Mid-Morning Look

Thursday, May 15, 2025

U.S. stocks a little shaky to stat the trading day, with major averages all lower from yesterday closing prices but still not far from recent best levels. The S&P is holding just below the 5,900 level up more than 1,000 points from the lows on April 7^th while the Dow Jones Industrial Average slides again due to weakness in one particular component, as UNH shares fall again on more negative news. Lots of news overnight/this morning as oil prices fall on Trump comments about Iran, retailers slip on WMT warning of price hikes, M&A in footwear sector and technology taking a breather as recently beaten-up defensive sectors utilities, staples and REITs lead the morning advance. Treasury yield stays elevated with the 10-yr above 4.5%, the dollar slips, Bitcoin declines, and gold prices bounce.

Just massive pain in the managed care sector as UNH shares plunge yet again, this time down on a WSJ report overnight that the company is under criminal investigation for Medicare Fraud in an active probe since at least last summer. That followed recent news of its CEO leaving and suspending guidance for the year, which had followed a recent cutting of guidance earlier in the earnings season. UNH is now at the lowest since April 2020, a 58% drawdown, and responsible for about -2600 DJIA points! ELV, HUM, CI, CVS remain weak along with drugmakers as well.

Retailers pressured this morning as well as WMT reported a decline in Q1 profit, with net income falling to $4.45B from $5.1B y/y though revenue rose by 2.5% to $165.61B, in-line with consensus and U.S. comparable sales grew by 4.5%; but shares fell after the CEO said to raise prices on some items this month citing impact of tariffs. Also, BABA shares fell after their top and bottom-line quarterly results fell short of consensus. The footwear sector is strong as shares of BOOT and BIRK rise on earnings/comp store results while FL was acquired by DKS in a $2.4B deal.

Technology also seeing a small pullback after a massive surge the last few days/weeks behind a +20% jump in semiconductors (SOX) in 4 weeks and big gains in the Mag7 names (NVDA, AMZN, META, MSFT, TSLA, etc.) There was a massive amount of economic data being digest by Wall Street today, showing slowing PPI inflation data for the month, but y/y figures held steady after sharp revisions higher the prior month; retail sales grew slowly; both Empire and Philly Fed data showed declines, but improved from the prior month; while business inventories and industrial production both slowed more than economist expectations.

Federal Reserve Chair Jerome Powell speaking this morning saying the Central bank was in the process of adjusting its overarching policy-setting framework to account for meaningful changes in the outlook for inflation and interest rates following the 2020 pandemic. “The economic environment has changed significantly since 2020, and our review will reflect our assessment of those changes,” Powell said Thursday. The Fed adopted its current framework five years ago, and it began a review of that framework this year. The review isn’t likely to influence how the Fed is currently setting interest rates. Powell has previously said the Fed could complete that process and unveil the results by August or September. Powell spoke at a research conference at the Central bank’s headquarters in Washington – WSJ.

• Philadelphia Fed business conditions for May fell an improved -4.0 (vs. consensus -11.0) and vs April -26.4; the Philly Fed prices paid index for May rises to 59.8 vs April 51.0, new orders index for May improved to 7.5 vs April -34.2 and the employment index May 16.5 vs April 0.2; the six-month business conditions for May 47.2 vs April 6.9 and the six-month capital expenditures outlook 27.0 vs April 2.0
• Weekly Jobless Claims unchanged at 229,000, in-line with consensus and prior week as the 4-week moving average climbed to 230,500 from 227,250 prior week; continued claims climbed to 1.881M from 1.872M prior week (prev 1.879M) and the U.S. insured unemployment rate unchanged at 1.2%.
• The NY Fed’s Empire State current business conditions index -9.2 in May (vs. consensus -10.0) vs -8.1 in April; the new orders index +7.0 in May vs -8.8 in April; prices paid index rises to +59.0 in May vs +50.8 in April and the employment index at -5.1 in May vs -2.6 in April.
• U.S. Retail Sales growth slowed in April, edging up 0.1% h after an upwardly revised 1.7% surge in March, the Commerce Department’s Census Bureau said. Economists had forecast retail sales, which are mostly goods and are not adjusted for inflation, unchanged after a previously reported 1.5% jump in March. Estimates ranged from a 0.6% decline to a 0.4% gain.
• April Industrial Output unchanged (consensus +0.2%) vs March -0.3% (previous -0.3%); U.S. April mining output -0.3% (March +1.1%), utilities output +3.3% (March -6.2%); U.S. April capacity use rate 77.7% (consensus 77.8%) vs March 77.8% (previous 77.8%). U.S. April manufacturing output -0.4% (consensus -0.2%) vs March +0.4%.
• U.S. March Business Inventories +0.1% (vs. consensus +0.2%) vs Feb +0.2%; U.S. March inventory/sales ratio 1.34 months’ worth vs Feb 1.35 months; U.S. March business sales +0.7% vs Feb +1.0% (prev +1.2%).
• May NAHB Housing market index 34 (consensus 40) versus 40 in April (previous 40); the index of current single-family home sales 37 versus 45 in April (previous 45); index of home sales over next six months 42 versus 43 in April (previous 43); index of prospective buyers 23 versus 25 in April (previous 25).

• In Solar: NXT reported strong q4 results ahead of expectations and introduced FY26 guidance. Quarterly results benefited from strong execution, robust demand, and favorable sales mix, which skewed more heavily toward the U.S., all supported by a resilient backlog. CSIQ posted a Q2 EPS loss $34M compared with a profit of $12.4M a year ago; sees Q2 revs to be in range of $1.9B to $2.1B vs. est. $1.76B and for FY, sees total revs in range of $6.1B to $7.1B vs. est. $7.4B.

• BOOT +12%; shares rallied despite a miss, (EPS $1.22 vs. est. 41.24 and comps +6% vs. est. +7.3%) as posted better margins of 37.1% vs. est. 36.5% and comp trends the last 2.5 months have accelerated.
• CSCO +5%; reported modestly better than expected Apr-Q results / Jul-Q outlook as key positives included continued growth in networking and data center switch orders, cloud AI order acceleration from $350M to $600M Q/Q ($1B YTD), and the start of AI order conversion.
• DE +5%; cut the lower end of its annual profit forecast saying they see annual net income to now be between $4.75B-$5.5B, compared to its prior forecast of $5B-$5.5B; had reported Q2 revs $12.76B topping the consensus of $10.79B and EPS of $6.64 vs. est. $5.58 and net income $1.8B vs. est. $1.515B.
• DLO +14%; shares jumped after results; as Q1 EPS $0.15 vs. est. $0.12; Q1 revs rose 18% y/y to $216.8M vs. est. $210.8M; announced a first-quarter net profit of $46.63M, more than doubling from a year earlier; Q1 gross margin 39%; Q1 Total Payment Volume reached a record $8.1B, up 53% y/y.
• FL +83%; as DKS agreed to buy smaller rival FL for $2.4B, an 86% premium to yesterday’s close as shareholders to receive $24 per share of Foot Locker. https://tinyurl.com/mrxasb2t
• NVEE +10%; and Acuren Corporation announce merger with $2B combined revenue as NV5 stockholders will receive $23.00 per share consisting of $10.00 in cash and $13.00 in shares of Acuren common stock at closing, in total deal valued at $1.7B. https://tinyurl.com/3asfwu55

• BHVN -15%; after the FDA extended the Prescription Drug User Fee Act (PDUFA) date for the company’s troriluzole application by three months as now expects an FDA decision in the fourth quarter. The FDA’s Division of Neurology 1 also informed the company that it plans to hold an advisory committee meeting.
• COIN -7%; said its working with law enforcement to track down an unknown “threat actor” that paid its contractors working in support roles for the company outside the U.S. to obtain personal information about its customer base; did not say how many of its clients were affected.
• CRWD -2%; reported Q1 revenue of $982M was 15% above the consensus estimate, increasing 420% y/y as demand for the company’s Cloud Platform continues to accelerate but shares slipped after saying is looking to spend $20B-$23B this year on AI infrastructure and data center capacity.
• CRWV -6%; reported Q1 revenue of $982M was 15% above the consensus estimate, increasing 420% y/y as demand for the company’s Cloud Platform continues to accelerate but shares slipped after saying is looking to spend $20B-$23B this year on AI infrastructure and data center capacity.
• DXC -8%; shares tumbled; reported a solid quarter with revenue and adj. EPS above Street estimates, as well as showing improvement in its book-to-bill, but given an uncertain macro and its mix towards larger products, issued weaker guidance as sees Q1 revs $3.04-3.09B vs est. $3.118B and lower EPS.
• LAZR -17%; downgraded to Neutral from Overweight following the announcement of Founder and CEO, Austin Russell, stepping down effective immediately, following a Code of Business Conduct and Ethics inquiry by the Audit Committee of Luminar’s Board of Directors.
• NFE -62%; as the company missed on Q1 EBITDA amid weak volumes through core terminals in Puerto Rico and Brazil (reported Q1 EPS ($0.73) vs est. ($0.06), adj EBITDA $82Mm vs est. $231.8Mm on weaker revs).
• UNH -18%; after the WSJ reported last night that the company is under criminal investigation for Medicare Fraud in an active probe since at least last summer https://tinyurl.com/2e5mvpvc  
• WMT -3%; posted Q1 adj EPS $0.61 vs est. $0.58 on mostly in-line revs $165.61B as total US comp sales ex-gas +4.8%, vs. est. +4.1%, Walmart-only US comp sales ex-gas +4.5% and Sam’s club US comp sales ex-gas +6.7%, vs. est. +4.93%; said they withhold Q2 operating income growth & EPS forecast; shares fell on tariff commentary Walmart CFO notes price hikes from tariffs could start later this month.