Closing Recap

Friday, February 28, 2025

U.S. stocks started the day positively, paring weekly losses and holding on to early gains for the first time this week as January PCE inflation data offered no major surprises, while personal income/savings rate both jumped (but spending declines), raising hopes that multiple Fed rate cuts this year may be on the table. While stocks reacted favorably initially on the data, slowing growth concerns for the U.S. reared its ugly head. Updated data from the Atlanta Fed model did not help alleviate growth concerns as Atlanta Fed GDPNow forecast showed the GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2025 is -1.5% on February 28, a big “about face” from the expected rise of +2.3% on February 19. That, coupled with yesterday news from President Trump that his proposed tariffs of 25% on Mexican and Canadian goods would indeed take effect on March 4, along with an extra 10% duty on Chinese imports, weighed on market sentiment. In data today, the Personal Consumption Expenditures (PCE) price index increased 0.3% in January, in line with expectations of economists polled by Reuters, after advancing by an unrevised 0.3% in December. In the 12 months through January, prices rose 2.5% after increasing 2.6% in December.

In a shocking turn of events, Ukrainian President Volodymyr Zelensky left the White House following the collapse of peace talks with President Donald Trump after a clash in the Oval Office. Zelensky did not respond to shouted questions from reporters asking him if a peace deal was now dead. Trump also said Zelensky “disrespected the United States of America in its cherished Oval Office.” “He can come back when he is ready for Peace,” Trump said. Following the breakdown in talks with Ukraine, shares of LNG and fertilizer chemical names (CF, NTR) jumped, but US stock markets pulled back on peace talk uncertainty. Heading into the final hour, stock markets saw a massive spike, closing the day strong in the final minutes, but posted sharp declines on the week and month. For the week, the S&P 500 fell -0.98%, the Nasdaq declined -3.47%, and the Dow climbed -0.95%, while for the month, the S&P 500 fell -1.43%, the Nasdaq declined -3.97%, and the Dow fell -1.58%.

• Inflation readings are mostly in-line as the January PCE price index y/y rises +2.5%, in-line with consensus and down from +2.6% in December while core Y/Y PCE was +2.6%, also in-line with consensus +2.6% and vs prior +2.8%. The Month-over-month PCE data showed headline PCE rose +0.3%, in-line with consensus and December reading and the core M/M PCE reading rose +0.3%, in-line with consensus +0.3% and vs Dec +0.2%.
• Chicago PMI climbed 6 points to 45.5 in February, a little better than expected 40.8 reading, and was the highest reading since September. The index bounced 2.6 points to 39.5 in January, breaking a string of three straight monthly declines to 36.9 in December which is the lowest since May’s 35.4

• WTI crude oil futures fell -$0.59 or 0.84% to settle at $69.76 per barrel, posting the biggest monthly loss since September as President Trump escalated tariff threats against major trading partners, hurting appetite for risk, boosting the dollar and clouding the outlook for energy demand. Brent crude futures dropped -$0.86 or 1.16% to settle at $73.18 per barrel. Natural gas prices fell -3% to a 2-week low on record output and forecasts for milder weather over the next two weeks that should keep heating demand low.

• The U.S. dollar index (DXY) rebounded off morning lows to finish higher, rising against the euro and yen adding to recent gains, but for the week, the dollar is up about 0.5% but down more than 1% for February, poised for its largest monthly decline since August. Against the Japanese yen, the dollar fell nearly 3% for the month as investors largely expect the Bank of Japan to hike interest rates this year.
• Bitcoin prices tumbled as low at $78,000 overnight, bringing its drawdown to over 27% from this year’s record highs, but rebounded back above $84,000 in what has been a turbulent time for the crypto assets. Just how weak has Bitcoin/crypto been? KobeissiLetter tweets: "Investors are pulling out of crypto at a record pace: Crypto funds posted a record $2.6B outflow in the week ending Wednesday. This is ~$500M above the previous record set at the end of last year. On Tuesday alone, Bitcoin ETFs posted a record one-day withdrawal of $1.0B. As a result, the 4-week moving average of crypto fund flows turned negative for just the 4th time in 14 months."

• In Food & Beverages: MNST reported net sales of $1.812B (+4.7% YoY), in-line with the consensus estimate of $1.803B (+4.2% YoY) while adj EPS was $0.38, below consensus of $0.41 as Monster Energy Drinks segment grew sales 4.5% to $1.67B, (vs. +3.3% to $1.651B consensus est.) and Alcohol Brands (~2% of sales) posted a sales decline of 0.8%, above Truist’s (7.0%) estimate but below the +10.5% consensus.

• In Energy E&P: BE Q4 revenue and margins were all in line with its guidance, and product backlog was flat while service backlog grew 6%; mgmt. is guiding to nearly 20% top line growth in 2025 as business momentum and demand remain strong; EOG posted a slight 4Q24 CFPS miss on pricing and higher cash taxes and while 2025 oil growth of ~3% and capex of $6.2B are in-line with consensus, free cash flow estimates are below expectations; OVV delivered a solid 4Q beat and largely reiterated its 2025 outlook. Baker Hughes (BKR) reports that the U.S. rig count is up 1 from last week to 593 with oil rigs down 2 to 486, gas rigs up 3 to 102.
• In Solar: RUN reported 4Q results, with solar installation volumes largely in line, while storage capacity beat expectations; 2025 solar volumes are expected to remain flat as the U.S resi market has yet to show meaningful signs of a demand recovery; lowered its cash generation guidance for 2025 to $200-$500M, down $125M at the midpoint, as domestic content ITC is slower to ramp, cost of capital increases. ARRY shares fell, downgraded at Seaport after an across-the-board Q4 miss and lower guidance as sees FY revs $1.05-1.15B vs est. $1.127B, adj EBITDA $180-200Mm vs est. $225.45Mm and EPS $0.60-0.70 vs est. $0.79.

• In Insurance: VOYA was upgraded to Overweight from Equal Weight at Morgan Stanley and raised tgt to $87 saying the company’s strategic initiatives in 2025 should help Voya “meaningfully rebound” from 2024 and set up an attractive growth profile in 2026 and beyond.
• In Financial Services: RKT 4Q adjusted earnings per share of $0.04 were in-line with ests while revs guide for Q1 is roughly in-line with current Street estimates at the midpoint while expense guide is ~7% higher and margin is expected to be flat q/q. RDFN reported Q4 EPS loss (-$0.29) vs. est. loss (-$0.23); Q4 revs rose 12% y/y to $244.3M vs. est. $242.5M; sees Q1 revenue $214M-$225M, below consensus $242.8M and sees Q1 total net loss is expected to be between ($94M-$83M); DLO was downgraded to Equal Weight at Morgan Stanley after the company reported weaker than expected results, missing consensus expectations by a wide margin, and follows its 60% rally over the past six months.

• NTLA downgraded from Neutral to Sell at Goldman Sachs with $9 tgt saying while it awaits Ph3 data from both programs to gain clarity on their overall profiles, it takes a conservative view given competitive and commercial dynamics for Nex-z in ATTR ALNY’s Amvuttra (March 23 PDUFA) and nucresiran; AZN Phase 3 Wainua data in 2H26; BBIO’s Attruby) and NTLA-2002 in HAE IONS Donidalorsen (August 21 PDUFA); TAK’s Takhzyro).

• Medical Equipment & Supplies: FIGS posted a beat on top line and profitability in the quarter, supported by repeat customer orders, while FY25 guide was softer than expected. OMI shares outperformed after Q4 EPS tops estimates and said it is in the process of selling its unit that distributes products to healthcare providers and manufacturers; also says its board has authorized a share repurchase worth $100M.
• Healthcare Facilities/Services: ACHC Q4 results mixed, with EBITDA below Street largely due to one-timers and SS revenue growth a touch below while guidance for 2025 is perhaps 2-3% below recent buy-side expectations as per Keybanc, but senses mgmt is taking a prudent/cautious approach to various inputs.

• In Aerospace & Defense: RKLB shares fell after earnings and news its Neutron’s first launch timing is now 2H25 (prior view was "no earlier than mid-2025") and represents a roughly 12-month push from original target; ACHR shares also declined following earnings results.
• In Chemicals: Keybanc noted Chemical Market Analytics (CMA) released its monthly chlor-alkali report, showing signs of life in the caustic soda market as the U.S. caustic soda index fell $5/ton m/m in February, better than the forecast of a $10/ton decline. Prices in the export markets strengthened during February with prices in the U.S. and China rising $38/ton and $30/ton, respectively. The firm views OLN as the key beneficiary of a recovery in chlor-alkali given its strong operating leverage upon the return of volumes.

• In PC/Hardware: DELL reported lower than expected revenue, driven by a sequential decline in CSG and flat ISG, though reported EPS exceeded consensus thanks to a surge in Storage revenue; Revenue is still driven by AI servers, which are margin dollar accretive but margin rate dilutive; expects its gross margin rate to decline roughly 100 basis points on lower Q1 EPS/rev outlook which weighed on shares and overshadowed $10B share buyback. HPQ Q1 results were in-line with expectations, but management guided to Q2 EPS $0.05 below the firm and Street view as the co said that better revenue and cost measures will help drive outsized EPS in the second half. LNVGY won an appeal in Britain in its attempt to get an interim license to use ERIC’s patents, the latest ruling in the companies’ global licensing dispute.
• In Storage: NTAP shares tumbled as Jan-Q revenue missed consensus estimates due to "inconsistent execution" in several deals during the quarter, resulting in pushouts to Q4; given weaker than expected Q3 revenues, mgmt lowered its FY25 revenue outlook to $6.49B-$6.64B, down from $6.54B-$6.74B, with GM/OM of 71%/28-28.5%.
• In Semiconductors: INTC’s promised $28 billion chip fabrication plant may not be completed until 2030 and would begin operations sometime shortly thereafter in either 2030 or 2031, local media outlet the Columbus Dispatch reported on Friday.