Mid-Morning Look

Friday, May 02, 2025

U.S. stocks coming out of the gate strong wit the S&P 500 index (SPX) on track for its 9^th straight day of gains (along with the Dow), rising over 1% and moving above the April lows after the monthly nonfarm payroll data comes in stronger than expected while hopes for improved trade talks with China climbed. The combo helped offset a decline in shares of Apple (AAPL), falling over -4% after its mixed earnings results last night. The Nasdaq was also up over 1% led by chip and software stocks as the Philadelphia Semiconductor Index (SOX) rose +3% topping its 50dma resistance this morning of 4,343 amid strong gains across the sector. Overnight, reports indicated China has said it’s evaluating approaches from US officials to start negotiations about tariffs, a potential de-escalation in the trade war that has raised hopes that formal trade talks could start soon. This has been another great week for stocks after the massive sell-off in April on tariff fears has been completely erased, and nine of the eleven S&P sectors are now up on the year (XLE -5.8% and XLY -10.79% laggards). Following this morning’s solid payrolls report (after a weak ADP private payroll reading mid-week), Nick Timiraos of the WSJ tweeted that “the April jobs report makes a June rate cut less likely (even though that is a world away) because there will only be one more employment report before then. For now, it means the Fed doesn’t have to say anything on June at next week’s meeting.” After a strong showing for the US dollar yesterday to kick off the new month (after tumbling in March/April), the dollar continuing recent losses, dropping more than 1% vs Yen to 143.85 Yen and Euro continues gains vs US dollar, now up 0.7% at $1.1367 while Treasury yields surged initially on the jobs report (10-yr highs 4.3%), but paring gains. Oil prices are tumbling again ahead of Monday’s OPEC+ meeting, gold prices partially rebound after yesterday’s tumble and Bitcoin above $97K. Dow Transports outperform, up over 2% behind airline strength.

• The April unemployment rate stood at 4.2%, in-line with consensus 4.2%, April average workweek all private workers 34.3 hours (cons 34.2 hours) and average hourly earnings +3.8% from year earlier (est. +3.9%), while April average hourly earnings climb +0.2% m/m below the est. +0.3%.
• March Factory orders +4.3% (consensus +4.5%) vs Feb +0.5% (prev +0.6%); factory orders ex-transportation -0.2% vs Feb +0.3% (prev +0.4%); factory orders ex-defense +4.8% vs Feb +0.4%; March Durables orders unrevised at +9.2%; nondurables orders -0.3% vs Feb +0.1%

• In Chemicals: the negative earnings and outlook for the chemical space continues to weigh on stocks, with WLK the latest to disappoint as Q1 sales $2.84B missed the $2.95B estimate on EPS loss of (-$0.31) vs. +$1.34 y/y saying higher feedstock and energy costs in North America, planned turnarounds and unplanned plant outages that impacted EBITDA by about $80M, and changes in sales mix drove the lower EBITDA and EBITDA margin. DD reported Q1 beat, a lower Q2 guide, but backed its year outlook.

• CART +12%; delivered a 1Q beat and better 2Q outlook, with strength in orders and advertising balanced against moderating AOV and transaction growth tied to recent affordability initiatives. 1Q order strength (+7.4% q/q).
• DXCM +13%; posted Q1 beat as revs $1.036B (+1.8% vs consensus), with Organic Growth of +14% (vs. 10.4% est.) and reaffirmed its +14% revenue growth expectations and Operating margins of 21%, while lowering its Gross Margin expectations to 62% (from 64% to 65%) driven by incremental costs.
• MTZ +6%; rose on strong results as Q1 EPS $0.51 vs. est. $0.34; Q1 revs $2.85B vs. est. $2.71B; outlook FY25 adj diluted EPS guidance increased 9% from prior midpoint of guidance.
• RDDT +3%; reported a beat and raise quarter as revenue came in $22M above the high end of guidance (6%) as advertising revenue grew 61% Y/Y while the company guided to 49% Y/Y revenue growth for Q225 on toughening comps; forecasts Q2 revenue between $410M-$430M, above the consensus estimate of $395.5M.
• TWLO +2%; Q1 results came topping expectations, showing further acceleration that was complemented by FCF leverage and a slightly better Q2 guide.

• CABO -35%; was downgraded by two analysts following its strategic decision to completely eliminate its dividend with no warning and no new financial change or justification and saying Q125 results are extremely disappointing: HSD net adds -10K, ARPUs down -3.1% y/y, and adj. EBITDA missing consensus by ~2%.
• CYTK -16%; after the FDA has extended the PDUFA date for aficamten in obstructive cardiomyopathy (oHCM) by three months, to December 26, 2025. The extension stems from the company’s submission of a REMS program during the review, deemed a major amendment by FDA.
• ROKU -10%; shares fell as Q1 revenue rose 16% to $1.02B, topping the est. $1.01B and reached an agreement to acquire streaming service provider Frndly TV for $185 million in cash but guided Q2 revs $1.07B, below analysts’ forecasts of $1.09B.
• TEAM -10%; posted a beat in F3Q with Cloud Revs +25% y/y vs 23.5% guide (but a ~5pt deceleration from last qtr) with DC revs growth +7% y/y; guides 4Q Cloud Revs +23% y/y and DC revs +16.5% y/y; guidance implies full-year FY25 Cloud revenue growth of ~27%.
• TREE -12%; shares tumble as Q1 results beat, but guided Q2 below consensus and cuts FY25 revenue view to $955M-$995M (est. $1.01B) from prior view $985M-$1.025B and cuts FY25 adjusted EBITDA view to $116M-$124M from $116M-$126M.
• TTWO -9%; after saying it was delaying Grand Theft Auto VI release to May 26, 2026, (which was expected to launch in the fall).
• WLK -11%; as Q1 sales $2.84B missed the $2.95B estimate on EPS loss of (-$0.31) vs. +$1.34 y/y saying higher feedstock and energy costs in North America, planned turnarounds and unplanned plant outages that impacted EBITDA by about $80M, and changes in sales mix drove the lower EBITDA and EBITDA margin.
• XYZ -21%; shares tumbled after results, prompting several Wall Street downgrades after posting Q1 results which were mixed due to softer Cash App inflows and consumer spending pressures and Full year guidance for ’25 was also lowered (Q1 adj EPS $0.56 vs est. $0.87 on revs $5.77B vs est. $6.2B).