Closing Recap

Friday, October 17, 2025

As the trade rhetoric between the United States and China has heated, stocks have cooled, and US equity futures followed China lower last night but recovered much of the decline pre-open after Trump indicated he did not expect higher tariffs on China to remain and that he will be meeting with China’s Xi in two weeks. By mid-morning, stocks had popped to green then reversed back to flattish for large caps. Breadth favored decliners by 3:2 as small caps underperformed with IWM (-0.84%) versus SPY (+0.02%) and QQQ (+0.01%). Sector performance was fairly evenly distributed with Consumer Staples (+0.79%), Financials (+0.54%) and Consumer Discretionary (+0.44%) outperformers among S&P sector ETFs, while Utilities (-0.31%), Materials (-0.34%) and Technology (-0.45%) led the underperformers with six sectors gaining versus five declining. In sentiment today, the Fear & Greed Index remained pressured at 23/100 (Extreme Fear) versus last week’s 31 (Fear) and way off last month’s 58 (Greed).

In data of note today, with its latest push higher gold has outperformed the S&P total return 154% to 95% during the current AI bull market from 10/12/22, per @bespokeinvest. @charliebilello notes the top ten S&P500 holdings have hit a record concentration of over 39%. Also, per @bespokeinvest, a different look at today’s market concentration at the top considering indices generally have worked higher but there are currently twice as many stocks oversold versus overbought in the S&P500 (43.2% vs 21.4%). On earnings, early reports have been mostly solid thus far with 86% beating expectations with average year/year growth of 15% and median growth of 12%. Per @charliebilello, S&P500 Q3 operating earnings are now expected to increase by 13% year/year, marking the 11th consecutive quarter of positive growth.

Equities enjoyed an afternoon rally, holding modest gains into the final hour of trading for the week. Breadth recovered but only to flattish as small caps continued to underperform with IWM (-0.69%) versus SPY (+0.59%) and QQQ (+0.73%). With the underlying bounce, sector performance also widened in favor of gainers with Consumer Staples (+1.28%) and Financials (+0.99%) leading, while Materials (-0.24%) and Utilities (-0.40%) were the lone sectors in the red. Next week brings more earnings and more uncertainty around when the government shutdown will conclude. Meanwhile, unreleased economic data continues to build and leaves the Fed with a tough task ahead.

• WTI crude gained late in the day with December futures settling +0.16/bbl, or +0.28%, at $57.15 but finishing the week lower following another round of oil surplus concerns. Recent ceasefire progress between Israel and Hamas also fed the surplus discussion as it at least temporarily removed a supply risk overhang.

• In Casinos: Jefferies previewed sector ahead of Q3 saying themes they are focused on into results include the forward set-up for LV group business and improved strip performance, regional gaming tailwinds via improved promo strategies and continued, though slower, growth in Macau. Jefferies expect weakness on the strip in Q3 to turn to early reads of a rebound in Q4. The firm said they are bullish on CHDN, RRR and WYNN on favorable exposure to these themes
• In Leisure Products: PLNT and LTH Initiate with Buys, and XPOF, MODG initiate with Neutrals at UBS in fitness space saying they see structural shifts in consumer behavior that point to more prioritization of health & wellness, esp. among Gen Z: ~82% of US consumers now consider health/wellness ($480B market; +10% growth/yr) a top priority, up from 50% in ’22.

• CMA both report earnings (recently announce M&A combination). CMA Q3 EPS $1.35 vs. est. $1.28; Q3 net interest income (NII) at $574M, while net interest margin (NIM) fell -7 bps to 3.09%; FITB Q3 EPS $0.91 vs. est. $0.86; Q3 noninterest vs. est. $2.29B; Q3 net interest margin 3.13% vs. 2.90% last year; sees Q4 NII stable to up 1% vs. Q3; sees Q4 average loans & leases up 1% vs. Q3.
• FNB Q3 adj EPS $0.41 vs est. $0.37 on NII $359.272Mm vs est. $356.51Mm, credit loss provision $23.991Mm; Q3 Average deposits totaled $37.9 billion, an increase of $2.3 billion, or 6.4%, as the growth in average interest-bearing demand deposits of $2.1 billion.
• INDB Q3 adj EPS $1.55 vs. est. $1.53; Q3 net interest income $203.344M and net interest margin rose 25bps q/q to 3.62%; decrease in Q3 net income was primarily driven by higher merger-related costs and the current period provision for credit losses associated with acquisition of Enterprise Bancorp.
• OZK reported weaker results as Q3 EPS $1.59 missed est. $1.66, and NII $365.545Mm vs est. $413.71Mm prompting a downgrade at Raymond James noting next year’s EPS forecast was reduced by roughly 12% due to softer loan growth expectations, higher expenses, and lower net interest income.
• RF Q3 adj EPS $0.63 vs. est. $0.60; Q3 adj revs $1.94B vs. est. $1.93B driven by wealth and capital markets; Q3 net interest margin 3.59% vs. 3.54% last year.
• TFC Q3 adj EPS $1.04 vs. est. $0.99; Q3 revs $5.24B vs. est. $5.22B; Q3 net interest margin (NIM) 3.01% vs. est. 3.04%; Q3 provision for credit losses $436M (vs. est. $484.9M); Q3 total average deposits $396.6B (vs. est. $400.09B); Q3 wealth management income rose 6.9% to $374M, driven by higher assets under management; Q3 income from IB/trading fell -2.7%

• In Consumer Lending: ALLY Q3 adj EPS $1.15 vs. est. $1.01; Q3 revs $2.17B vs. est. $2.11B; Q3 net interest margin 3.55% vs. 3.32% last year (and Q2 NIM of 3.45%); Q3 adj net income $363M vs. est. $314.6M.
• In Insurance sector: MMC was upgraded to Market Perform from Underperform at KBW, while lowering tgt to $191 from $209 following its Q325 earnings report, conference call, and 8%-plus post-report selloff. KBW raises its 2025E/2026E/2027E operating cash EPS views. RGA was downgraded to Underperform at Raymond James citing rising risk factors and relative valuation for the downgrade/says Reinsurance will need to cut expenses and reposition assets quickly to achieve excess earnings on the Equitable block.
• In Financial Services: MCO was upgraded to Market Perform from Underperform at Raymond James ahead of Q325 results as it sees limited further downside risk to the company’s valuation multiple and says strong issuance activity in the quarter should boost Q325 results.

• Residential REITs: INVH was upgraded to Overweight from Neutral and UDR downgraded to Neutral at JP Morgan mainly because it finds INVH to be almost “washed out” on a valuation basis. JPM notes it has lagged peers and is now at a level they believe to be heavily discounted relative to both its underlying fundamentals/growth and real estate value.

• ATAI said 23.725M share Spot Secondary priced at $5.48.
• EW added to TAP Outperform list at Evercore saying the recent sell-off seems overdone as the upcoming TCT presentation should reinforce confidence in TAVR’s performance against SAVR over seven years
• KZR announced a formal process to explore strategic alternatives given it could not align with the FDA on a registrational path for its asset in autoimmune hepatitis.
• LLY, NVO, VKTX shares fell after President Trump said last night during a briefing on fertility treatments suggested the administration was negotiating much lower prices for their blockbuster obesity drugs.
• LXEO said 15.625M share Spot Secondary priced at $8.00.
• PRAX said 3M share Spot Secondary priced at $152.00.
• RANI shares surged after signing a licensing agreement with Japan’s Chugai Pharmaceutical to develop an experimental pill, with an option to extend it to up to five drugs, which could bring the total deal value to over $1 billion (will receive $10M upfront and is eligible to receive up to $75M in technology and development milestones, and up to $100M in sales milestones and single-digit royalties on product sales).
• VRTX says the FDA grants rolling review of Biologics License Application for povetacicept in IgA nephropathy; Vertex to submit first module before end of year.

• In Transports: Railroad CSX reported Q3 adj EPS $0.44 above est. $0.42 and revs slightly better falling -1% y/y to $3.59B but above est. $3.576B; Q3 volume totaled 1.61M units, up 1% y/y and up 2% sequentially; said effects of lower export coal prices and a decline in merchandise volume were partially offset by increases in other revenue, higher pricing in merchandise, and intermodal volume growth.
• In Industrials: DE was upgraded to Buy from Neutral at UBS saying they expect ’26 to be the last year of DE’s earnings downturn before a recovery in ’27. UBS believes Ag fundamentals & sentiment are near the bottom, and while it may be a bit early for the stock today based on elevated expectations for ’26, it thinks a positive inflection in the cycle & DE earnings should begin to be priced in over the next year.

• In Government Defense/IT: BAH was downgraded to Hold from Buy with $105 PT at TD Cowen saying they expect BAH to pare F26 guidance on the Sept Q print, and this should also reduce F27E Street EPS. Headwinds won’t persist indefinitely, but bookings over the next few Qs are apt to be middling.

• In Metals & Mining: another overnight record high for gold prices (GLD), now up over 60% YTD and topping $4,350 an ounce for the first time ever this morning – giving a boost early to precious metal miners (NEM, AEM, AUY, CDE, PAAS, SVM) – but prices reversed sharply, taking precious metal prices lower along with those miners; in steel, CMC was upgraded to Buy at Citigroup with $65 tgt seeing an emerging FCF/deleveraging story post the transformational precast concrete acquisitions, while saying the main headwind is 600kt new rebar capacity arriving from Hybar—but manageable.

• In Gaming: Bloomberg reported Nintendo (NTDOY) has asked suppliers to produce as many as 25M Switch 2 units by the end of Mar 2026. The Japanese company is asking its manufacturing partners to ramp up output, counting on demand to persist over the coming holidays and into the new year.
• In AI/Data Centers: Goldman Sachs said look for S&P 500 cash spending to reach $4.4 trillion in 2026, up 11% from 2025 as policy uncertainty recedes, CEO confidence improves, and corporate fiscal stimulus from the budget bill kick in. Against this backdrop, look for CAPEX growth of 17% YoY as AI hyperscalers push CAPEX beyond current expectations; and cash M&A growth of +15%.
• In Software: ORCL shares fell after rising 3% in the previous session as Oracle discussed the outlook for the next five years and weighed in on cloud margins.
• In Semiconductors: MU shares fell on reports it will stop supplying server chips to Chinese data centers after being targeted by a ban from Beijing on the use of its products in critical infrastructure, although it will continue to sell chips to automotive and smartphone customers in the country, Reuters reported.