Mid-Morning Look

Friday, May 16, 2025

U.S. stocks open with a modest advance as the S&P looks to make a it a 5^th straight days of gains, rising over 6% this week alone on improved trade/tariff talk this week following deals with China (temporary 90 day truce of lower tariffs) and a Middle East tour by President Trump that led to big investments from Saudi Arabia, Qatar, UAE in the U.S. Semi stocks (SOX) slipping led by equipment stocks following mixed results from AMAT overnight (shares -6%). US equity funds benefit from their first inflows in five weeks according to data from Bank America. The dollar and 10-year Treasury yields are lower after traders priced in more Fed cuts following weaker housing starts data. Gold prices dropped more than 2% on Friday and were set for their worst week since November, currently down -4% on week. Reminder today is option expiration and Goldman Sachs recently noted they estimate that over $2.8 trillion of notional options exposure will expire today, including $1.2 trillion of SPX options and $580 billion notional of single stock options. This will be the largest May expiration on record. Market sentiment has remained strong in recent weeks as trade deals have been favorable, inflation prices have slowed and investors bought the dip again, recovering more than 20% for major averages since the April lows…will it continue to hold remains the question?

• University of Michigan surveys of consumers 1-year inflation outlook prelim May jumped to 7.3% vs final April 6.5% while the consumers 5-year inflation outlook prelim May 4.6% vs final April 4.4%.
• U.S. April export prices edge higher +0.1% (vs. consensus -0.5%) and vs March +0.1% (prev unchanged) while Import Prices rose +0.1% vs. est. -0.4%).
• April Housing Starts rose +1.6% m/m vs. +3% est. & prior month reading -10.1%; April building permits fell (-4.7%) vs. (-1.2%) est. and prior +1.9%; Housing starts 1.361M unit rate (consensus 1.365M), vs March 1.339M units; April single-family starts -2.1% to 927,000-unit rate; multifamily rate +10.7% to 434,000-unit rate.

• In Retailers: Richemont (CFRUY) shares rose in luxury retail after results, posting a 7% rise in quarterly sales to 5.17 billion euros ($5.80 billion), beating a 6% rise forecast – said its jewelry sales jumped 11% y/y in Q4, which offset an -11% decline in its watches division; WWW was upgraded to Buy from Hold at Argus with a $20 price target saying the company is continuing its turnaround progress with strong sales of Saucony and Merrell Brands, and current valuation inadequately reflects the management’s efforts to sell shoes at full price and its turnaround plans. Markets prep for earnings next week in retail with TGT, HD, TJX and others.
• In Industrials: UBS upgraded CAT, URI, and TEX to Neutral from Sell, maintain Buy OSK following the better-than-expected progress and outcomes of trade discussions with China and legislative discussions. The firm says they no longer see the same extent of downside risk to earnings and multiples. They said they now think recent actions by the US and foreign counterparts are driving towards the contained downside scenario. We still think lingering uncertainty will be somewhat of a drag on demand. See risk/reward as relatively balanced for the sector. Construction machinery demand was cyclically lower entering 2025, and we think economic/policy uncertainty serves as a further headwind for demand.
• In Events/Theatres/Leisure: Late yesterday, Bloomberg reported the DoJ is conducting criminal antitrust investigation into response of LYV, AEG if they illegally colluded on refund policies for canceled concerts and dealt with artists to limit their losses to mass concert cancellations at outset of pandemic in 2020; in movie theatres, B Riley downgraded NCMI to Neutral from Buy and cut tgt to $6 from $8.50 in transfer of coverage as the firm is generally constructive on the exhibitor space, saying the sector is underpinned by a strong Hollywood film slate for 2025 and 2026 that should fuel further box office recovery; the firm raised prices tgts for IMAX (to $36 from $33) and CNK (to $35 from $33).

• CHTR +1%; reached a deal to buy rival Cox Communications for $21.9B, bringing together two of the biggest cable operators in the U.S. The tie-up values privately held Cox at roughly $34.5B, including debt and other obligations. Under the terms of the transaction, family-owned Cox Enterprises will receive $4B in cash, $6B worth of convertible units in Charter’s existing partnership that ultimately are exchangeable for Charter shares
• COIN +6%; above $261 – is expected to join the S&P 500 on Monday 5/19 (replacing DFS).
• CRWV +20%; extending move after earnings the day prior boosted shares.
• INZY +177%; as BMRN said it is paying $270 million to acquire Inozyme Pharma, developer of a treatment for ENPP-1 deficiency in deal that values Inozyme at $4 per share, or an 182% premium from yesterday close.
• QUBT +20%; shares climbed after the quantum optics technology company reported its Q1 results showed low, but growing revs on good margins, while expenses rose.
• SPCE +23%; bounced after quarterly results better-than-expected and said it was keeping pace with plans to relaunch commercial spaceflights by the summer of 2026.
• STZ +1%; shares rose after 13F filing showed Warren Buffett’s Berkshire Hathaway more than doubled its stake in the company as stake grew to ~12 million shares worth $2.2 billion from 5.6 million shares at year end, giving Berkshire a 6.6% stake in Constellation.
• VST +3%; said it would acquire seven natural gas generation facilities, with a combined capacity of nearly 2,600 megawatts, from Lotus Infrastructure Partners for $1.9B, as it looks to meet growing power demand.

• DOCS -15%; shares sunk after posting better Q4 results but guided Q1 revs $139M-$140M, below consensus of $143.4M and gave FY revenue outlook of +10% below ests of +12% view, shy of forecasts, as guidance includes macro-related risk for DOCS’ pharma customer base.
• FLO -2%; after the company cut its annual sales forecast to about $5.297B-$5.395B or 3.8%-5.7% growth, down from prior view of $5.4B-$5.487B or 5.9%-7.5% growth to reflect first quarter performance, the challenging consumer environment, and potential for increased tariff costs.
• GLOB -30%; was downgraded by a few firms (Goldman, Piper) as reported Q1 below the Street and lowered FY25 targets (sees FY25 adj EPS at least $6.10/$2.46B revs vs. consensus est. $6.82/$2.64B) and the company saw a decline in the number of $1M/$100K customers and in its headcount sequentially (shares of ACN, EPAM, CTSH falling in sympathy on guidance)
• NVO -4%; after saying their CEO Lars Fruergaard Jorgensen will step down over concerns the company is losing its first-mover advantage in the highly competitive obesity drug market.
• TVTX -17%; after the FDA accepted its supplemental New Drug Application for traditional approval of FILSPARI for the treatment of focal segmental glomerulosclerosis. The FDA has assigned a PDUFA action date of January 13, 2026, and has indicated that it is currently planning to hold an advisory committee meeting.