Closing Recap

Thursday, February 27, 2025

U.S. stock markets were better for sale all day, led by weakness again in technology (XLK -3.62%), Utilities/power (XLU -2.22%) and Consumer Discretionary (XLY -1.44%), while Energy (XLE +0.5%) rebounded along with strength in financials (XLF +0.5%). If not for a tiny gain on Wednesday, the S&P 500 and Nasdaq would be posting six-day losing streaks after today’s drop, picking up selling steam late this afternoon ahead of tomorrow’s key January PCE inflation report. Tech, AI, data centers and nuclear/power stocks led the afternoon pullback after NVDA, which reported a top and bottom-line earnings beat last night and upward guidance (along with strong Blackwell demand and Data Center revs), began to pull back this afternoon, falling below its key 200dma support of roughly $126.50, and took other semis/tech lower (SOX -5%). Note the S&P 500 index hit record highs just last week, but has since pulled back on tariff headlines, fears of inflation creeping higher and signs of the US economy slowing. Earlier this morning, President Trump announced that 25% tariffs on both Mexico, Canada remain and will go into effect March 4^th as scheduled. China will likewise be charged an additional 10% Tariff on that date. The Nasdaq traded in a 600-point range today and the S&P a 130-point range.

Sentiment in the market continues to worsen (despite the S&P 500 just roughly 3% from all-time highs) as the bull-bear spread in the American Association of Individual Investors (AAII) weekly survey was -41.2 vs -11.3 last week. Bulls fall to 19.4% from 29.2%, Neutrals fall to 20% from 30.3% and Bears surge to 60.6% from 40.5%. MikeZaccardi tweets: “AAII sentiment, bulls-bears, most bearish since September 2022, -41.2, nearly the worst since early 2009.” Meanwhile, the weekly NAAIM Exposure index told a different story today as this week’s number is just slightly lower from last week’s reading: 87.87 (from 91.48) – a recent peak of 99.24 from 12/11, trough reading of 64.10 to start the year on 1/1. Note the NAAIM Exposure Index represents the average exposure to US Equity markets reported by our members. Bespoke invest tweets: “If the Nasdaq 100 closes below 21,066.83 today, it will be the fastest 5%+ decline from an all-time high (6 trading days) since September 2020. Note the VIX closed above 21 today – last time closing above 20 was 12/19 (24.09 that day), though has topped the 20 level the last 4 days.

• Weekly jobless claims climbed to 242,000 from 220,000 prior week and vs. consensus 221,000; the 4-week moving average climbed to 224,000 from 215,500 prior week; continued claims fell to 1.862M from 1.867M prior and below the 1.872M estimate; insured unemployment rate unchanged at 1.2%.
• Durables Goods Orders for January rose +3.1%, above consensus +2.0% and vs Dec -1.8%; Jan Durables ex-transportation orders unchanged (cons +0.3%) vs Dec +0.1% and Jan Durables ex-defense orders +3.5% vs Dec -1.8% (prev -2.4%); Machinery orders +0.2%, electrical equipment +0.1%, defense aircraft/parts +1.9%.
• January Pending Home sales index falls -4.6%, worse than consensus -1.3%) and down -5.2% y/y.

• April gold declined -$34.70 to settle at $2,895.90 an ounce; Treasury yields rebounded, with the 10-yr back to around 4.3% after its recent 6-day losing streak while the dollar bounced as well ahead of tomorrow’s January Core PCE inflation reading.  Bitcoin prices were up above $86,000 this morning, before fading late to below $83,000 this afternoon as the extended selloff continues.

• In Food: HRL recorded a smaller Q1 profit as volume declines ate into sales and costs rose (EPS $0.35 vs. est. $0.38) as sales edged down slightly y/y to $2.99B, about $42M above estimates and stands by its forecast for $11.9B-$12.2B in sales for FY25 and lowered its profit guidance by 2 cents a share to $1.49-$1.63 a share; KDP  announces 73M share offering sold by top shareholder JAB Holding Co at $32.80 (JAB’s stake goes from ~16% to 10.7%, or ~145M shares); BYND Q4 revenue of $76.7M topped views but lower-than-expected gross margins pressured EBITDA $7M below consensus and guided lower for 2025 sales.
• In Restaurants: SG missed on both comp growth (4%, vs consensus 5.8%) and restaurant-level margin (17.4%, vs consensus 18.1%), though adj. EBITDA was essentially in line with expectations at $(0.6) million and 2025 guidance metrics came in below Street consensus.

• In Casinos & Gaming: PENN top and bottom line Q4 results miss; said its Entertainment’s Interactive Division, which includes ESPN BET sportsbook, theScore Bet, retail sportsbook and its Hollywood iCasino, generated $275 million in revenue in Q4 2024; that resulted in ($110) million in Adjusted EBITDA losses.

• In Refining/Marketing: ARKO reported Q4 results with adjusted EBITDA and revenue below consensus expectations while also provided initial 2025 adjusted EBITDA guidance in the range of $233mm-$253mm (consensus $249.9mm).
• In Energy space: APA delivered an EBITDAX and FCF beat in Q424 driven by stronger gas volumes and pricing and lower CAPEX, with spending down 17% to deliver a 3% increase in adjust production, though reported oil guidance was below consensus

• In Payments: Shares of MA, Visa (V), COF outperformed in credit cards this morning; MQ shares climb after the payment card partner for firms including Block and Affirm posted better-than-forecast results and said that Chief Executive Officer Simon Khalaf stepped down.
• In Financial Services: FTDR shares tumbled after the home service provider said the company saw a decline in membership count due to the challenging real estate market; reported Q4 beat and better guidance.

• MRNA shares fell after reports last night that the Trump administration is reevaluating the $590M contract for a bird flu vaccine awarded to MRNA in the final days of the Biden administration.
• SRPT Q4:24 Elevidys sales were $384.2M (+112% q/q), in-line with January’s pre-announcement
• In Managed care (UNH, CI, CNC, MOH, ELV): House Speaker Mike Johnson rules out the steepest Medicaid cut options in interview with CN last night. The speaker also said that he doesn’t expect the Senate will make changes to the House’s budget resolution. Speaker Mike Johnson has ruled out some of the biggest potential cuts to Medicaid for Republicans’ party-line package to enact President Donald Trump’s agenda.
• In the Insulin Sector: TNDM shares fell after reporting better quarterly results but 2025 guidance for revenue of $997M-$1.007B (up 10-11%) compared to consensus’s $1.01B, which includes $15-$20M of potential OUS headwinds as management transitions to direct operations, weighed on shares.
• In MedTech: LAB was downgraded at KeyBanc after the company preannounced 4Q24 with disappointing initial 2025 revenue guidance of $165M-$175M vs. consensus of $186.9M citing the proposed White House NIH spending cut that may drive cautious spending for its academic customers. Agilent (A) reported strong results for the quarter, but guidance that was reduced due to FX, Q125, was a mixed quarter for Agilent.
• In Healthcare Servies: TDOC shares declined as reported 4Q results that came in in line on the top line but missed adjusted EBITDA expectations, largely driven by weaker than expected profitability in BetterHelp (margins came in at ~8.7% vs. consensus of ~13%); full-year outlook also came in light vs. consensus. WBA shares edged higher after the Financial Times reported Sycamore Partners’ plans to separate Walgreens’ three main businesses into separate units with distinct capital structures after taking the pharmacy chain private.
• In Hospital Operators: UHS 4Q strong, highlighted by an 8% EBITDA beat (or ~4-5% beat excluding higher SDPs), good underlying SS trends in both Acute and Behavioral, and strong cost controls. Additionally, 2025 guidance is above Street and assumes a modest reduction in SDPs.
• In the Dental sector: XRAY shares fall after Q4 results missed (EPS $0.26/$905M below consensus of $0.43/$920.6M) and guided 2025 net sales in range of $3.5B-$3.6B below the $3.73B estimate but EPS midpoint in-line w ests.

• In Metals & Mining: FCX upgraded to Buy from Hold and raise PT to $48 from $40 at Jefferies due to encouraging recent updates regarding Indonesia as well as the potential significant benefit to FCX of tariffs on US copper imports (said had downgraded just last month due to risks in Indonesia, its cautious view on copper). Gold miners (NEM, AEM, GOLD, GFI, AU) slumped on Thursday as gold dropped below $2,900 to its lowest level in more than two weeks, pulling back from recent all-time highs of $2,974 an ounce.

• In Media: TKO slips after results; WBD Q4 adjusted EBITDA $2.7B vs $2.47B last year; said expects its streaming service business to reach at least 150Mm users by 2026 vs est. of 135.8M subscribers after added 6.4Mm direct to consumer subscribers, above estimates of 4.89Mm; PARA Q4 revenue $7.98B vs. est. $8.1B while operating income fell -68% y/y to $129M and adj OIBDA -22% y/y to $406M as revenue at its TV media segment fell by 4% from a year earlier, hurt by declines in the linear advertising market and fewer sporting events on CBS while added 5.6M subscribers during the quarter.
• In Online Services/Internet: IBTA shares tumbled after being downgraded by at least two Wall Street analysts following weaker than expected Q4 results and Q1 guidance as redemption revenue growth slowed from +76% in ’23 to +26% in ’24. EBAY shares slipped after delivering strong Q4 results, with 2% organic FXN GMV growth, but Q125 and FY25 GMV outlook disappoints

• CRM Q4 results mixed (EPS beat/revs miss) on weaker Q1 outlook, and guided FY26 CC subscription revenue growth of ~9%, below the consensus of 9.5%; Agentforce has over 3,000 paid customers, and all of CRM’s top 10 wins included Data and AI; Data Cloud and AI ARR reached $900M, growing 120% y/y.
• SNOW reported FQ4 beat on product revenue and FY26 product revenue guide $50M/$100M above consensus as mgmt noted stable consumption patterns, strong adoption of data engineering and AI features, and several large customers consuming beyond their commitments; Q1 revenue guide ($955M-960M) came in marginally below consensus ($961M). Additionally, CFO Mike Scarpelli announced his retirement.
• In Storage: NTNX delivered another solid beat/raise for Q2 and continues to benefit from the industry shift to HyperConverged Infrastructure, on top of share gains from key competitor VMware; PSTG shares fell as reported Q4 top and bottom-line beat, Q1 guide was above views but 2025 rev guidance of $3.515B was below consensus est. $3.52B; Q4 subscription annual recurring revenue (ARR) $1.7B, up 21% y/y.
• Quantum Computing: IONQ announced better than expected 4Q24 revenue and guided FY25 revenue to increase ~+94% Y/Y at the midpoint, in line with expectations (but q1 lower), while also announced a CEO change and a plan to acquire ID Quantique.