but well below Bloomberg consensus of 131/111k
• PRIM -3%; after late Friday announced CEO McCormick will be separating from Co effective 3/20.
• TSLA -3%; along with weakness in other mega cap tech names early (NVDA, AMZN, GOOGL).