Mid-Morning Look

Wednesday, May 14, 2025

U.S. stocks doing a whole lot of nothing to start the day, as futures traded in a tight range overnight and kept that pattern to kick off the day as markets stay higher. The continued surge off the April “Liberation Day” tariff announcement lows remains astounding, with the S&P 500 turning back positive on the year. Improved trade talk with China on Monday (reducing tariff rates substantially for 90 days for both countries), an announced investment and trade deals with Saudi Arabia yesterday along with cooler CPI inflation data has helped keep the rally going to start the week. White House Advisor Hassett said last night that the U.S. has got >20-25 deals on the table, deals are close to being finalized. Massive gains half-way through the month with Technology (XLK) +11.2% MTD, followed by a +9.5% MTD advance for Consumer Discretionary (XLY) and a 7% monthly advance for Industrials (XLI) so far. The biggest laggards are Healthcare (XLV) -6.3% in May along with defensive sectors such as Staples (XLP) and REITs (XLRE). No economic data today but April producer price index (PPI) data tomorrow. Treasury yields remain elevated with the 10-yr holding around the 4.5%, while gold slides and the U.S. dollar is down slightly. No really big earnings today but CSCO is tonight and then in retail WMT, BABA tomorrow morning along with Deere (DE) in industrials. Is a rest coming? Or more fireworks for U.S. stocks? Well, bespoke invest tweets: “Coming into today, 95.7% of Tech stocks and 92.3% of Industrials stocks were back above their 50-day moving averages. It can only get to 100. We prepare for a rest-pause when readings get this high.”

• In Autos: RIVN was downgraded from Buy to Hold at Jefferies with $16 tgt saying Q1’s better numbers got helped by new accounting of previously received funds, but management also demonstrated further progress in driving down R1 variable unit costs and in managing cash carefully. TSLA another strong showing, extending its recent gains/winning streak; AUR shares dropped after UBER, a leading backer, said it plans to sell $1 billion of senior notes exchangeable into shares of the self-driving technology developer; GOOGL’s Waymo is recalling more than 1,200 self-driving vehicles to update software and address risks of collisions with chains, gates and other roadway barriers after U.S. auto safety investigators opened a probe last year.
• In Utility sector: group pressured most of the day as Treasury yields remain higher (10-yr around 4.5%), making high dividend paying sectors like utilities less attractive; Keybanc upgraded shares of both AEE, ETR to Overweight from Sector Weight on attractive growth, downgraded ED, EXC, and SO to Underweight on valuation and POR downgraded to SW from Overweight due to jurisdictional headwinds in utilities. The firm said following a volatile first quarter, the reporting season proved fairly uneventful, with most companies under coverage reporting results ahead of consensus estimates, maintaining FY guidance, and issuing constructive commentary. Tariffs, data centers/power demand, and IRA repeal dominated discussions.

• BA +2%; after Qatar signs an aviation agreement to purchase 160 jets from the planemaker in deal valued over $200B, its largest order in history.
• BURBY +15%; after the luxury retailer posts FY adj. operating profit of 26M pounds ($34.6M) vs 11M pounds; said expects reduction in people-related costs, which could impact 1,700 roles globally; says still in early stages of a turnaround, notes significant improvement in comp sales in H2 vs H1 (shares of comp luxury names RL, TPR, CPRI, PPRUY, LVMUY, CFRUY were among names active on the results).
• EXEL +16%; reported Q1 adj EPS $0.62 above consensus est. $0.44; Q1 revs $555.4M vs. est. $500.96M; said based on strong first quarter dynamics of CABOMETYX, they are increasing FY25 guidance for net product revenues and total revenues by $100M to $2.25B-$2.35B, from $2.15B-$2.25B.
• OKLO +18%; posts narrower Q1 EPS loss of (-$0.07) vs. ests of (-$0.10) and narrower y/y loss of (-$0.34), adding to gains from the prior day after the co said it had finished drilling to gather information about the proposed location of its first nuclear plant in what it called a ” pivotal step” toward the production of commercial power.
• SEPN +45%; as NVO said that it will work with the biotech SEPN to develop oral GLP-1 obesity drugs. Under the deal, Septerna is eligible to receive about $2.2B from Novo, including more than $200M in upfront and near-term milestone payments.
• SMCI +11%; as announced a $20 billion+ multi-year partnership with Saudi Arabia-based DataVolt during the Saudi-U.S. Investment Forum in Riyadh. The deal focuses on accelerating the adoption of rack-scale total liquid cooling IT solutions for AI data centers.

• ALC -6%; as results miss; Q1 EPS $0.73 vs. est. $0.76; Q1 revenue $2.45B vs. est. $2.52B; cuts FY25 EPS view to $3.05-$3.15 from $3.15-$3.25 (est. $3.24); raises FY25 revenue view to $10.4B-$10.5B from $10.2B-$10.4B.
• ARCO -7%; after mixed Q1 results as Consolidated Adjusted EBITDA was $91.3M, with an 8.5% margin on total revenues and revs totaled $1.1 billion, relatively flat versus the prior year in US dollars.
• AUR -11%; after UBER, a leading backer, said it plans to sell $1 billion of senior notes exchangeable into shares of the self-driving technology developer
• GRAL -20%; shares fall on results as revs fall short of consensus; Q1 EPS ($3.10) vs est. ($4.09), adj EBITDA ($98.7Mm) vs est. ($91.35Mm) on revs $31.8Mm vs est. $35.2Mm.
• INTC -3%; ARM gained ground on AMD and INTC in the microprocessor market last quarter, according to Citi. Drawing on estimates from Mercury Research, Citi said Arm’s share of the processor market expanded to 13.6% in Q1 from 11.8% in Q4’24. Those gains ate into Intel and AMD’s slices of the market.
• NOC -3%; as defense contractors seeing broad weakness early.