Mid-Morning Look

Tuesday, May 06, 2025

U.S. stocks pressured this morning, with concerns on trade/tariffs renewed following a report of EU countermeasures, concerning commentary from a well know hedge fund manager, and market concerns ahead of tomorrow’s FOMC policy rate meeting where expectations are for the Fed to hold steady on rates. Gold prices rose over 2% to a two-week high back above $3,400 an ounce, supported by post-holiday buying from China and ahead of the Fed.  The S&P 500 and Dow Jones Industrials both snapped their long 9-day win streaks on Monday and open lower again today. While the news flow/data was weaker today, markets are quickly rebounding off morning lows, helped by comments from Treasury Secretary Bessent who again noted perhaps as early as this week the White House will be announcing trade deals with some of our largest trading partners, while dismissing recession concerns.

Weighing on sentiment overnight: concern ahead of the Fed, Germany’s prospective chancellor fell short of a majority vote sending German DAX lower, China’s Caixin Services PMI came in soft for April, tariff concerns linger after media/movie tariff headlines yesterday and after Trump signed an executive order to ease construction of U.S. pharmaceutical facilities, with drug tariff details possibly coming later this month; lastly, earnings from likes of Ford (F) and Mattel (MAT) withdrew guidance due to macro uncertainty; also PLTR is trading lower despite strong results on elevated expectations. Later today newly appointed Canadian prime Minister Carney meets President Trump.

On the Trade/tariff front, Bloomberg reported that the European Union could target roughly 100 billion euros ($113.17 billion) worth of U.S. goods with additional tariffs if officials fail to reach a deal with their U.S. counterparts that de-escalates the regions’ trade dispute. The European Commission’s proposed countermeasures on U.S. tariffs if talks fail are expected to be shared with EU member states later this week. That measure would come on top of a levy on 21 billion euros of U.S. goods the commission has already drafted (these headlines weighed on futures earlier).

Also, legendary hedge-fund manager Paul Tudor Jones said this morning in a CNBC interview that stocks are bound to hit new lows even if President Donald Trump tones down his aggressive tariffs on China. “For me, it’s pretty clear. You have Trump who’s locked in on tariffs. You have the Fed who’s locked in on not cutting rates. That’s not good for the stock market,” Jones said. “We’ll probably go down to new lows, even when Trump dials back China to 50%.” Tudor Jones also raised alarms on AI, saying, “AI clearly poses an imminent threat to humanity in our lifetime”…says “there is a 10% chance AI will lead to a weapon that takes out half of humanity.”

Treasury yields rise while the dollar falls as markets go back to the risk-off mood. The Fed starts its two-day meeting and is expected to keep interest rates unchanged. Chair Powell is likely to face questions about the impact of tariffs on monetary policy. The U.S. trade deficit widens to a record $140.5 billion in March–a 14% increase from a month earlier, and a bigger jump from February than analysts had been forecasting. Imports increased 4.4%, and exports rose only 0.2%.

• Oil futures climbed after tumbling sharply in recent sessions, after technical measures suggested crude’s recent plunge may have overstretched. In earnings, FANG Q1 adj EPS $4.54 vs est. $4.13 on revs $4.05B vs est. $3.729B and said production has likely peaked in America’s prolific shale fields and will decline in the months ahead after crude prices plummeted (also lowered its capital budget to $3.4-$3.8B). CTRA delivered mixed 1Q results, with EPS inline, EBITDAX and oil production below and FCF ahead of expectations, is lowering FY25 capex 4% while maintaining oil guidance at the midpoint. TDW reported higher than expected revenue that drove gross margins of 50% well above guidance of 46%. TALO 1Q earnings and FCF beat. Production, realizations, cash opex, and capex all came in better than expected.
• In Solar & Utilities: SEDG shares jumped in solar space after posting a smaller-than-expected Q1 EPS loss and better revs and guided Q2 revs $265M-$285M, above consensus $243.65M and sees Q2 Non-GAAP gross margin 8%-12%; SHLS posted mixed Q1 results (EPS mis/revs beat) while guides FY25 revenue $410M-$450M, vs. consensus $426.33M and lastly ARRY shares jumped after Q1 adj EPS beat consensus ($0.13 vs. $0.09) on better revs of $302.4M; in nuclear power names, CEG reported Q1 EPS of $2.14 that missed the $2.18 estimate and said Calpine acquisition on track to be completed by year-end; backs FY25 adjusted EPS view $8.90-$9.60 (est. $9.45). AEP, WEC also moves in utilities on earnings results.

• FARO +34%; to be acquired by AME for $44 per share in cash in an enterprise value of about $920M; the deal price represents about a 40% premium to FARO’s last close.
• HIMS +8%; reiterated their full-year sales outlook despite delivering a nice Q1 beat and the new Wegovy partnership. HIMS did deliver a solid Q1 beat, with revenue growing 111% y/y to $586.0M vs. the Street’s $538.6M and adj. EBITDA at $91.1M vs. the Street’s $61.3M.
• LMND +4%; raised its 2025 gross earned premium and revenue estimates while reiterating its forecast for positive adjusted free cash flow in 2025 despite a hit from California wildfires; it said it plans to incorporate any inflationary impacts in its pricing to maintain alignment between rate and risk.
• NBIX +13%; as reported Q1 diluted Q1 EPS of $0.70 on revenue of $572.6M, compared to Street estimates of $0.54 and $559.6M, respectively; reiterated 2025 Ingrezza guidance of $2.5B-$2.6B, implying growth of ~10% at the midpoint; Q1 Ingrezza sales grew by ~8% y/y.
• SEDG +14%; after posting a smaller-than-expected Q1 EPS loss and better revs and guided Q2 revs $265M-$285M, above consensus $243.65M and sees Q2 Non-GAAP gross margin 8%-12% (shares of ARRY and SHLS also advanced following their own results in solar space).
• TDUP +29%; posted better Q1 results and guided Q2 above ests and raises FY25 revenue view to $281M-$291M from $270M-$280M (est. $274.23M).
• UPWK +18%; as reported beat and raise 1Q results with revenue and EBITDA coming in $1.7M (1%) and $6.0M (12%), respectively, above the high end of guidance as the company raised 2026 EBITDA guidance by $10M.

• CTRA -8%; delivered mixed 1Q results, with EPS inline, EBITDAX and oil production below and FCF ahead of expectations, is lowering FY25 capex 4% while maintaining oil guidance at the midpoint.
• DASH -8%; after quarterly results and agreed to acquire British rival Deliveroo for 2.9B pounds ($3.9B) in cash, expanding its business in Europe, Asia and the Middle East; to pay 180 Pence ($2.40) for each Deliveroo share.
• ETD -9%; as reported FQ3 (ended March) revenue and EPS below expectations due to softer than anticipated written order trends.
• ICHR -21%; as Q2 revs of $244M in-line with consensus, but EPS of $0.12 missed the $0.26 estimate along with lower guidance and sees Q2 revs $225M-$245M vs. the consensus $245.5M as gross margin expansion fell short of expectations
• PLTR -13%; reported a solid quarter and raised 2025 guidance ahead of consensus, as Government results were better than expectations, but concerns about the runway for growth and product differentiation weighed on the shares; commercial came in slightly below consensus.
• PRAA -30%; as lower-than-forecast U.S. collections (by 4%) drove a material earnings shortfall ($0.09 versus our Street-high $0.54 estimate).
• VRTX -11%; shares fell on results; posted Q1 adj EPS of $4.06, below estimates of $4.32 and revs of $2.77B also missed analysts’ estimates of $2.85B (downgraded to market perform at Leerink post results).