Mid-Morning Look

Tuesday, May 27, 2025

U.S. stocks declined on Friday following tariff comments on the EU from President Trump, while markets rebound today on…comments from President Trump on tariffs to the EU! On Friday, stocks slumped after the President recommended a straight 50% Tariff on the European Union, starting on June 1, 2025 after saying U.S.-EU trade talks “are going nowhere”. Things changed a bit this weekend as Trump said he was encouraged the European Union is speeding up negotiations on trade. Trump stated in a post to Truth Social: “I received a call today from Ursula von der Leyen, President of the European Commission, requesting an extension on the June 1st deadline on the 50% Tariff with respect to Trade and the European Union. I agreed to the extension – July 9, 2025 – It was my privilege to do so. The Commission President said that talks will begin rapidly.” The headlines are reversing stock market weakness from Friday where Trump had initially threatened to impose 50% tariffs on imports. Sentiment got another boost after data showed US consumer confidence rebounded sharply in May from a near five-year low as the outlook for the economy and labor market improved amid a truce on tariffs. So far a strong start to the week, with high expectations for the AI trade ahead of NVDA earnings results midweek (along with other big tech names out DELL, CRM, MRVL, NTAP). Chip stocks rebounding with the SOX +3% above 4,840 and AI related plays extend gains (CRWV, VRT, AVGO and power plays all seeing extended rallies the last few weeks). Treasuries rallying (10yr rate back below 4.50%) after Japan signaled changes to its debt sale plans, fueling speculation that demand for US bonds could rise. Bitcoin also adds to recent gains, holding above $110,000 while the dollar rebounds and gold prices slide.

• April Durables orders -6.3% (consensus -7.8%) vs March +7.6% (prev +7.5%); April Durables ex-transportation orders +0.2% (cons -0.1%) vs March -0.2% (prev -0.4%); Durables ex-defense orders -7.5% vs March +9.0% (prev +8.9%); Nondefense cap orders ex-aircraft -1.3%, (cons -0.1%) vs March +0.3% (prev -0.2%); April Durables shipments +0.4% vs March +0.2%; April nondefense cap shipments ex-aircraft -0.1% vs March +0.5%.
• US March 20-metro area home prices +4.1% (consensus +4.5%) from year ago (previous +4.5%) — S&P CoreLogic Case-Shiller reported; March home prices in 20 metro areas -0.1% seasonally adj (consensus +0.3%) (previous +0.4%) and March 20-metro area home prices non-adjusted +1.1% (previous +0.7%)
• Atlanta Fed GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2025 is 2.2% on May 27, down from 2.4% on May 16. After recent releases from the US Census Bureau and the National Association of Realtors, the nowcast of second quarter real gross private domestic investment growth decreased from 0.7% to -0.2%.

• In Industrials: Goldman Sachs with several ratings changes as they upgraded CMI to Buy saying they see structurally higher Power Systems profitability, derisked EPA 2027 expectations, and US truck demand expectations that have been significantly reduced; the firm upgraded TEX to Buy saying believe Aerials segment earnings are bottoming in Q1 amid a 30% production cut, and tariff headwinds are now the base case in estimates; they also downgraded KBR to Neutral on valuation after stock price move. MSM was upgraded from Neutral to Overweight at JP Morgan and raised tgt to $89 saying with various self-help initiatives in flight, the company is better positioned than it has been in some time to leverage a return to growth in end markets and tariff-driven price as it comes.
• In Restaurants: WING was upgraded from Hold to Buy at Truist and raised tgt to $400 from $274 saying they have increased confidence that WING’s comp store sales will trough in Q225 and accelerate in ’26, with the Truist Card Data pointing to improved trends in May. Truist also downgraded JACK from Buy to Hold and slashed tgt to $22 from $51 following another quarter of comp sales underperformance and upcoming menu innovation/promotions at competitors and doesn’t see NT SSS catalysts driving the stock higher. YUM said its KFC plans to invest 1.49B pounds ($2.0B) in Britain and Ireland over the next five years, creating over 7,000 jobs within its business and across its supply chain – Reuters.

• ETWO +26%; agreed to be acquired by WiseTech Global Limited (WTCHF), which marks the conclusion of e2open’s previously announced strategic review process. Under the terms of the transaction, e2open stockholders will receive $3.30 per share in cash equating to an enterprise value of $2.1B.
• INFA +5%; confirms prior reports by the WSJ late Friday and over the weekend, as agrees to be acquired by CRM at $25 per share in a $8B cash/debt deal. https://tinyurl.com/58ftfhy9
• MTAL +18%; as Harmony Gold (HMY) agreed to buy Australian miner Mac Copper Ltd (MTAL) in a deal worth $1.03 billion as they are offering $12.25 per Mac Copper share in the cash deal.
• RCL +4%; after Bernstein names a top pick for 2H as stay Outperform and $290 PT as forecast RCL can sustainably deliver a high teens EPS growth algorithm for ~10x 2027 PE, a PEG ratio far below leaders in other travel verticals.
• TEM +7%; after saying earlier a new study shows impact of Ambry Genetics’ Patient for Life™ Program on Rare Disease Diagnosis.
• TSLA +5%; shares extend recent rally.
• XYZ +6%; upgraded by BNP Paribas Exane to Outperform from Neutral with a $72 price target saying the company’s guidance for mid-teens gross profit growth acceleration in Q4 looks attainable as headwinds fade, such as high comps in bitcoin and continued pressure in the cash business

• DJT -7%; agreed to issue and sell approximately $1.5B in the Company’s common stock and $1.0B in principal amount of 0.00% convertible senior secured notes, for gross proceeds of an aggregate approximately $2.5B, in a private placement offering for the creation of a bitcoin treasury.
• FICO -8%; after Director of Federal Housing FHFA Pulte tweets, “”Thanks for input. Still not happy with FICO. We should be making some decisions on all related items in next 1-3 weeks.”
• NEM -2%; along with other gold miners (AU, RGLD, AEM, GOLD, KGC) are lower as gold extends a slide on weakening demand for haven assets.
• PDD -16%; after reported revenue of 95.67B yuan ($13.30B) for the quarter ended March 31, compared with analysts’ average estimate of 102.51B yuan, and said net income fell 47% to 14.74B yuan in the quarter from 28B yuan a year earlier.
• PRTA -26%; after saying it would reduce its workforce after a recent trial failed to meet its primary and secondary endpoints. Prothena reported unfavorable data from a Phase 3 trial of birtamimab to treat the blood disorder AL amyloidosis saying the study didn’t meet its primary endpoint.
• RCKT -57%; after disclosing an update on its Phase 2 trial of RP-A501 in Danon disease, where a patient experienced an unexpected Serious Adverse Event (SAE) related to a capillary leak syndrome, with that patient since passing away after an acute systemic infection. The FDA has placed a clinical hold on the trial.
• SVRA -32%; after receives Refusal to File (RTF) Letter From the U.S. FDA for the Biologics License Application (BLA) for MOLBREEVI to Treat Patients With Autoimmune Pulmonary Alveolar Proteinosis (autoimmune PAP).